The Food Industry Lives In a Global Community

Articles
March 17, 2011

The Food Industry Lives In a Global Community

The impact of the global economy is much discussed on the business pages of the nation’s newspapers of late and is being particularly seen in the food industry. Last week, the Department of Agriculture released its latest projections for U.S. cereals and grains and The Food Institute points out that we are all impacted by what happens to crops thousands of miles across the globe.

The impact of the global economy is much discussed on the business pages of the nation’s newspapers of late and is being particularly seen in the food industry. Last week, the Department of Agriculture released its latest projections for U.S. cereals and grains and The Food Institute points out that we are all impacted by what happens to crops thousands of miles across the globe.

Brian Todd, President of The Food Institute, commented that in talking to a wheat farmer at the recent National Grocers Association convention, he was amazed at the knowledge this mid-America farmer had about event around the globe. “He told me exactly what was happening to the Russian wheat crop and why as well as occurrences in China and Australia. Using the internet and e-mailing other farmers, he was much more than a farmer; he was an entrepreneur with his finger on the pulse global agriculture.”

And in USDA’s latest projections, the Department reports that U.S. wheat price projections are unchanged from a month ago because increased supplies of wheat from Australia will mean more wheat is available in the U.S. In addition, reduced demand for wheat in Russia due to higher prices there will mean a larger global supply of wheat should prevail in 2010/11. 


Overall however, wheat prices in the U.S. are seen ranging from $5.60-$5.80 per bushel, as much as 19% higher than last year but 14% less than prices in 2008/09.

Feed corn projections were mostly unchanged as well for the U.S. although from a global perspective reduced crops in Mexico and India will be partially offset by greater production in Brazil. But with more corn going for ethanol production in the U.S., prices for corn are seen rising almost 60% this year from a year ago. This in turn, means higher feed costs for livestock producers. Thus live beef and hog prices are seen climbing 10% to 15% this year. It should be noted that ending feed corn stocks this marketing year are projected at just 675 million bushels, the smallest carryover in 15 years and just over a two-week supply. Therefore, all aspects of this crop will be closely followed in future months.

And other areas of the food industry are impacted globally as well. Indeed just last week a major British retailer purchased a stake in e-grocer Fresh Direct. And while it is not unusual for foreign firms to have controlling stakes in U.S. supermarket chains, The Food Institute believes this may be the first such move by a foreign retailer to get a foothold in an electronic grocer.

And as always these developments will be followed closely by the Food Institute in its weekly report and daily email update.