The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
23-27 de Marzo de 2009

The World

Hoping for a windy future: It appears that wind power is becoming less of a fad and more of a trend. Meijer’s, the Midwest U.S. retailer, will be placing six 9-foot turbines on the roof of their Grand Rapids corporate headquarters. The idea is see "how much power they generate and how well the system works." They also plan to put turbines on two of their stores, which are on “the Lake Michigan shoreline, which will mean a steady supply of wind." This is one more effort in their objective of responding to consumer concerns about the environment. In this case their goal is to reduce the carbon footprint. When, looking at what Meijer’s is doing, it should be remembered they were the innovators of the super center concept, which Wal-Mart copied and perfected. Meyer says that the depending on results, they will place turbines on the other stores throughout the Midwest. And, you can be sure that other retailers will be watching closely Meijer’s decisions, to see whether or not wind turbines at the store level are a viable option.

Less meat but better cuts: That is what research is showing in the U.S. And food companies are reacting according by changing their strategic focus. Overall meat consumption fell in that country by 2% in 2008 compared with 2007. The USDA is saying that “beef [consumption was] down about 3%, pork down 2.3% and chicken down 0.6%.” What is happening is that while overall consumption has fallen, the contraction has largely taken place in the institutional market, since “restaurant sales are the first to suffer in tough economic times.” With consumers going out less to eat, they are eating more at home. As a result “supermarket sales of beef, pork and chicken are holding up surprisingly well”, with sales in the last quarter of 2008 of beef up 3%, chicken 9%, and pork 5%, respectively. Of course, it is not only that consumers are eating more at home that is driving supermarket, but also price. High end cuts which are usually in demand by the restaurant trade are selling in supermarkets at interesting discounts to last year’s prices. Choice-grade steaks are going for about 30% less, while chicken breasts are down by 4%. With the retail channel become more import for the meat industry, a shift in strategy is taking place. The beef industry, for example, is putting more resources into promotional efforts aimed at convincing consumers to buy more beef for grilling as the summer season approaches. In the poultry segment, Sanderson, for example, “has cut back production of chicken aimed at [the restaurant segment] and focused on supermarket sales.” Other companies, in other segments have also changed their strategic focus. Hormel, for example, is now looking at product development more oriented to affordability than straight convenience.

Mexico

Fifteen years of patience is not enough: That is what the press and some even some analysts are saying following Mexico’s decision to put duties on 89 products from U.S. in response to the suspension by the U.S. of a program to allow Mexican trucks to operate in that country. It seems that Mexico’s error was to announce the decision just after the World Bank came out with report expressing concern about the “trend toward protectionism”. Mexico’s decision has been characterized as a “tit-for-tat response”. And while it may have been a response, it was rather weak and particularly restrained, especially considering that under the NAFTA in 1994 the U.S. was to have opened its roads to Mexican trucking.