The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
30 de Marzo a 3 de Abril de 2009

The World

It’s a wrap. That is what McDonald is saying now that it is test marketing “a downsized version of [their] signature Big Mac served in a warm flour tortilla instead of a sesame bun.” What we are seeing here is a company that is willing to innovate. Of course innovation can be a double edged sword: you could innovate yourself right out of business, but again there are times when innovation is needed to keep the business relevant. McDonald's has done this in the past, and most recently with salads and healthier meal options. What they are doing here is building on this to respond to the growing trend towards wraps, which are seen by some segments of consumers as a healthier, and less fattening, option. The company already markets a wrap "made with fried on grilled chicken”. Recently, though, "mini-burgers have become a popular menu addition at fast food chains". With the mini-burger wrap they are putting the company’s core product "into a portable, convenient sized entrée.” Right now the product is being test-marketed in Canada and the U.S. city of Houston. In regards to the company’s performance, so far in the present economic recession McDonald’s has done well, being one of the “restaurant industry’s strongest performers.” But by adding mini-burger wraps to their menu alternatives they are saying that they want to grow not just by being an inexpensive alternative in hard economic times, but by creating demand for a new product that will keep consumers coming to their fast food outlets.

That’s a farm. In the United States the Department of Agriculture released just a short while back their 2007 Census of Agriculture. The results shed an interesting light on what farming looks like in the U.S. To begin with, the USDA considers a farm to be “any place from which US$1,000 of agricultural products were produced and sold, or normally would have been sold during the census year”. Under that definition there are 2.2 million farms in the U.S. with an average size of 169.2 hectares. What is interesting is that the number of farms is up 4% from the 2002 Census. Farmers, though, are getting older, with the average age now 57, two years older than was the case in the 2002 Census. But they are also becoming more cyber oriented: in 2002 only 7% of the farmers had internet access. By the time of the 2007 Census 57% of the farms were wired for the internet. The concept of a family farm still predominates with 86.5% of the farms being individually or family owned. However, only 62% of the farmland owned by the operator. While there are a large numbers of farmers, a small number of farms “(5.7% of total farms) produce 75% of the agricultural products in the U.S.”.

Mexico

Financing agriculture. Looking to expand financing to Mexico’s farmers, the Secretary of Agriculture (SAGARPA) announced that it would transfer additional funds to the government’s two development financial institutions focusing on agriculture (FIRA and Financiera Rural). An important element of the government’s efforts to stimulate rural lending is the creation of a risk management fund (FONAGA) which will work as a loan guarantee program for low and mid-level income farmers. FONAGA will allow financial intermediaries to cover risks for loans for working capital as well as for long term capital investment. Coverage limits are set for individual farmers, but farmers can group themselves together for a project, which will greater risk coverage for project finance.