Supply Assurance

This Can't End Well...

This cannot end well.  This cannot end well for anybody.  While there are clearly a host of forces at work in the world of agriculture today, the decision to remove 30-35% of the corn crop from the food supply will one day soon be acknowledged as a very bad mistake.  At the present time, if there is any benefit going to the consuming public through lower gasoline prices as is alleged by the ethanol supporters, it is being paid for almost exclusively on the backs of poultry, livestock and milk and  egg producers primarily in the United States.  There is just such a woven set of consequences to this that it is hard to pry them all apart.

Global Supply Assurance

Late last week China revealed that it was about to approve a plan to buy large tracts of land in South America and Africa. The purpose of the purchases is to assure that China is not left to the risks of the market place in the future when its own agricultural production is not able to keep up with its growing demand.

China is essentially self-sufficient in food at the present (something that it cherishes) but rising incomes are changing the mix of demand from lower quality vegetarian diets to meat and more refined and processed foods. China has about nine percent of the arable land and the current global food crisis is helping to fuel the long-held desire by China not to be at the mercy of foreigners. China is currently self-sufficient in corn but imports lots of soybeans. As its livestock production ramps up for future demand, it will need to produce substantially more feed stuffs than its own resources currently can support.

There's a lot happening in the Pork Industry today

There’s a lot happening in the pork industry today. Brazil bought into the global beef and pork business in a big way with J & F Participacoes, S.A. purchase of Swift & Co. ending a long speculation (since 2002) about who would eventually own those assets. Those who predicted countries like Brazil, with underdeveloped infrastructure and disease containment mechanisms would have a hard time competing with U.S. produced beef and pork in the export market just got a valuable lesson. If you don’t have everything you need domestically to compete, you can always consider buying the capabilities and attributes abroad. We went down there for cheap inputs. They came up here for access to the Pacific markets among other things.

Syndicate content