martes, 17 de marzo de 2009

The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
March,16-20, 2009

The World

Back to tap water: Over the last couple of years, particularly in the U.S. we have seen a phenomenal growth of the bottled water segment. For the three years up to January 2008 dollar sales of bottled water registered annual gains of 20.3%, 15.5% and 10.5%, respectively. Now all of that appears to have changed. During the 12 months leading up to the end of January of this year, according to Nielson, sales, measured in value, of bottle water in the U.S. market fell by 4.1%. In volume terms, sales fell by 1.9%. And, it appears that this is only the beginning. For the four-week period ending January 24, 2009 compared with the same period in 2008,”dollar sales were off by 11.4% and EUV slid by 4.5%”. What is happening is that the bottled water segment, of course, is being hit by the economy. With the economy contracting and unemployment on the rise, bottled water has become a target for cutting back. Does this mean that with a turnaround in the economy we will see the segment returning to past growth rates? Most likely not. We should not forget that the bottle water segment has come under intense criticism by ecology groups because of the use of plastic bottles which have contributed to contamination. As if to drive the point home, Nielson data reports that the sales of water conditioner units and filters grew yoy by 9.1%. This means that a growing number of consumers who are concerned about safe water have home units and will not need by purchase bottled water.

Genetically modified whiskey? Well not exactly whiskey; but Brown-Forman, the spirits manufacture, said that they will use “genetically modified corn for some of [their] whiskey distilling.” Is this a reversal of their 2000 decision to opt “for non-genetically modified corn”? To a certain extent it, obviously, is. What is interesting, though, is what they say is behind the decision. Deciding not to offer a higher priced non-GM beverage, they argue that the supply of non-GM corn in North America has contracted “making it increasingly more difficult to source the quantity of non-GM corn required for [their] bourbons and whiskeys.” When they opted for non-GM corn in 2000. “About 25% of all corn grown in the United States and 46% of all corn grown in Canada was genetically modified”. By 2007 the panorama had radically changed: about 80% of all Corn in the United States, and 84% in Canada, respectively, is genetically modified. This suggests that other companies may also feel that they have no choice but to use GM commodities because of shrinking. To the extent that this takes place, it will make GM foods the norm in a number of markets —even more than they already are.


Supporting the peso: With the peso losing value against the dollar, Banco de Mexico, the central bank, openly announced last year their intervention in the market. In spite of the assurance that the central bank would stand behind the peso, the peso continued to lose ground. Seeing that it was time for “plan B”, the Banco de Mexico announced that they would, over the course of this year, inject US$19 billion into the market. They explicitly spelled out how they would intervene in the market. Over the course of last week the peso strengthened. Was it the market responding to the Bank’s policy? Some analysts think it was more likely a response to the U.S. stock market having its best week since last November.

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