WorldWatch:

[Mustang Sally Farm]

Wednesday, April 25, 2012
Pork Commentary: USDA Livestock & Poultry
GLOBAL - Last week the USDA released its projected expectations for the world’s production of beef, pork, and poultry, exports and US market share, writes Jim Long.

Jim Long is President &
CEO of Genesus Genetics. 1,000 Metric Tons
Production 2007 2011 2012 Per Cent Change 2011 to 2012
Beef & veal 58,438 56,888 57,001 0.2%
Pork 94,103 101,662 104,357 2.7%
Broiler & turkey 74,646 85,732 87,497 2.1%
Total 227,187 244,282 248,855 1.9%


Observations:
Global pork production has increased 10,000 (1,000 metric tons) or 10 per cent since 2007. Global pork production in 2012 is about 42 per cent of total livestock and poultry output. This is a slightly higher percentage of total market shares while increasing production. This is a real sign of a strong industry and growing demand.


Beef has lost not only global market share but also a decline in output; since 2007 to 2012 a decline of 1.4 (1,000 metric tons). Beef global market share was 25.7 per cent in 2007 and 2012 22.9 per cent, losing production and market share is not a very positive scenario for the global beef industry.


Since 2007 the world’s total livestock and poultry production has increased almost 20,000(1,000 metric tons) or over 8 per cent. This is not exactly a sign of a giant swing to vegetarianism - more poultry and more pork than ever eaten, as the world population and disposable income increase so does pork and poultry consumption. We have huge opportunities. It’s great to be in the pork industry that has a proven opportunity to grow which you can’t say the same for beef!
Global Exports (1000 metric tons)
  2007 2011 2012 Per Cent Change 2011 to 2012
Beef & veal 7679 8155 8728 7.0%
Pork 5186 6982 6985 0.0%
Broiler & turkey 7952 9978 10242 2.9%
Total 20817 25115 25955 2.1%

World exports have increased 20 per cent since 2007; this is a real sign of global interdependence for food. Approximately 10 per cent of total production is expected to be exported n 2012.

The USDA is projecting US pork exports in 2012 will be 2404(1000 metric tons) the highest level ever (2007: 1425). This is up 65 per cent plus from 2007. The US projects in 2012 that the US market share ( per cent) of pork exports among major pork trading countries to be 34 per cent (up from 27 per cent in 2007). The US is the global major pork exporter – it’s a big dog!!

The US advantages include a national swine health that meets or exceeds standards of importing nations, price competitive volumes of pork that allows for major supply availability, a packer industry well capitalized, efficient large plants with an aggressive competitive ownership group. You don’t want to do battle with the shareholders and management of Smithfield Foods, Tyson, Swift, Hormel, Seaboard, Mitsubishi, etc... Couple this with a battle hardened group of technically advanced swine producers. It’s a formidable competitive group and the major reason the US dominates global pork exports.

The flip side of US global pork export dominance is the US industries vulnerability to global trade issues, health risk (remember swine flu) we can never forget Larry Pope CEO of Smithfield Foods (world’s largest hog and pork producer) saying ‘five – six years ago (we paraphrase) US pork exports are an opiate for the US swine industry.’ True then, and even more now without exports a train wreck.

Major Pork Importers
The USDA projects major pork importers to be Russia 900,000 tons, China 650,000 tons, South Korea 550,000 tons, and Japan 1.3 million tons.

Markets
Global pork demand is increasing the US has a major market share in global pork trade. All sounds good, unfortunately the cash hog market and lean hog futures are not reflecting a profitable now or near future. $6.00 a bushel for corn and hog prices in mid to high 80s means next to no profit for producers buying their feed. While those producing and feeding their own hogs are cash flowing just fine.

Maybe we are like the boy who sees the manure pile and believes there must be a pony there but we can’t help it. We still firmly believe that as the seasonal supply of hogs decline over the next few weeks coupled with continued strong pork exports and less domestic chicken and beef. Cash hog prices are going to have a major surge.


Author: Jim Long, President & CEO, Genesus Genetics 

[Mustang Sally Farm]

Monday, April 30, 2012
Food Security Project Enhances Pig Industries
PAPUA NEW GUINEA - The South Australian Research and Development Institute (SARDI) is helping to provide security of food production through its participation in Australian Centre for International Agricultural Research (ACIAR) food security projects in Papua New Guinea.


SARDI is the lead organisation facilitating the adoption of mini feed mills in the monogastric (single stomach) livestock industry in Papua New Guinea to improve smallholder and semi commercial enterprise profitability.

The four year ACIAR project, currently in its first year, involves a diverse collaborative group. Australian partners include SARDI, Primary Industries Industry and Investment NSW, value chain, nutrition and economic consultants. The PNG partners include the Highlands Aquaculture Development Centre, National Agriculture Research Institute, National Fisheries Authority, PNG University of Technology, Christian Leaders Training College, Ok Tedi Development Foundation and Lutheran Development Service.

SARDI Senior Research Scientist Dr Phil Glatz said options included feeding systems for pigs and poultry and information for the intensive commercial industry on suitable higher fibre and lower energy diets that ameliorate the effects of conventional diets.

“Development of user briefs for small scale feed mills will allow the niche pig and poultry sector and game bird industry the option of investing in their own feed manufacturing and produced diets that are cheaper than commercial diets,” Dr Glatz said.

The project is planned to result in a 25% increase in profitability of the monogastric sector in PNG and increase production by 5% per annum, equating to $A47 million per annum.

Dr Glatz said smallholder and semi-commercial aquaculture, pig and poultry farming was making an important contribution to the livelihoods of rural households in PNG.

“Currently the monogastric sector in PNG has a market value of $A190.5 million per annum comprising about 600 000 small farmers,” Dr Glatz said.

[Mustang Sally Farm]

Thursday, May 03, 2012
Brasil Foods Sees Strong Domestic Sales Growth
BRAZIL - Brasil Foods (BRF) has announced its first quarter results, which include a 5.3 per cent increase in revenue and net income of 153 million reals (BRR). While some key export markets were challenging, domestic sales were up 11 per cent.


The Company has now been assigned an investment grade rating by all three leading rating agencies.

BRF ended the first quarter 2012 reporting net sales of BRR6.3 billion, a year–on–year increase of 5.3 per cent.

Quarterly gross profits were BRR1.3 billion, a decline of 13 per cent, primarily reflecting the challenges of the overseas market which saw a significant decline in prices. Net income in the quarter was BRR153.2 million while EBITDA reached BRR532 million, corresponding to a margin of 8.4 per cent, compared with BRR816 million in the preceding year, same quarter, and a margin of 13.6 per cent.

The Company’s results reflected the challenging scenario in the export market, as had already been observed in the fourth quarter of 2011. Some key markets such as Japan and the Middle East continued to suffer from a process of adjustment and running down of levels of inventory and merchandise flows. Export revenues in the quarter were BRR2.4 billion, practically unchanged as compared with the same quarter last year.

Conversely, the Company reported a good performance in sales to the domestic/retail market amounting to BRR3 billion, a growth of 11 per cent, in spite of below–forecast consumption in the Brazilian retail sector overall.

Similarly, the food service segment reported a good performance posting an increase in net sales of 10.4 per cent. During the period, the Company launched 11 products between ‘in natura’ and processed lines for the major global networks, a savoury snacks platform, a grill line and rotisserie products.

The Company also achieved an investment grade risk rating classification from all three principal world rating agencies. In their assessment, the agencies emphasized competitive advantages such as brand, distribution, corporate governance and financial soundness, among others. Between the months of March and April, Standard & Poor’s and Moody’s assigned an investment grade rating to the Company while Fitch Ratings reiterated its rating first issued a year ago.

[Mustang Sally Farm]

Monday, May 07, 2012
Food Prices Ease But Stay High
GLOBAL - Global food prices measured by the FAO Food Price Index fell three points or 1.4 percent from March to April 2012 but seem to have stabilized at a relatively high level of 214 points, FAO said last week.


The fall was the first after three consecutive months of increases and although the index is significantly down from its record level of 235 points in April 2011, it is still well above the figures of under 200 which preceded the 2008 food crisis.

The index was published in the latest FAO Food Outlook, a global market analysis which comes out twice a year. It noted that the prospects for the second half of this year and into the next indicate generally improved supplies and continuing strong demand.

Consequently the global food import bill in 2012 could decline to $1.24 trillion, down slightly from last year’s record of $1.29 trillion Food Outlook said.

Record cereals production
The forecast for cereals production was for a modest expansion in 2012 to a new record of 2,371 million tonnes compared to 2 344 million tonnes in 2011.

However, within the cereals sector, wheat production in 2012 is anticipated to fall by 3.6 per cent compared to 2011, to 675 million tonnes, with the largest declines forecast for Ukraine, followed by Kazakhstan, China, Morocco and the EU. The expected decrease coincides with prospects of a slight reduction in total wheat utilization in the 2012/13 marketing season.

Lower wheat output is offset by a record coarse grains production of 1,207 million tonnes anticipated in 2012, compared to 1,164 million tonnes in 2011 – itself a record year. But the increase, expected to follow a sharp rise in plantings in the United States, is unlikely to be sufficient to ease current market tightness because of the very low level of opening stocks, with consequent, continuing pressure on prices.

Rice production is expected to grow 1.7 per cent in 2012 to 488 million tonnes, but slackening import demand and the return of India as a major exporter are keeping prices down. World rice production this year is expected to exceed demand for the eighth consecutive year.

Oilseeds not meeting growing demand
After two seasons of relatively ample supplies, in 2011/12 the market for oilseeds and derived products is set to tighten again. Global oilcrop production will not be sufficient to satisfy growing demand for oils and meals. Global soybean production is estimated to decrease by almost 10 per cent, one of the steepest year-on-year falls on record. With oilcrops other than soybeans only partly compensating for the shortfall, total oilcrop production should drop to a three-year low, down 4 per cent from last season. International prices for oilcrops and derived products, which have risen sharply since January, are therefore likely to stay firm.

World sugar output in 2011/12 is set to increase by close to 8 million tonnes, or 4.6 per cent over 2010/11, reaching nearly 173 million tonnes. For the second consecutive year, production is anticipated to surpass consumption, with a surplus expected of some 5.4 million tonnes helping to rebuild relatively low stock levels.

The growth in sugar output is attributed to significant expansion in area and input use, prompted by strong international sugar prices and better weather. A fall in production in Brazil, the world’s largest producer, is expected to be offset by increased production in other major producing countries, including Thailand and India.

Expansion seen for meat, dairy and fish
Driven exclusively by gains in poultry and pigmeat production, global meat output is set to expand by nearly 2 per cent to 302 million tonnes in 2012. Most of the sector growth is likely to originate in developing countries. An ongoing struggle for markets is expected to intensify in 2012 as increased production in key importing countries slows down global meat trade expansion. This, combined with limited supplies in developed exporting countries, is shifting international market shares towards developing countries, in particular Brazil and India.

World milk production in 2012 is forecast to grow by 2.7 per cent to 750 million tonnes. Asia is expected to account for most of the increase, but higher output is anticipated in most regions. World trade in dairy products is expected to continue expanding in 2012. Demand remains firm, with imports anticipated to reach 52.7 million tonnes of milk equivalent. Asia will continue to be the main market, followed by North Africa, the Middle East, and Latin America and the Caribbean.

Sustained demand for fish and fishery products is boosting aquaculture production worldwide and pushing prices higher, despite some consumer resistance in the more traditional markets in southern Europe. Overall production for the year is expected to grow by 2.1 per cent to 157.3 million tonnes, thanks to a 5.8 per cent increase in aquaculture output that more than offset a small decline in capture fisheries following limitations on catches of small pelagic species in the Pacific.

[Mustang Sally Farm]

Food Outlook – Meat and Meat Products
Global meat markets in 2012 are expected to see a recovery of supplies in traditionally importing countries and strong competition for markets, according to the latest Food Outlook report from FAO. Near record prices are constraining consumption growth.

Meat Prices Hover at Near–Record Levels
Global meat markets are likely to face heightened trade competition in 2012, at the same time that recovering meat production in Asia is set to dampen growth in global import demand. Overall, meat trade is expected to expand by two per cent, to 29.2 million tonnes, much of which is anticipated to be taken up by developing country exporters, which could increase their share of the global trade to 44 per cent.

Disease outbreaks in 2011, drought–reduced cattle inventories and high feed costs sustained international meat prices to near record levels in the first quarter of 2012. In April, the FAO meat price index edged up to 182 points, surpassing the record 181 points registered in November 2011.



Variable feed prices influence pork and poultry price movements



World meat market at a glance
Indications of slowing import demand, especially for pig and poultry meats, portents a potential moderation of meat prices in the coming months, which, along with high feed costs, is raising concern about the profitability of the meat sector in 2012.



Beef prices strong while easing feed prices translate into lower pig meat and poultry prices
Pig Meat
As disease concerns in Asia abate, the pig meat sector is poised for a quick recovery
After last year’s drop, global pig meat production is expected to rebound by 2.6 per cent in 2012 to 111.7 million tonnes, underpinned by gains in Asia due to reduced incidence of disease. In the region, policy support, growing investments and favourable market returns, particularly in China, are behind an anticipated four per cent expansion in the region’s output to 62.8 million tonnes. The sector may also recover in Japan, following a rebuilding of sow inventories and a return to normal piglet births in provinces affected by the nuclear fallout in 2011. Investments in breeding and feed industries in Viet Nam will support output growth, while a rebuilding of FMD-depleted inventories in the Republic of Korea is stimulating a 20 per cent production recovery.

In South America, high beef prices are indirectly supporting the expansion of the pig meat sector in Brazil, Chile and Colombia while, in Argentina, sporadic restrictions on pig meat imports from Brazil are creating incentives for investment. The recognition of Mexico as free of classical swine fever has opened new market access opportunities which, combined with investment in new breeding lines, supports an increase of the country’s production and exports in 2012.

Anticipation of new EU environmental regulations that will become effective in 2013 has catalysed a restructuring and concentration of hog operations that may translate into fewer pigs and lower production in 2012.

Despite tight margins, a shift by consumers in North America from beef to lower priced meat products is expected to strengthen demand and translate into higher production. Investment–driven gains in the Russian Federation are foreseen to boost production by five per cent despite persistent occurrences of African swine fever.

Pig meat trade may decline in 2012 as Asian import demand falters
After witnessing double-digit increases in Asian import demand in 2011 due to its disease-reduced output, improved production in the region is forecast to result in global pig meat trade falling to 7.0 million tonnes in 2012.

Reduced purchases by China, the Republic of Korea and Japan, amid large supplies, underlie this expected contraction. This is despite the expected ratification by the Russian Federation of the WTO accession treaty later this year and the signing of a free trade agreement between the Republic of Korea and the United States. It is clear that the Russian Federation will only ease restrictions on pig meat imports when it officially joins the WTO in mid-2012. Until then, imports by the country will be negatively affected by a reduction of its tariff-rate import quota from 470,000 tonnes in 2011 to 400,000 tonnes this year, which may result in smaller pig meat purchases.

By contrast, imports by Chile, Colombia, Mexico and Uruguay look set to increase, while Argentina’s “off-and-on” restrictions on imports of Brazilian product may lower deliveries to the country.

Declining trade prospects in 2012 set the stage for considerable competition among the major exporters – the United States, the EU, Canada and Brazil – which together account for nearly 90 per cent of global trade. Lingering Russian restrictions on imports of Brazilian products may contribute to lower exports from Brazil in 2012, while benefiting smaller international suppliers, such as Chile and Mexico, but also the United States and Canada.

[Mustang Sally Farm]

Friday, May 11, 2012
Slight Drop in Chinese Farm Produce Prices
CHINA - The prices of major farm produce monitored by MOFCOM saw a slight drop last week (30 April - 6 May) and that of materials for production fell in three consecutive weeks.


The retail price of egg dropped 0.5 per cent over the previous week, 9.3 per cent percentage lower than that of the beginning of this year. The retail prices of egg in Beijing, Xiamen and Tianjin saw a decrease of 15.1 per cent, 14.4 per cent and 14.4 per cent than that of the beginning of this year.

The wholesale prices of meat fell, of which pork continued to fell, 0.8 per cent lower than that of the previous week, and 14.7 per cent lower than that of the end of January.

The price of pork was 18 yuan per kilo in Beijing, Shanghai and Chongqing, 24.1 per cent, 23 per cent and 19.9 per cent lower than that of the end of January. The prices of chicken dropped 0.1 per cent while that of beef and mutton rose 0.3 per cent and 0.1 per cent respectively.

The prices of grains and oil maintained a steady growth, of which peanut oil, soybean oil, wheat flour and rapeseed oil rose 0.3 per cent, 0.3 per cent, 0.2 per cent and 0.1 per cent respectively, while that of rice remained unchanged.

The wholesale prices of eight aquatic productions rose 0.9 per cent over the previous week, with an accumulative increase of 2 per cent in three weeks, of which carp, grass carp and silver carp rose 2.4 per cent, 2.3 per cent and 1.1 per cent over the previous week.

[Mustang Sally Farm]

Brazil: Bread–basket of the World
17 May 2012

 

BRAZIL - For decades it has been predicted that Brazil would become the breadbasket of the world, writes Martin Riordan, Sales and Service at Genesus Brazil.
 
The Creator was generous when he made Brazil: a vast land area (slightly less than Canada and the USA), climates rangeing from tropical in the north to temperate in the south, total absence of natural disasters, such as volcanoes, earthquakes and tsunamis. Brazil has everything to be one of the best countries in the world for its inhabitants.
 
A well-worn joke in Brazil explains that, when St. Peter questioned God’s generosity with Brazil, He replied: “But wait till you see the people I am going to put there!”
 
Over the last five decades, agricultural production in Brazil has exploded. This is partly due to an increase in the area planted, as dynamic farmers from the south of the country migrated north into states with vast, unexploited agricultural resources. Thirty years ago, this migration opened up the Center West region of the country and more recently it is doing the same for the North East.
 
Even more important has been the increase in productivity. Modern Brazilian farmers are innovative and progressive, and rapidly adopt new technologies which increase productivity. They have been aided in this quest by Embrapa, a federal government agricultural research organization that has played a vital role in adapting crops to different climatic conditions, thus extending the geographical area where crops can be produced.
 
Looking at the two principal ingredients for producing pigs, with data taken from Wikipedia, we can see the following changes from 1960 to 2005:
 •Corn production increased from 8.67 million metric tons (mmt) to 35.13 mmt, an astounding increase of 305 per cent.
 •Soybean production grew from almost nothing (0.20 mmt) to 51.18 mmt.
 
This would lead one to the conclusion that Brazil is the ideal country for large-scale, low-cost production of pork. It has all the ingredients: land area, grain production and a kind climate.
 
So why does Brazil not dominate the world market for pork products, as it has with chicken and beef since 2004?
 
For a long time, pork exports were almost zero. This changed from around the year 2000, when exports started growing rapidly. By 2003, Brazil was exporting over 600,000 metric tons (mt) and exports peaked in 2005 at 761,000 mt. Since then, exports have stagnated, and by 2011 fell to 582,000 mt. This contrasts with exports of beef and especially chicken, which have been growing much more constantly as shown by this somewhat outdated USDA chart:
 




Genesus Global Market Report
Prices for the week of April 29, 2012



Country

Domestic price
(own currency)

US dollars
(Liveweight a lb)
 


USA (Iowa-Minnesota)

77.06¢ USD/lb carcass

57.02¢
 


Canada (Ontario)

1.43¢ CAD/kg carcass

52.01¢
 


Mexico (DF)

18.08 MXN/kg liveweight

59.61¢
 


Brazil (South Region)

2.02 BRL/kg liveweight

45.82¢
 


Russia

95 RUB/kg liveweight

$1.40
 


China

13.46 RMB/kg liveweight

96.18¢
 


Spain

1.29 EUR/kg liveweight

74.77¢
 

What is the problem? Here are some answers:

Trade barriers: many importing countries impose political barriers to imports, in order to protect domestic producers. These require political negotiation, and the Brazilian government has not demonstrated competence in this area. Many times exports to Russia, historically the most important importer of pork products, have been cut overnight, leading to slumps in exports. The current battle is with Argentina, Brazil’s commercial partner in Mercosur, which imposed a ban on pork imports.
 
Animal health: Brazil has animal health problems, and government agencies have been slow to address the problem. However, there is progress. Santa Catarina is now a state free of foot and mouth disease without vaccination. But many world markets, such as Japan, which demand that the whole country be free of F&M, are still beyond the pale for Brazilian exporters.
 
It is unlikely that either of these factors will change much in the short term. Brazil’s international competitors have little reason to worry.
 
The domestic situation for pig producers continues in dire straits. Soya meal prices are very high, over US$500 per metric tonne. Corn prices have dropped some 10-15 per cent with harvests coming in, and are around US$5.70 per bushel. But the price of live market hogs has remained low, well below cost, and more and more independent producers are being obliged to cease production, unable to sustain the debt load generated over the last 3-4 years.
 

[Mustang Sally Farm]

Urgent Action Required on Falling Food Productivity
21 May 2012


US - In advance of the G8 summit, Elanco president Jeff Simmons warns global leaders that food productivity is not keeping pace with food demand now and in the immediate future.

Food inflation combined with inadequate gains in productivity are clear indicators that our ability to feed a rapidly growing population is at serious risk without swift action.
 
During a panel discussion with senior global leaders at the Chicago Council on Global Affairs Symposium "Advancing Food and Nutrition Security at the G8 Summit" in Washington, Mr Simmons urged leaders to take action now to address the challenge of developing more efficient food production systems and pressed for policy alternatives that provide long-term, sustainable solutions to hunger, food inflation and food availability.
 
"Currently, nearly 1 billion people cannot afford 1,880 calories a day and almost 3 billion live on less than $2 a day. These observations show that the time is now to make decisions that support the world's growing food needs," said Mr Simmons. "We're already facing significant challenges to our food system. They must be addressed today."
 
According to the 2011 World Livestock Report issued by the UN Food and Agriculture Organization (FAO), by the end of the decade, the world will need to produce 20 per cent more meat and poultry than we do today – with two-thirds of the need coming from developing countries. By 2050, demand is expected to grow by about 75 per cent. Simmons used new predictions for eggs and dairy to illustrate the impact such demands could have on our food system.
 
Egg Productivity Declining
 
Challenge: Eggs are one of the most basic, affordable protein sources that people around the world depend upon. But, in recent years, production has been declining by one egg per chicken per year. If continued, this trend will require three times more hens (17.7 billion) to deliver the estimated egg needs required by families in 2050.
 
Solution: Adopting new and existing technologies and practices that optimize animal welfare, health, and productivity can restore productivity to necessary growth levels – helping hens produce a modest 1.5 eggs more per year. Such a change in productivity would require just 10.4 billion hens to meet egg demand in 2050 – or approximately 7 billion fewer birds.
 
Per capita milk availability is declining despite 2X production growth
 
Challenge: Global milk production has almost doubled in the past 50 years. Yet, fewer people have access to milk today because populations are growing faster than production gains. In 1950, each person had access to 279g of milk per day. By 2010, milk per capita had dropped 14 per cent to 239g per day.
 
Solutions: The adoption of existing and emerging innovation to dairy production can help accelerate milk productivity to align population and demand growth. For example, China is targeting a near doubling of per capita milk availability to 156g per person per day by the end of the decade. Without significant improvements in productivity this will require 15 million additional cows, and a doubling of the feed and water resources currently used.
 
"Given the right policy environment and access to appropriate technologies, I believe global agriculture can meet these productivity challenges," Mr Simmons said. "If you take the United States for example, in the past 60 years agricultural output has increased 250 per cent while inputs have remained nearly stable."
 
Making Progress a Priority

Mr Simmons urged leaders to take action now and emphasized three clear priorities for overcoming barriers in inspiring progress and enabling people's access to safe, affordable food today:
1.Innovation: It is important to invest in innovative technologies that drive efficient food productivity to meet the growing needs of a rapidly expanding population. Innovation must start with consistent, science-based regulatory processes and public and private support is needed to assure that innovation has the ability to enter the market.


2.Choice: Every country, family and mother deserves the right to make their own choices about the food they feed their families and not live by the choices of others – particularly when those choices impact their children's food. Whether it's a Chinese citizen that wants to add more dairy to the diet as they grow in affluence, or the American consumer that prefers a luxury option, we must not make decisions that limit access to safe protein that meets consumers' needs.


3.Food Trade: As the demand for meat, milk and eggs grows, the challenge is recognizing the impact a global market has on developing counties. Barriers to trade impact availability, inflation, and the price of food. Leaders should consider the global impact of policies outside their borders.

The panel, "Agricultural Innovation: Getting to Scale" also included, Jack Sinclair, Walmart; Hugh Grant, Monsanto; Sam Dryden, Bill & Melinda Gates Foundation; Dyborn Chibonga, National Association of Smallholder Farmers of Malawi; and Janet Chigabatia, Savanna Farmers Market Company.
 
To join the dialogue about how to sustainably feed a growing global population, click here. A copy of Jeff Simmons' white paper, Making Safe, Affordable, Abundant Food a Global Reality is also available on the site.
 

[Mustang Sally Farm]

24 May 2012
Agricultural Price Indices - March 2012
The agricultural output price index was down 0.5% in March 2012.

 


The agricultural output price index decreased by 0.5% in March 2012 compared with February 2012. The agricultural input price index increased by 0.7% over the same period. Thus, the resulting terms of trade index decreased by 1.2% in March 2012. See Tables 1a, 2a and graph. [For tables, please download the document]
 




The seasonally adjusted output price index in March 2012 was 0.8% higher than in February 2012. See Table 3. [For Table 3, please download the document]
 
On an annual comparison, the agricultural output price index in March 2012 was 11.0% higher than in March 2011. The agricultural input price index was up 1.2% in March 2012 compared with March 2011.
 
A further comparison of the March 2012 sub-indices with March 2011 shows that:
•Cattle, poultry and pig prices increased by 23.1%, 20.5% and 7.5% respectively, while potatoes (incl. seeds) decreased by 19.5%. See Tables 1a and 1b.
 •Seeds, energy, and fertiliser prices increased by 7.7%, 7.6% and 3.1% respectively, while feeding stuffs decreased by 0.6%. See Tables 2a and 2b.
 
Annual EU output and input price index changes (base year 2005 = 100) for selected items are shown at the back of this release.

[Mustang Sally Farm]

Brazil Feed Forecast Up 2.8 Per Cent in 2012
29 May 2012


BRAZIL - Brazilian feed production is projected to grow 2.8 per cent in 2012 compared to the previous year, with production of 66.2 million MT of feed and 2.58 million MT of mineral supplements, according to the Brazilian Feed Industry Association (Sindirações).

In 2011, the sector saw growth of 5.2 per cent as well as turnover of $25 billion in feedstuffs and additives while producing 64.5 million MT of feed and 2.35 million MT of mineral supplements.

 "The modest increase expected along 2012 will be gauged by livestock producers' performance that have suffered a lot because of higher costs of agricultural commodities and low domestics prices as well as exports slowdown for chicken, pork and beef," explains Ariovaldo Zani, CEO of Sindirações.
 
According to Mr Zani, the Brazilian livestock production chain has seen successful cycles of expansion, thanks to the continuous mobilization of technology and fostered by the global voluptuous appetite for animal protein. It already represents 6.5 per cent of GDP, has generated millions of jobs and is responsible for 18 per cent of the overall agribusiness exports.
 
Swine Feed
 
The amount of pork exported in 2011 dropped more than 4 per cent due to local currency overvaluation during the first half and because of trade embargoes imposed by usual customers. The domestic market absorbed more than 180,000 tons of pork and per capita consumption exceed 15 kg.

The increase in production cost pulled by higher feedstuff prices set a fast pace in the slaughter of breeders and particularly lighter animals. These factors pushed the swine live price and discouraged increasing the herd.

Following the stability trend, the feed industry produced 15.4 million MT in 2011, and it has projected to deliver the same amount in 2012, although the increased shipments to China and recent open markets in Japan and South Korea are expected to move pork production higher.

[Mustang Sally Farm]

Chinese Farm Produce Prices Down Last Week
07 June 2012


CHINA - China's farm produce prices generally maintained a downward trend last week, as data from the Ministry of Commerce (MOC) showed that prices dropped during the week of 28 May - 3 June from the previous week, marking the fifth week of decline.

The MOC data released Wednesday showed that 18 kinds of major vegetables saw a 7.5-per cent drop in wholesale prices from the previous week as supplies increased.
 
According to the data, the price of pork also fell 0.9 per cent while prices of beef and mutton rose 0.5 per cent and 0.3 per cent, respectively. The price of chicken edged up 0.1 per cent.
 
Prices of staple foods, including rice and flour, remained unchanged, while the prices of different kinds of cooking oils saw moderate increases. Eight kinds of sea products saw an average price rise of 0.3 per cent, data showed.
 
Prices of eggs and garlic saw significant increases.

The report said egg prices ended the downshifting trend seen since the start of the year, rising 2.6 per cent last week. The cities of Beijing and Wuhan saw egg prices surge 11.4 per cent and 10.2 per cent, respectively.
 
The recent price surges on eggs and garlic have reignited concerns of inflation, even though analysts expect it to further moderate in May. Data show that the nation's consumer price index, the main gauge of inflation, eased to 3.4 per cent in April from 3.6 per cent in March.
 
An official with the National Development and Reform Commission also said Tuesday the price increases of eggs and garlic were "a reasonable recovery" from low bases.
 

[Mustang Sally Farm]

Friday, June 08, 2012
FAO Food Price Index Drops Sharply
GLOBAL - Global food prices have dropped sharply in May due to generally favourable supplies, growing global economic uncertainties and a strengthening of the US dollar, FAO said.


According to FAO, the Food Price Index, measuring the monthly change in international prices of a basket of food commodities, fell by four per cent in May. It averaged 204 points and was 9 points down from April. This was the lowest level since September 2011 and about 14 per cent below its peak in February 2011.

"Crop prices have come down sharply from their peak level but they remain still high and vulnerable due to risks related to weather conditions in the critical growing months ahead," said FAO's grain analyst Abdolreza Abbassian.

FAO at the same time raised the forecast for world cereal production by 48.5 million tonnes since May, mainly on the expectation of a bumper maize crop in the United States.

FAO's latest forecast for world cereal production in 2012 stands at a record level of 2 419 million tonnes, 3.2 per cent up from the 2011 record.

The bulk of the increase is expected to originate mainly from maize in the United States amid an early start of the planting season and prevailing favourable growing conditions. As a result, the global coarse grain production is forecast at 1,248 million tonnes, a huge 85 million tonnes increase from the previous year.

However, with planting still to be completed and much of the crop at very early stages of development, the final outcome will depend greatly on weather conditions in the coming months.

With the main northern hemisphere rice crops now in the ground in several countries, the forecast of global rice production in 2012 is firmer and points to a 2.2 per cent increase from 2011, to some 490 million tonnes, mostly reflecting larger plantings in Asia.

For wheat, latest indications point to a contraction of about 3 per cent in production in 2012, to 680 million tonnes, still well above the average of the past five years.

The global cereal utilization is forecast to expand by at least 2 per cent in 2012/13, to 2 376 million tonnes, with feed utilization growing by 3.8 per cent, while food consumption is expected to increase by just over 1 per cent, largely keeping pace with world population growth.

At the current forecast level, world cereal production would exceed the anticipated utilization in 2012/13 (which has been revised up since last month by 19 million tonnes or 1 per cent) and lead to a significant replenishment of world cereal stocks, up 36 million tonnes, or 7 per cent, from the previous season.

[Mustang Sally Farm]

Global Protein Market in State of Structural Change
12 June 2012



 
FRANCE - The world is no longer one of structural surpluses, it is a world of structural scarcity David Nelson, a global strategist with Rabobank's Food and Agribusiness Research and Advisory Group told the World Meat Congress in Paris last week, writes Chris Harris.
 
He said the basics of the world agricultural market have remained the same with populations rising and land use falling.
 
However, crop prices are also rising and the high grain prices are being driven by higher gross domestic product growth, largely in developing countries.
 
This growth in GDP is driving the demand for meat and hence the demand for grain, Mr Nelson told the congress.
 
He said that in the developed world meat consumption in going down, but the demand growth is coming from the developing markets while the developed markets are flat.
 
This is the scenario that he said analysts forecast will continue for the next 10 years.
 
He said that while world GDP growth was on an upward swing two years ago, this growth is now on the decline.
 
In 2010 world GDP growth was 4.05 per cent. Last year it was 2.87 per cent and this year it is expected to fall to 2.26 per cent although, rise again in 2013 to 2.89 per cent.
 
By contrast, China that has seen the most dramatic growth in its GDP over recent years is also facing a slowdown. In 2010, China's GDP growth was 10.4 per cent, but it fell to 9.2 per cent last year and is forecast to go down to 8.3 per cent this year with a slight rise in 2013 to 8.5 per cent.
 
While the global GDP grew, Mr Nelson said, it outpaced the growth in protein prices although they have now stayed quite high.
 
The growth in agricultural industrialisation in China has been the main reason for the growth in protein consumption and also prices. The country has changed from back yard production of livestock feeding scraps to a more industrialised production with larger herds and flocks that call for more grain to be used as feed.
 
However, there have also been other demands placed on the demand for this grain, including the demand from ethanol and biodiesel production.
 
"£The demand growth for protein is rising, but the growth of crop production is declining," said Mr Nelson.
 
"There are structural shortfalls in corn production."
 
Mr Nelson added that he believed the USDA is also overestimating the potential yields for corn which they have set at 166 bushels per acre whereas, he said, in reality they could be nearer to 155 bushels.
 
He also told the congress that the global problems with meeting demand for grain were because of infrastructure problems in Russia and Brazil and the fact that Russia and Ukraine produce about 25 per cent of the world's grain meant that relying on these countries' production put the world in a precarious position.
 
China is also structurally incapable of producing its own crops, but the country will keep driving the market for pork, corn and soy.
 
He said that even assuming that there will be a rebound in the US production of corn this year and that Brazil will be producing more soy, this will only be a small rise in production and the effect on world supplies and the ability to meet demand will be slight.
 
"There is not a comfortable level of stocks," Mr Nelson said.
 
Mr Nelson warned that the grain markets are also in the hands of speculators. In recent times fund managers have moved out of the markets but they have the ability to change things around quickly just by moving back in again.
 
Mr Nelson said that production of protein is also changing with a move to more dairy production in northern Europe. This rise in dairy production has seen a drop in beef production in Europe as more pasture is turned over to dairy. Beef production in Europe is starting to move to the southern countries.
 
European beef production will also be affected by the imminent changes to the Common Agricultural Policy.
 
In the pig meat sector, Mr Nelson said that he US has costs that are a third less than those in Europe, but an exchange rate change and a reduction in the value of the Euro has made the EU more competitive in recent times.
 
Similarly, a devaluation of the Brazilian real has made Brazil more competitive.
 
However, he warned that with continuing rising costs, Europe might not be a net pork exporter in four or five years' time.
 
"Europe has been doing a bit better recently with exports of beef and pork up, but feed prices and new regulations will make Europe a challenge," Mr Nelson said.
 
He warned that the global animal protein industry is becoming globalised as labour rates in China rise along with those in Brazil as their economies grow. However, in developed countries, such as the US, labour rates are predominantly flat - another factor impinging on the global cost of protein.
 
Livestock costs are also becoming comparatively high in some developing countries, which will have another levelling effect on global prices, while currency swings will affect both production and competitiveness.
 
Mr Nelson concluded that the major issue affecting world protein markets is the price of pork in China and that although protein production in China is high, producers have been losing money. However, there will still be continuing growth in developing markets that will have a dominant effect on world protein production.

 Chris Harris, Editor-in-Chief

[Mustang Sally Farm]

Is Agriculture Leading the Way Out of the Recession?
ANALYSIS - Against what appears to be all the economic trends, the global agriculture sector seems to be showing a strength and even punching above its weight during the current global financial problems, writes, Chris Harris.

According to a new report from the USDA, The 2008-09 Recession and Recovery, US agriculture was better positioned than most US industries entering the recession, was less affected by the recession than most other US industries, and is well positioned to continue to do well in the years ahead.

And it is not only in the US that agriculture appears to be doing better than other industries.

In the UK, a recent report from the National Farmers Union showed that agriculture contributed £85 billion to the UK economy last year, while helping to keep some 3.5 million people in work.

The NFU report, Farming Delivers, says that because of its role as the driving force behind so much economic activity, farming offers huge potential to the economy as a whole.

The agricultural sector around the world is finding itself in a strong position largely because of international trade. With developing nations growing in strength, populations growing and wealth in these countries growing, there is an ever-growing demand for food.

In this respect, countries in the developed world that have been hit by the recession will be able to use food and agriculture as a major means of escaping from the straightened times.

The outlook report from the Food and Agriculture Organisation of the UN and the OECD said: "A stronger than expected agriculture commodity supply response last year, particularly in developed countries and much lower oil prices has resulted in significantly lower commodity prices from 2007-8 highs".

It continues: "Despite the significant impact of the global financial crisis and economic downturn on all sectors of the economy, agriculture is expected to be relatively better off, as a result of the recent period of relatively high incomes and a relatively income-inelastic demand for food."

The report focuses on the resilience of agriculture to economic recession and says that as the recovery begins, a reduction in agricultural prices and a fall in production and consumption are unlikely.

This resilience of the agricultural sector is reflected in the USDA report that shows that the growing importance of developing countries as markets for US agricultural exports, strong balance sheets in US agriculture going into and coming out of the recession, healthy financial institutions supporting agriculture, and prospects for a continued low real trade-weighted dollar exchange rate are supporting relatively strong growth in the farm sector.

US agricultural exports, especially those to developing countries, benefited from stronger world growth, the report says.

Approximately 22 per cent of US agricultural production is exported, accounting for almost 10 per cent of total US merchandise exports.

These economic and financial factors, along with underlying gains in agricultural research and productivity and in expanding and improving access to markets for farm products, suggest a strong outlook for US agriculture as US and global economies continue their recovery, the USDA says.

The USDA said that the latest recession has been longer and deeper than anything the US has seen since the 1930s.

While both developed and developing countries showed declines in 2008 and 2009, developed countries went into a severe recession whereas the developing countries only had a growth slowdown.

Real world trade fell by 11 per cent in 2009, and developed country exports declined nearly 13 per cent.

Those countries reliant on exporting expensive durable consumer and business goods, such as Western Europe and Japan, were hit especially hard.

US agricultural exports, while not affected as greatly as non-agricultural exports, were not immune to the impact of global recession. Real US agricultural exports fell by two per cent in 2009 after increasing by 5.3 per cent in 2008.

Exports of high value products, such as fresh beef and dairy, fell six and 39 per cent, respectively.

However, in 2011, US agricultural exports exceeded $136 billion. The growth in post-recession exports was about twice the historical average between 1998 and 2007, the decade preceding the recession and developing countries' share of US agricultural exports rose to more than 60 per cent in 2011.

The world economic recovery was underway in 2011 and is likely to continue in 2012 and beyond, with developing countries, including those in Asia, Latin America, and Africa, leading the way, while developed countries will recover at a much slower pace.

The crisis in the Eurozone continues and is likely to continue for some time, further dampening growth prospects in developed countries.

However, the global agricultural sector is leading the way and if it can continue to find and build on new export markets it will help to strengthen the economies that have been hit hardest.

However, financial institutions will also have to lend their support to the growing global trade in agricultural products and agriculture could be the key to unlocking much of the finance that has been held back from the markets.


Chris Harris, Editor-in-Chief

[Mustang Sally Farm]

Good Week for Green Agriculture and Welfare
20 June 2012


EU - The EU agriculture Ministers have decided to work for better animal welfare in the future and have endorsed both a proposal for the combating antimicrobial resistance and the progress report on the reform of the Common Agricultural Policy .

 “This is a good week. Not only because we have achieved the aims of the Presidency but first and foremost because we have decided to ensure better animal welfare for animals in Europe and because we have taken important steps towards a greener agriculture – a greener Europe,” says the Danish chair, Minister Mette Gjerskov.
 
The Danish Presidency has worked intensively to reach agreement on the strategy on animal welfare 2012 – 2015 and with regard to the Commission’s report on transport of animals. These decisions are a strong signal that animal welfare is high on the EU agenda and that the EU will strive to strengthen animal welfare.
 
Combating antimicrobial resistance
 
At the meeting the Danish chair presented a proposal for council conclusions on combating antimicrobial resistance:
 
“Fighting antimicrobial resistance is a major priority of the Danish Presidency. Each year 25,000 European citizens die due to antimicrobial resistance and the problem is increasing. This calls for action. Therefore I am content in having full support for the conclusions that are expected to be adopted at the EPSCO Council 22 June,” states Mette Gjerskov.
 
The reform of the Common Agricultural Policy
 
Council has also endorsed the Presidency’s progress report on the reform of the Common Agricultural Policy. Most of the major elements have already been discussed at Council meetings during the Danish Presidency, and at the most recent meeting, before the endorsement of the progress report, the Council discussed the proposal on the Rural Development Policy.
 
“I am convinced that green transition and growth are two sides of the same coin. Therefore I am content that there is a broad understanding that the Rural Development Policy should contribute to the protection of nature aswell. And I am glad that the Council has endorsed a progress report on the reform with focus on both simplification and green solutions,“ says Mette Gjerskov.

Report on organic farming
 
The Commission presented its evaluations report on the existing organic legislation.
 
“Organic farming is a powerful tool for green transition, and it is important that we now have the Commission’s report which, in turn, means that we can begin discussions on the future regulation of organic farming,” says Mette Gjerskov.