The Agribusiness World Today

Ken Shwedel
Investigador de Agronegocios de Rabobank, México
8-12 de Junio de 2009

The World

More soy, but sustainably produced: First there was the concern that the expansion of the production of palm was impacting negatively on the environment. Then it was soybeans that came “under fire for causing widespread deforestation, displacing indigenous peoples and destroying natural habitats, particularly in South America.” Taking their cue from the palm industry, the soy industry formed the Round Table on Responsible Soy, which brought together “producers, industry and trade representatives and environmental organizations”.

By bringing all the players to the table it becomes easier to work through issues before they become serious problems that will damage the supply chain. At their most recent meeting, they agreed to put in place voluntary standards for producing soybeans for a 12-month test period. The standards “specifically forbid soy cultivation on land cleared of native habitat”. We see this as an important step to keep the industry viable into the future. And if sustainability is not enough to worry about, the biodiesel market just suffered a setback when the Berkeley California City Council stopped receiving biodiesel that used soy-oil as a feedstock. While the soy-diesel contaminates less than petroleum, taking into consideration “the farming involved to produce crop-based biofuels [it] actually increases pollution worldwide”. Berkeley’s not buying doesn’t mean that there will be an excess on the market tomorrow, rather California tends to be a bellwether for energy in the U.S. That bodes badly for the future of soy based biofuels.

Rebranding for shelf space: If it doesn’t sell, the attitude that retailers are taking is that it’s off the shelf. And when the products are on the shelf retailers want “to know that food makers will promote their brands, [because that is what] drives traffic to stores”. Looking to guarantee that their brand portfolio stays on retailers’ shelves ConAgra is moving away from the highly focused individual promotion of their different brands, to more of a corporate brand focus through a rebanding strategy that “overtly advertising its name with the brands it makes.” There is a new logo and a marketing campaign with the tag line “Food You Love”. What this does is give retailers the assurance they need to feel comfortable with the entire ConAgra line of products. Interesting, their efforts at rebranding are also part of the efforts to reposition ConAgra in the mind of investors, reaffirming that the company has shifted its business model from a commodities focus to a branded food products company.

Mexico

Surviving the auto bankruptcies: With the decision of last week of GM, the U.S. automaker, to declare bankruptcy the question arises about the future of the auto industry in Mexico. And this is import for the country’s economy since last year exports of motor vehicles alone, i.e. not including auto parts, etc., generated more than US$26 billion in earnings. The feeling is that the outlook remains positive and could actually strengthen Mexico’s position since the plants here are newer, more efficient with a more disciplined workforce. In conversations with Mexican government officials carmakers have said that they plan to stay and produce in the country. The plants in Mexico have been highly profitable for the U.S. industry and are a crucial part of their strategy. And that’s not only the case for U.S. automakers. Both VW and Nissan are said to be planning on increasing their investment in Mexico.