lunes, 4 de agosto de 2008

The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios, Rabobank, México
4 - 8 de Agosto de 2008

The World

Doha dead. That was the diagnosis last week as negotiations broke down, largely over agricultural issues. Some analysts had expected that the increase of commodity prices would work towards a willingness to agree to cutback or even eliminate subsidies. This, they suggested, would facilitate a successful conclusion of the Doha Round. We took a different view, however. With high commodity prices and concerns about shortages, numerous countries put policies in place that limited or even suspended exports. In other words, market access ceased to be an issue, yet increased trade was not seen as a solution to high commodity prices —in fact, some claimed that it was part of the cause. With one of the stated benefits of trade no longer relevant for many of the participants there was no underlying desire to conclude a deal. In the short run the direct impact of the collapse of the Doha Round is expected to be minimal. It doesn’t mean that countries will go back on the agreements already in place, i.e. we do not see countries moving to close their borders to import agricultural and food products. Furthermore, not only are a number of bi-lateral and regional trade agreements already in place but there are also on-going negotiations for new trade agreements. Into the future, most likely into the next decade, as the market adjusts, we expect that there will be a renewed interest in reaching a new WTO agreement.

Jerking the market for more M&A. Apparently Marfrig wants more businesses even after their acquisition of OSI Group’s Brazilian business as well as the businesses in several European countries just over a month ago. At the end of last week they announced that they had “acquired the Pemmican beef jerky band and related production equipment from ConAgra Foods”. At the same time Marfrig entered into an agreement whereby ConAgra “will sell and distribute the Pemmican brand beef jerky” through July 2013. While the deal is small, valued at US$25 million, it is particularly interesting since it further positions Marfirg at the consumer ended of the value chain, in the potentially high margin branded meat snack segment. At the same time the agreement with ConAgra should also give them further insight into the food distribution business, particularly in the U.S. market.


Lots of shrimp. Mexico has always had a shrimp industry, but until the laws were changed towards the end of the 20th century to allow private sector investment in shrimp farms, most of the country’s shrimp were captured. This has now changed: last year, according to FIRA, some 114.3 thousand MT —64.4% of the country’s shrimp— were farmed. Initial estimates suggest that this year’s shrimp production will grow by over 6.5 percent. More than half of the farmed shrimp comes the state of Sonora. This year projection in Sonora is projected to grow by 13.3 percent, reaching just under 90 thousand MT. While most of the shrimp is consumed in Mexico, exports are important to the viability of the industry, particularly for the shrimp farms. Last year Mexico exported 41.8 thousand MT, worth US$ 382 million, with over 90 percent going to the U.S. market. It should be remembered that Mexico’s advantage in that market is due not only to geography and the NAFTA, but also to the fact that it was excluded from the dumping demand.

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