The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios, Rabobank, México
17 - 21 de Febrero de 2008

The World

Running the labyrinth of socially responsible eating: A recent commentary in Confectionerynews.com pointed to the problem that consumer face trying to consume ethically – sourced cocoa. The problem, though, goes far beyond just cocoa, having the potential to impact on the entire food industry. Surveys leave little doubt that consumers worry about how farmers are treated in the developing world. In the U.K., for example, the Department for Environment, Rural and Food Affairs found that over 50 percent of consumers would “try not to buy products whose ethics they disagree with… [And] 45 percent said they would be prepared to pay more for ethically – sourced food.” Where the problem lays is that with companies wanting to demonstrate to consumers that they are ‘ethical’ there are now a “number of schemes” in the market. Frequently, they are company sponsored programs or initiatives, with each one being somewhat different from the other. While there is no need to doubt companies’ sincerity and ethical concerns often the programs are not independently regulated or supervised. The result is that consumers are becoming confused. While it appears that consumers have yet to become cynical, the writing is on the wall. The food industry will have to develop industry-wide initiatives and/or companies promote third party supervision.

Meat from happier animals: Last week we were talking about the UK’s Co-operative Group decision to no longer sell caged eggs. Now in the U.S. Safeway, one of that country’s largest supermarket chains says that they “will elevate animal welfare as a priority when buying meat and eggs.” Particularly they will source more non-caged eggs, poultry from “producers that use ’controlled-atmosphere stunning’” and pork from “sources that are phasing out gestation crates to confine sows”. There are questions as to whether there are enough producers to supply in sufficient quantities at this time. Nevertheless, it does suggest that there will be pressure on the animal protein industry to seriously look at the way they operate.

Mexico

Lots of corn: Last week data began to circulate showing that imports of corn and powdered milk during January of this year were significantly above those during January 2007. The volume of corn imports, for example, was some 20 times higher than last year. This increase is being used as an argument to justify the need to renegotiate the NAFTA, alleging that the surge in imports is the result of the opening of the border and that it foreshadows a flood of imports during the rest of the year. Looking closer at data on trade flows show that typically in December imports surge, reflecting both the end of the calendar year quota allocation and fiscal planning strategies. Because of the December surge and government quota policies, in January imports levels fall drastically. Last year, in anticipation of the elimination of quotas under the NAFTA as well as the implicit tax penalties related to 2007 inventory levels in the transition to the new fiscal regime (IETU), imports that would have been realized in December were pushed forward to January. Rather than suggest that the NAFTA will flood the Mexican market, what January imports indicate is that NAFTA will result in a rationalization of imports, representing a savings for agribusinesses. Regarding international trade in 2008, interestingly, projections are for a contraction in the overall level of to corn and sorghum imports.