The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
17 - 21 de Diciembre de 2007

The World

Going their separate e – business way. Over the last couple of years, we have seen e – business ventures, now having recovered from the bust, slowly and steadily grow in importance. According to an analysis by comScore, in the U.S. during the first week in December holiday internet retail sales grew by 20 percent over the same period last year. As Rabobank predicted the brick and click model has become the dominate business model. The industry seems to agree that running the e – business and the brick business as separate businesses has not been all that successful.

Beyond that, though, the retail industry is still trying to define the optimum strategy. For example, Target, the U.S. retailer, has an e – marketing “strategy that mirrors what is going on in its stores.” They are also using their e – business as an additional tool for inventory management, i.e. “stores will increase a given product’s inventory when a spike in the item’s online sales takes place.” WALMART, by way of contrast, is using their online business to reinforce their low price positioning in the marketplace, while, at the same time, looking to push consumer traffic to their stores.

They do offer more items online than in their stores, but what seems to be an important driver of their business model is no charge for items picked – up in their stores. For the consumer the savings on the shipping costs is very attractive. For WALMART, this gets a consumer in their store and potentially buying something else. Even more important, it brings new consumers to WALMART. While the Target model seems to be the simpler model to manage, especially as logistics are concerned, most analysts see the WALMART – type model as superior. Based also on what we have seen in the U.K. we would, therefore, expect the “click” as a driver to the “brick” to predominate into the future.

No more junk in the UK. Repeatedly we are seeing the food industry taking the initiative through voluntary controls, rather than giving governments the chance to unilaterally set rules and regulations. The latest example of this proactive industry strategy is in the UK. Responding growing concerns by consumers and government about childhood obesity thirteen companies, including major industry players, have “pledged to stop advertising ‘junk’ food to children under 12”. When they do advertise, they will attempt to “depict an active, rather than a sedentary life style” as well as promote “moderation in food consumption”. The efforts by industry at self – regulation should not be seen as an attempt to continue ‘business as usual’. It is really a question of who will set the rules and the pace of change. Companies that stand on the sidelines risk eventually being marginalized in the marketplace.

Mexico

Lot’s of biofuel: Leaving aside state owed oil company, it seems that just about everyone else in Mexico is interested in biofuels. While there are some projects to produce biodiesel most of the proposals focus on ethanol. The latest one that we have heard about is being promoted by the Agrarian Attorney General (Procurador Agrario). It calls for planting 1.5 million hectares in sugar cane – on land not already in sugar cane – under a tenure scheme that allows for the participation of private investors and a guaranteed return for farmers who put up their land. The projected output is 10.8 billion cubic meters of ethanol. The government sees this as not only as a way to produce ethanol, but also as vehicle to bring more of the country’s poorer farmers into the market economy.