2009 and Beyond: The New Strategic Environment, Part 1

     Sometimes its hard to tell if recent events, like the generalized global economic meltdown, cast a shadow that is a vapor and will burn off as the sun comes out again, or whether they are a harbinger of a more persistent, new strategic environment in the global market and political system.

     There is certainly a feeling in the air that some substantial things have changed but time will tell if they are persistent or even fully realized.  Some of the things which form the emerging global situation that U.S. agricultural will operate in include:

Swine Industry Update for beginning of year

Mark Greenwood
January 2009

SwineCast 0366 for December 22 2008

SwineCast 0366 Show Notes:

Swine Industry Update: I must be dreaming

Mark Greenwood
November 2008

FED action and the Demand for Pork

     As the US and global recession deepens, the monetary authorities in the UK, the EU and the US are driving interest rates to record low levels.  Today the FED cut the Federal Funds rate, the overnight lending rate to banks, to a range of zero to 0.25 percent which is the lowest rate on record.  The action is an effort to make holding cash by banks so disadvantageous that they are tempted to begin lending in order to earn a return.  The action is meant to increase the money supply, an action which is deemed safe now since its primary danger (inflation) appears as no immediate threat due to slumping demand and rapidly falling prices for everything from housing to gasoline. 

Living in a World Where Everything is an Externality

     Nicholas Kristoff, an editorial writer for the NYT has recently written an opinion piece calling on President-elect Obama to take the bold step of changing the name of the Department of Agriculture to the Department of Food. 

     The main reason behind his recommendation is to unseat the powerful agri-business lobby from controlling government policy, that among other things has favored factory farms raising as many as 5,000 hogs and that these "large operations receive, in effect, a $24 subsidy for each hog raised. We face an obesity crisis and a budget crisis, and we subsidize bacon?"

"When You Are Out of Cash, You are Out of Business"

"When you are out of cash, you are out of business", is a truism which should be on the top of everyone's mind these days.  With the bankruptcy filing of Pilgrim's Pride and VeraSun we are witnessing the turmoil and equity destruction which has been brought on by the tremendous volatility in commodity prices experienced over the last year.  This volatility is directly related to (but not completely the result of) government policy interventions, especially ethanol policy.

Swine Industry Update for end of year

Mark Greenwood
December 2008

Light at the end of the tunnel?

China and the Global Slowdown

     China is facing some serious internal issues related to the global slowdown that is underway.  Growth is certainly slowing in China as a direct result of weakening global demand for its products.  This poses some significant problems for the Chinese economy since it is widely believed that China must maintain a 7-9% annual increase in GDP to maintain employment stability.  Last year growth was almost 12% and has been double digit for many years.  Forecasts for 2009 have been as low as 5-6% up to the minimum levels in the target range.

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