lunes, 26 de enero de 2009

The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
26 - 30 de Enero de 2009

The World

Restaurants closing and opening a wash. Since the total number of restaurants in the U.S. remained flat last year in the U.S. —that is, the number of restaurants that were closed was balanced out by the number of new openings— it would seem that 2008 was not all that bad for the industry. However, on closer examination of the data presented by The NPD Group, gives a picture of the important changes taking place in the restaurant industry in response to the economic situation. It seems that the closings were in the small chains and independent restaurants. By way of contrast the number of restaurants openings “by the largest chains (500+ units) were up one percent.” Digging deeper into the data we see that the growth has come in the fast food segment (QSR). To a certain extent this is not a surprise. The fast food segment tends to offer cheaper eats which is attractive in times of economic difficulties. At the same time the larger chains, which counted for the industry’s growth, tend to be heavy into the fast food segment. While the fast food segment grew, the number of family dining and fine dining restaurants fell, with the later showing the largest percentage contraction. Again this should not come as much of a surprise since these full service restaurants have higher costs, which are passed on in terms of higher prices. With the economy in contraction consumers are cutting down on the more expensive dining options. The change in restaurant numbers suggests that, when the final 2008 numbers are available, we’ll see the total consumer expenditures actually contracting due to consumers cutting down on the number of occasions eating out and/or trading down to less expensive restaurant options.

COOL, cooling down. That is, at least what it appears as far as Canadian and Mexican cattle exporters and are thinking. The U.S. country of origin labeling (COOL) law “forced beef packers to segregate [imported] animals from American [animals].” This increased the cost of handling imported animals worked to dissuade imports. According to the Canadian Cattlemen’s Association, “the law represented a [CAN]$400-million loss to Canadian beef producers”. At the beginning of January (Jan. 9) the regulations were modified “to mostly eliminate the differentiation of cattle fed in the U.S. from cattle entering the United States for slaughter.” Apparently, that change has resulted in an increased willingness to import cattle. However, that is not the end of the story. It appears that the incoming Obama Administration wants to take a second look at COOL. If this happens, the betting is that they would “tighten up COOL rules”. This, because the explicit objective of the COOL is to give consumer specific information —not less— to allow them to differentiate U.S. product from foreign sourced product.


Retail sales took a hit in 2008. That is what ANTAD, the supermarket and department store association, is saying. While they say that supermarket sales were off, our discussions suggest that the food category sales within supermarkets did not contract. ANTAD projects 2009 as essentially flat, with investment falling by over 50 percent compared with 2008 levels to the equivalent of US$1.3 billion, of which about 54 percent destined for new units. This works out to a 4.7 percent increase in floor space.

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