New York, New York
December 21, 2007
Consumer trends, animal protein
exports, and biofuels are key issues in 2008
Changes in consumer trends, country of origin labeling and
developments in biofuels are some of the issues
addressed in Rabobank's
2008 North American Food & Agribusiness Outlook.
The Outlook is produced annually by the Food and Agribusiness
Research team (FAR) team, which provides information and
analysis covering all of the major sectors throughout the food
chain. The Americas-based FAR team is part of Rabobank's global
FAR group, comprised of 80 research analysts located around the
world, who conduct research on subjects of strategic interest to
companies and customers within the food, agribusiness and
agriculture sectors.
"The agribusiness environment is constantly evolving, reflecting
ongoing changes in overall economic and business cycles,
consumer preferences, demographic shifts, new product
technologies, energy sources, as well as regulatory issues,"
said Debbie Perkins, Rabobank's Head of Food and Agribusiness
Research in North America. "As a result, farmers, input
suppliers, food companies and retailers are constantly being
forced to rethink their business models."
In the Outlook, Rabobank's FAR team takes an in-depth look at
issues that will affect the global agricultural industry in the
coming year. Below are highlights of three key issues addressed
in this year's Outlook: Consumer Trends, Animal Protein Exports,
and Biofuels.
Consumer Trends
The main consumer trends affecting food purchases are health
concerns, and increased desire for premium products and for a
greater variety of products. With the increased media attention
on obesity and associated health problems, consumers are trying
to eat healthier foods, placing an increased focus on items such
as fruits, vegetables and whole grains.
Additionally, as household disposable income increases and free
time diminishes, consumers have an increased desire for better
quality and more convenient products that command higher prices.
For example, according to Rabobank's Outlook, one of the results
of this trend is the increase in sales of specialty items such
as fresh-cut fruits and vegetables. Between 1997 and 2006,
fresh-cut produce sales increased by nearly 170 percent and
reached an estimated $13.4 billion in sales.
"Food retailers are expected to see continued growth of many
gourmet and specialty items, even if inflation continues," said
FAR Vice President Stephen Rannekleiv. "Consumers can be
expected to continue to trade down
for items of lower importance and continue to trade up for
products that they value. Inflation or even a slowing of the
economy is more likely to affect mid-tier products than
specialty items."
Animal Protein Exports
The United States meat (beef, pork and poultry) industry is
becoming increasing reliant on international consumers. For
example, in light of record pork supplies, the performance of
U.S. pork exports will remain
under the spotlight in 2008. Specifically, China has been touted
as the next big opportunity for U.S. pork exports and is likely
to become especially important given the recent decline in
exports to Mexico, traditionally one of the most important
markets for U.S. pork.
While the Chinese government has implemented myriad measures to
stimulate domestic production, prices are expected to remain
historically high for the next 12 months, because the Chinese
pork inventory is barely keeping up with current demand, while
demand continues to increase. and demand too strong.
Additionally, while a devalued dollar will assist U.S. pork
exporters in China and other export markets, competition is also
expected to accelerate. U.S. poultry leg quarters are a very
price competitive protein source in the Chinese market, and two
other pork producing countries, Argentina and Brazil, have
recently signed agreements allowing them to export to China.
"Future export performance will be influenced by: U.S. dollar
movements; ongoing market access constraints and trade reform;
competition from other meat exporters; cost competitiveness; and
the threat of unforeseen events, such as disease," said FAR
Executive Director Fiona Boal. "Despite the fact that many, if
not all, of these factors are outside of the control of
individual industry participants, the U.S. meat industry should
not lose sight of the fact that the benefits of exporting and
competing on the world stage far outweigh the risks."
Developments in Biofuels
Within the United States, feed continues to account for most of
the demand in grains and oilseeds but the most important driver
of growth, particularly for corn, continues to be the biofuel
sector.
In 2007, the enthusiastic attitude of the market toward ethanol
and corn were tempered by caution. Questions arose over issues
such as whether the United States was approaching an ethanol
surplus, and whether levels of
transportation and infrastructure were capable of servicing the
ethanol segment.
"After a strong performance in the 2007/2008 calendar year, corn
acreage in the United States is likely to dip slightly, as some
growers take advantage of higher soybean prices, and respond
cautiously to a re-adjustment of the ethanol market structure,"
said FAR Vice President Michael Whitehead. "However, as the
ethanol market in the United States becomes more efficient, and
as U.S. government support for biofuels solidifies, a return to
strong corn acreage and good prices seem likely."
The premier bank to the global food and agriculture industry,
Rabobank is a global
financial services leader providing institutional and retail
banking and agricultural finance solutions in key markets around
the world. From its century-old roots in the Netherlands,
Rabobank has grown into one of the 25 largest banks worldwide,
with over $800 billion in total assets and operations in over 35
countries. Rabobank is the only private bank in the world with a
triple A credit rating from both Standard & Poor's and Moody's,
and is ranked among the world's safest banks. In the Americas,
Rabobank is a leading financial partner to the entire American
food and agribusiness industry and is a specialist in
sophisticated, customer-driven solutions in the Global Financial
Markets and Corporate Finance arenas. Rabobank also provides
retail and commercial banking services in California; leasing;
and real estate lending, operating loans, input financing and
crop insurance to American agricultural producers, input
suppliers and agricultural manufacturers. |
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