The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
13-17 de Abril de 2009

The World

A hungry world getting hungrier. That is what a recent report prepared for the upcoming meeting of G8 agricultural ministers is saying. It seems that with the recent fall in agricultural prices combined with the global financial prices many policy markers feel that the food crisis is over, or at least have stopped worrying about food. The report, however, is urging countries to take action now, saying that rather than being over, the world is facing the danger of a “permanent food crisis”. There are calculations that the chronically hungry in the world are now over one billion and the number could grow. This, the report, implies will lead to international instability. Yes, prices have fallen from their highs last year, but they are above the levels at the beginning of the decade and the outlook is for prices to remain above the pre 2006/07 levels. In fact, among analysts the general view is that “worst is yet to come to come as the impact the recession on purchasing power comes more evident and food costs remain high”. What all this means is that agriculture will face extreme challenges in the future: “global food production to double by 2050 to feed on a surging population”, while having to overcome the double obstacle of climate change and high input costs.

Looking to the four P’s to wake up a sleeping brand. When Healthy Choice was first introduced twenty years ago it was considered as an innovative product offering “healthier choices than offered by traditional packaged foods.” That was then; now consumers have more choices and Healthy Choice seems to be lost in the crowd. ConAgra Foods’ strategy is to “reintroduce to consumers” the brand through product, price, packaging and promotion. With regards to the product itself, they plan to come out with “a new line of all-natural frozen entrees”. They have come up with names such as “pumpkin squash ravioli and portabella marsala pasta” which they hope will be both catchy and send a message to consumers at the same time. The new products will have a suggested price of between US$2.00 and US$2.40. This “may help…in fending off a price cutting effort by Lean Cuisine”, their main competitor in the nationally branded segment, as well as favorably positioning the new products vis a vis store brands. They have redesigned the packaging with a new brand symbol “an exclamation point, meant to signal ‘surprisingly great taste’”. All this will be supported by a promotional campaign which is said to cost between US$90-US$100 million. Technically, the strategy is a text book case for success, the challenge will be to pull it all together.

Mexico

Eating a lot, but not necessarily eating well. That is what can be concluded from the National Nutrition Survey. Because the survey refers to results from last year’s consumption levels, there may be some changes in the absolute quantities. Nevertheless, we believe that the general conclusion is still valid: the Mexican diet is heavy in sugars and starches, which, in turn, contribute to growing obesity and health problems. The survey indicates that the average annual diet includes 50 kilos of sugar, 3,650 tortillas, 400 bottles of soda pop, and 730 bottles of beer. Regarding vegetables, they are 25th in the order of preferences for the average Mexican. And if all this wasn’t enough to convenience you that consumption habits in the country are not the best, the survey also indicates that the average Mexican smokes 365 cigarettes a year.