Agrobusiness – International World Of Business

Food and Agriculture Organization: Food Price Index broadly unchanged in July

Press Room Team — Sun, 11 Aug 2024 22:18:44 +0000

Declining quotations for major cereals offset increases in those for vegetable oils, meat and sugar

Rome – The benchmark for world food commodity prices was broadly unchanged in July for the second month in a row, as increases in international quotations of vegetable oils, meat products and sugar offset an ongoing decrease in those for cereals, the Food and Agriculture Organization of the United Nations reported Friday.

The FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally-traded food commodities, averaged 120.8 points in July, marginally below its revised 121.0 figure for June. The index is now 3.1 percent lower than its corresponding value one year earlier.

The FAO Cereal Price Index declined by 3.8 percent from June as the global export prices of all major cereals decreased for the second consecutive month. Wheat quotations dipped on increasing seasonal availability from ongoing winter harvests in the northern hemisphere and generally favorable conditions in Canada and the United State of America supporting expectations for large spring wheat harvests later in the year. Maize export prices also declined as harvests in Argentina and Brazil progressed ahead of last year’s pace and crop conditions in the United States remained robust. The FAO All-Rice Price Index declined by 2.4 percent from June amid generally quiet trading activities for both Indica and Japonica varieties.

The FAO Vegetable Oil Price Index, by contrast, rose 2.4 percent from June to reach a one-and-a-half-year high. Global quotations for palm, soy, sunflower and rapeseed oils all rose, lifted by robust demand for soy oil from the biofuel sector and deteriorating crop prospects for sunflower and rapeseed oils in several major producing countries.

The FAO Meat Price Index increased by 1.2 percent in July amid robust import demand for ovine, bovine and poultry meat, even as pig meat prices declined marginally due to an oversupply situation in Western Europe.

The FAO Sugar Price Index increased by 0.7 percent from June as lower-than-expected production in Brazil outweighed the impact of improved monsoon rainfall in India and conducive weather conditions in Thailand.

The FAO Dairy Price Index was unchanged in July, as decreases in the quotations for milk powders offset increases in those for butter and cheese.

More details are available here. The next FAO Food Price Index will be released on 6 September.

The potential of intraregional trade for Latin American and Caribbean food security

Press Room Team — Tue, 18 Jun 2024 21:33:08 +0000

The annual meeting of the IDB’s Board of Governors is the ideal time to reflect on the strategic challenges facing Latin America and the Caribbean (LAC) and the agenda for addressing them. President Ilan Goldfajn opened this year’s meeting by highlighting that LAC may be at a turning point: “There is a great opportunity for the region to become part of the solution to shared global challenges.” Food security is emblematic of this opportunity.

A turning point

In 2022, an estimated 735 million people in the world went hungry, 122 million more than in 2019, before the COVID-19 pandemic and Russia’s invasion of Ukraine. That same year, 42% of the world’s population (3.1 billion people) could not afford a healthy diet, while 30% (2.4 billion people) experienced severe or moderate food insecurity.

These trends need to be reversed to achieve the Sustainable Development Goal of eradicating hunger by 2030. LAC is clearly part of the solution. The region is the world’s largest net food exporter, and through international trade it contributes more than any other region to global food availability.

However, the idea that LAC is the world’s breadbasket is paradoxical. The region is the world’s main supplier of cereals, oilseeds, bananas, coffee, and sugar. It also plays an indispensable role in producing other crops, such as fruits and vegetables, essential for a healthy, balanced diet. Nevertheless, food insecurity continues to affect 37% of the population on average, or nearly 250 million people.

Since the 2000s, the weight of the region’s agricultural exports has increased significantly, growing from 15% to 25% of total exports. Agriculture employs an average of 15% of the labor force and, in some cases, as much as 30%. The sector accounts for 6% of GDP on average but reaches as high as 15% in some countries. These figures may even double if production linkages are included—that is, the production of goods and services that are indirectly related to agriculture.

Being a major contributor to household income, especially among poorer households in rural areas, LAC’s agricultural sector is essential to food security not just globally but also within the region itself.

The potential of intraregional trade

Reconciling this paradox is the objective of a series of studies sponsored jointly by the Food and Agriculture Organization of the United Nations (FAO) and the IDB. A key preliminary observation from these publications is that LAC countries import 40% of their external purchases of agricultural and food products from their neighbors. Moreover, while LAC’s trade with the rest of the world tends to focus on primary products, intraregional trade is oriented more toward processed foods, which tend to create greater value-added, more jobs, higher revenues, and more positive spillover effects for economic development.

Expanding intraregional trade in agrifoods is thus a necessary, albeit insufficient, condition for food security in LAC. Growth in agrifood trade would enable the region to bring down food costs by making the most of geographic proximity and regional integration. It could also create jobs, raise incomes, and increase LAC’s competitiveness in extraregional markets.

Examining the region as a whole, the studies identified 67 products with potential for growth in the intraregional market. This potential arises when three factors are present: complementarity between the structures of a country’s exports and its partners’ imports, the product being important in the country of origin’s export pattern, and the existence of room for increasing market share in the destination country.

Trade in these products between LAC countries is currently worth US$21.6 billion. The potential market for the products with the best growth prospects is estimated at US$24.7 billion, representing 8.5% of LAC’s total agrifood exports, 21% of its imports, and 57% of its intraregional trade. Numbers on this scale cannot go unnoticed and should make us sit up.

The biggest opportunities in terms of potential market size are cereals, food residues, meats, fats and oils, food preparations, oilseeds, beverages, and dairy products. These are indeed some of the key foods that make up a healthy, affordable diet.

The results by country show that the greatest potential for growth is in Mexican imports from Mercosur countries, as well as in some bilateral relationships between South American countries. There is also significant potential for sales of some products from Mexico to Chile and Colombia.

Focusing on the most exposed countries

However, assessing results solely in terms of potential market size underestimates their importance for smaller economies that are more vulnerable to food security risks. For this reason, a specific study was conducted to analyze trade between Central American and Caribbean countries.

Eighty products were identified as having the greatest growth prospects, representing a potential market of US$2.8 billion. Most of these products (64%) are processed foods, such as vegetable oil-based preparations, sausages, canned tuna, sugar, pasta, cereal-based products, pineapple juice, sauces and condiments, and animal feed. Meanwhile, the main primary products (36%) were beef, dairy, tomatoes, cauliflower and broccoli, beans and other vegetables, bananas, and coffee.

Guatemala, Costa Rica, and Honduras have the most products with potential for growth among the Central American countries. Jamaica, Barbados, and Trinidad and Tobago stand out in the Caribbean.

An agenda to make an impact

A critical aspect of these studies is that they are not limited to economic analysis. They include interviews with public and private stakeholders to identify the obstacles they perceive as being most restrictive and the actions that need to be prioritized to make an impact on the ground.

The list below is by no means exhaustive, but the most promising initiatives include the following:

Negotiating preferential trade agreements between LAC countries to offset the more favorable market access conditions which external competitors currently benefit from.
Overcoming structural and regulatory barriers through investments to improve transportation infrastructure, the compatibility of quality control systems, and logistics networks.
Bringing sanitary and phytosanitary authorities closer as a steppingstone to negotiating regulatory convergence regimes, including by focusing pragmatically on specific products with proven potential for trade growth.
Adopting or developing single windows for foreign trade and other trade facilitation measures to streamline export and import procedures.
Strengthening export promotion and investment attraction agencies to improve access to information on external markets and coordinating closely with agricultural extension services.
Promoting public-private dialogues and partnerships to identify effective courses of action in areas where private-sector involvement is needed.

The IDB is committed to supporting a trade expansion agenda to feed the world. Progress in any of the areas mentioned in this post will also help boost intraregional trade in agricultural products. A more integrated regional market would have a significant impact on LAC’s food security, as it would contribute to improving the availability, access, utilization, and stability of food provision.

USDA Partners with Washington to Award Over $7.3 Million to Strengthen Food Supply Chain Infrastructure

Press Room Team — Wed, 05 Jun 2024 19:51:14 +0000

WASHINGTON, Jun, 2024 — The U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS) today announced it has a cooperative agreement with Washington under the Resilient Food Systems Infrastructure Program (RFSI). Through this agreement, USDA and Washington are working together to offer over $7.3 million in competitive grant funding for projects designed to build resilience across the middle of the supply chain. Washington is accepting applications for this Infrastructure Grant funding through July 15, 2024.

USDA announced the availability of up to $420 million through RFSI to strengthen local and regional food systems. Through this program, AMS has entered into cooperative agreements with state agencies, commissions, or departments responsible for agriculture, commercial food processing, seafood, or food system and distribution activities or commerce activities in states or U.S. territories. RFSI is authorized by the American Rescue Plan. Updates for each state’s Request for Applications for the RFSI program are available on the AMS website.

“This partnership between USDA and Washington is allowing critical funding to reach areas of the supply chain that need it most,” said USDA Marketing and Regulatory Programs Under Secretary Jenny Lester Moffitt. “The projects funded through this program will create new opportunities for the region’s small and midsize producers to thrive, expand access to nutritious food options, and increase supply chain resiliency.”

Using RFSI funding, the Washington State Department of Agriculture (WSDA) will fund projects that expand capacity for processing, aggregation, and distribution of agricultural products to create more and better markets for producers; modernize manufacturing, tracking, storage, and information technology systems; improve the capacity of entities to comply with food safety requirements; and modernize processing and manufacturing equipment. The state’s priorities are informed by stakeholder engagement and outreach to underserved producers to better understand their needs.

Director of the Washington State Department of Agriculture, Derek Sandison, underscored the significance of this partnership. “These federally-funded infrastructure grants provide a unique opportunity to complement the work that our agency has already committed to support the local food supply chain for farms, ranches, food processors and food distributors,” he said. “We are grateful to the USDA for partnering on a program that helps strengthen and expand local market access for Washington’s small and mid-sized agricultural producers and organizations operating in the middle of the food supply chain. We also appreciate our partnership with the Washington Small Business Development Center to provide technical assistance to applicants,” Sandison added.

Those interested in receiving a subaward should apply directly through WSDA by July 15, 2024. AMS encourages applications that serve smaller farms and ranches, new and beginning farmers and ranchers, underserved producers, veteran producers, and underserved communities.

Through the program and in addition to the Infrastructure Grant funding, WSDA will support supply chain coordination and technical assistance to farmers and food businesses operating in processing, aggregation and distribution—all critical activities to support access to more and better markets for farmers.

World Food Forum concludes with diverse perspectives to transform agri-food systems

Press Room Team — Mon, 24 Oct 2022 12:39:03 +0000

Rome – From brainstorming solutions for food security and mitigating climate change based on science and innovation to highlighting the links between healthy eating and a healthy planet – a youth-driven World Food Forum today wrapped up five days of intensive dialogue, networking and investment pitching aimed at addressing the world’s growing food crisis.

Speaking in a closing ceremony which offered a rich mix of indigenous youth advocacy, music, poetry and film, QU Dongyu, Director-General of the Food and Agriculture Organization of the United Nations (FAO), said: “I am impressed by the many ways policy, science, technology, innovation and investment have converged to spark the actions we need for a better food future.” He added: “The future I always believe is brighter!”

Energizing the gathering has been the urgency of bringing diverse perspectives to bear towards its goals of finding solutions for food security and improving agrifood resilience; raising awareness of the links between dietary and planetary health; and identifying bold, actionable science based solutions to mitigate the impacts of the climate crisis, while also increasing access to healthy diets for all.

Qu was joined by counterparts from the other Rome-based Agencies (RBAs), featuring Assistant Vice President Satu Sala from the International Fund of Agricultural Development (IFAD) and Arif Husain, Chief Economist and Director of Research, Assessment and Monitoring, from the World Food Programme (WFP), as well as youth, science, investment and cultural leaders, who all testified to a new sense of momentum in the continuing collaboration of all stakeholders towards agrifood systems transformation and the achievement of the Sustainable Development Goals.

Three concurrent streams

The forum brought together three concurrent streams, focusing on youth, science, technology and innovation and FAO’s flagship Hand-in-Hand Initiative pairing prospective investors with countries in greatest need of support. Among the key achievements:

In the WFF Global Youth stream: Youth spoke up and clearly defined the policies and solutions they want to see in their regions and in the world. Key points of Regional Youth Action Compendium drafts from the event are to be taken to the COP27 summit in Egypt. The forum introduced a food and agriculture-related youth policy group and a young scientists group to further substantiate the drafts and carry them further to all relevant multilateral meetings ahead. There were round table dialogues including young farmers, young media professionals, Indigenous Youth. The Global Youth Forum brought game-changing research and innovation in the Transformative Research Challenge and Startup Innovation Awards, as well as cultural celebrations to inspire people worldwide to join the movement for transforming how our food is produced, delivered and consumed.
In the FAO Science, Technology and Innovation stream: Participants in the Science and Innovation Forum explored harness science and innovation for all areas of agrifood systems, including sustainable livestock, blue transformation, innovation in improving access and affordability of fertilizers, and many others. They also learned about the transformative potential of traditional diversification and the application of Indigenous Peoples’ knowledge. A new transformative partnership was celebrated between FAO and the Wageningen University and Research, as well as the three French research institutes for rural and agricultural development, and environment: CIRAD, INRAE and the IRD. And the stream explored how to fast-track science and innovation to enhance climate action and improve nutrition with sustainable agrifood systems.
And in the FAO Hand-in-Hand Investment Forum: 20 countries presented investment impact opportunities and held bilateral meetings and 3 regional initiatives were highlighted. Significant investment pitches were made and a process started with many investors coming from multilateral and regional banks as well as from the private sector and investment funds. Many new partnerships were formed, and significant investments are already happening, with more to come. In addition, the growth potential and various finance structures of the agrifood sector were explored. The FAO Investment Center and Regional Offices will continue to support and accelerate investment processes with countries.

Organizers stressed there is no one individual thing that made this year’s World Food Forum a success, but instead it was the coming together of all the different perspectives, and all the stakeholders, across regions and generations. The three interlinked streams highlighted the importance of collaboration between the current and next generation. And our combined ingenuity in science, technology, innovation – and investments give us the best hope of creating a better food future, leaving no one behind.

Additional highlights:

More than 2,000 people joined in person at FAO Headquarters
Tens of thousands of people joined virtually from around the world
More than 100 in-person events were hosted and hundreds of more virtual events and side events, strengthening intergenerational networks and dialogue
The forum featured global leaders, renowned scientists and innovators, famed artists and cultural leaders, Startup and Research competitions, young farmers, investors, and more coming together for solutions to address global challenges facing hunger, nutrition and agrifood systems.
The WFF also introduced the stakeholder groups of the Food Systems Coordination Hub, and global decision makers, hosted a week-long Indigenous youth festival, and spurred dialogues on the latest science in support of agrifood systems transformation.
The WFF announced that with its partner Social Gastronomy Movement, it ran a youth action campaign in the month leading up to the WFF- working with organizations around the world to give out 4 million meals to those in need and saving 130,000 KG of food waste.
Next year WFF will move from ideas into impact-launching a WFF Incubator, bringing youth voices to global decision-making fora, ensuring the fostering of science-based innovations to address agrifood systems challenges, and igniting inclusive investments for the countries most in need via the Hand-in-Hand Initiative.

Promoting Green FDI: Essential but Invisible to the Eye?

Press Room Team — Thu, 20 Oct 2022 22:14:08 +0000

Earth is warming at an unprecedented rate, with the last decade being by far the warmest one on record. The severe implications of the implied climate change have made the green and sustainability imperatives clearer than ever. Countries around the world have accordingly made new commitments and taken action to fight climate change, often setting more ambitious goals to achieve net-zero emissions. By end 2021, net-zero pledges have been estimated to cover 65% of global emissions. In the same line, governments as well as businesses have introduced initiatives to standardize and enhance climate-change disclosures.[1]

According to recent studies, foreign direct investment (FDI) can have positive environmental effects in host economies. From a policy point of view, the question is: what investment attraction policies, in general, and IPAs –as agencies at the forefront of such policies—, in particular, can and actually do to help materialize such FDI positive environmental potential?

Besides their goal of generating and facilitating more investment, IPAs are increasingly asked to attract investors that are sustainable, inclusive, and green. According to an OECD survey conducted in 2021, 37% of OECD IPAs report to contribute to the Sustainable Development Goal (SDG) 13 related to climate change. Higher shares report to contribute to broader SDGs that could also be related to green investment (Figure 2).

Figure 1. Share of IPAs Reporting to Contribute to Climate-Related SDG

Source: Sztajerowska and Volpe Martincus (2021).

Yet, aspiring to do good and doing good cannot be the same things. Establishing to what extent this is the case requires measuring the environmental implications of IPAs’ actions.

What Do We Know?

Some basic tools can help IPAs measure the potential climate contribution of assisted investment projects. For example, data on green-house gas (GHG) emissions by sector are collected in many countries. They are also compiled for several countries by international and non-profit organizations and are publicly available (e.g., UNHCC, 2022; OECD, 2022; or Climate Watch, 2022).[2] Combined with the internal data available to most IPAs on their assistance of firms, they help establish if IPAs indeed focus on assisting firms in less-polluting industries. Moreover, when also merged with information on the presence of multinational firms’ foreign affiliates in their countries from local administrative sources or private providers, data on sector-level emission makes it possible to determine if the impact of IPA assistance is higher in such industries. This is exactly what the IDB has done in a recent flagship report on investment promotion for 12 Latin American and the Caribbean (LAC) countries.[3]

What did we learn from such an analysis?

IPAs tend to focus on firms in less polluting sectors: 60% of multinational firms assisted by IPAs were in relatively less-polluting sectors
Investment promotion favors the entry of firms in relatively less-polluting sectors (Figure 3).IPAs increased the probability of first entry by a multinational firm in such sectors by 8.7 percentage points, on average.

Figure 2

IPAs’ Assistance Favors Entry of Multinational Firms in Sectors with Less CO₂ Emissions

Source: Volpe Martincus et al. (2021).

What Can Be Done?

This simple exercise provides IPAs with additional insights. Yet, much more can be done. For example, IPAs may attempt to obtain firm-level information from several different sources to measure the environmental performance of multinational firms, both assisted and established, as well as potential spillovers on domestic counterparts:

In some countries, IPAs may be able to gain access to administrative data on firm-level emissions, energy consumption or other relevant variables, for example, from environmental protection, certification, and emission-disclosure monitoring bodies.[4] An example in this regard is Chile’s Register of Emissions and Transfers of Pollutants. IPAs can also use or complement such data with their own data-gathering, or develop proxies based on their correlation with the official statistics.
Second, private data providers offer environmental, social and governance (ESG) scores and underlying data of firms. While it has been shown that E-scores themselves do not necessarily correlate with emission reductions, and can vary widely, ESG-score providers increasingly dispose of actual and estimated CO₂ emissions.[5] They can also be complemented with data from organizations that assist firms in complying with climate disclosure requirements.[6] Such data may provide useful insights at least for the largest and publicly traded firms.

The rise in climate-change policies worldwide is likely to require IPAs to adopt and develop new tools to measure green investment in the future. While far from being invisible today, more can be done. The IDB, through its Integration and Trade Sector, is supporting LAC IPAs in coping with this challenge and is currently developing a consistent FDI sustainability monitoring and evaluation approach, which includes an evidence-based scoring mechanism.

A Honey Exporter Reveals the Potential of Innovative Cooperatives

Press Room Team — Fri, 16 Sep 2022 00:11:21 +0000

Latin America and the Caribbean has a huge opportunity in innovative and sustainable export-driven agriculture. But that path is more difficult for small-scale producers. Small farms, many of them family owned, don’t have the funds to invest in the research and development, the equipment and infrastructure, and the information gathering needed to penetrate high value niche food markets abroad. They can’t afford the training and certifications that can ease the way into international markets where prices are better and the possibilities for expansion greater.

So the success of the Coopsol cooperative, a honey exporter in Argentina that has grown from 10 producers in 1989 to 600 today with principal clients in Europe and the United States represents a triumph. It is the triumph of the cooperative model, where small farms band together, often with support from state and non-governmental institutions, to share the ideas and costs needed to improve production standards and enter international food supply chains.

The Challenges of an Argentine Honey Cooperative

As revealed in a new IDB report entitled, “Competing in Agribusiness: Corporate Strategies and Public Policies for the Challenges of the 21st Century,” Coopsol emerged in Santiago del Estero and Chaco, two of Argentina’s poorest provinces, to thrive by producing conventional and organic honey, while contribute to better social and environmental conditions in local communities. It did so amid a particularly challenging international environment in which prices had fallen because of honey’s widespread adulteration with cheap syrups from corn, rice and other foodstuffs.

Coopsol sought out financial support from American, European and Argentine NGOs, as well as international development organizations and the European Community. It trained it members in high quality production, both conventional and organic, and developed systems to monitor standards and trace the honey from the supplier to the final product.

Those advances – together with members involvement in decision making — allowed the cooperative to demonstrate that it had worker-driven, high quality, unadulterated honey and to export directly to niche markers in the US and Europe. With at least one-third of its members possessing organic and fair-trade certifications, many cooperative members are now earning at least 20% above the price of conventional honey for their organic product, and 5%-15% premiums from their fair trade status that they can use to reinvest in their businesses.

Environmental and Social Impact

They are also having a significant environmental and social impact. Coopsol lies within the larger Gran Chaco, the second largest forest in South America after the Amazon. That area has been devastated by a galloping deforestation rate linked to agricultural activities and charcoal extraction. But because the production of organic honey depends on the preservation of healthy forests, free of pesticides and other agricultural chemicals, Coopsol’s business model is forest protective, beneficial to the climate and to the people who live off the natural environment.

The ability of Coopsol to collaborate with NGOs and pool resources also allows it to provide financial support and advice on production and trade to farmers who need to supplement their beekeeping with agroforestry and other activities. It is working with the IDB Lab to provide phone and internet services to its members – something essential to the ability to trace honey production from the source to its destination. And all of this helps guarantee the viability of the project and position it as a socially responsible enterprise, dedicated to sustainable regional development.

Research has taken off. Working with the Universidad Nacional de Tucumán and supported in part by Argentina’s Ministry of Science, Technology and Productive Innovation, the cooperative has been investigating and demonstrating the anti-inflammatory and analgesic healing powers of a kind of honey it makes from the atamisqui, a flower native to Santiago del Estero. This too can help position its exports for high value, green markets abroad.

Agricultural Cooperatives: Strength in Numbers

The pooling of resources, the sharing of management decisions, and the building of networks are all things beyond the scope of small farms working in isolation. Meeting overseas production and safety standards, establishing strict traceability mechanisms, doing research and obtaining certifications are all expensive and technically advanced processes that only larger farms could be expected to do. But as the experience of Coopsol shows, small farmers can collaborate—binding together in what economists call horizontal associativity—to do all those things, achieve economies of scale and boost their bargaining power. They can become participants in the innovative, sustainable agriculture that holds so much transformative potential for the economies of Latin America and the Caribbean.

How Proposed Legislation Would Micromanage Beef Markets

Press Room Team — Mon, 18 Jul 2022 14:24:57 +0000

In the 1930s, in response to the Great Depression, Congress enacted laws like the National Industrial Recovery Act and the Agricultural Adjustment Act to micromanage various markets. With the benefit of hindsight, it is easy to see that these bills ultimately harmed consumers by fixing prices and harmed producers by preventing markets from adjusting naturally.

All Hat, No Cattle: House Hearing on Rising Meat Prices Lacks Substance
Proposed Antitrust Bill: Fuels Inflation, Harms Innovation, and Empowers the FTC with Dangerous New Powers
U.S. Chamber Report: Antitrust Legislation Threatens U.S. Competitiveness and National Security
Why, then, is Congress again considering aggressive legislation to regulate beef markets?

In a rush to address soaring meat prices and ensure that all parts of the supply chain benefit from those prices, several pending bills would dramatically expand the federal government’s role in meat markets. In particular, the Meat and Poultry Special Investigator Act would create a new office within the Department of Agriculture (USDA) to police competition. And the Cattle Price Discovery and Transparency Act would give the USDA significant new authority to manage cattle sales around the country.

Unfortunately, both bills would harm consumers and reduce competition. Specifically, the special investigator bill would create a duplicative office within USDA to combat anticompetitive conduct, which could slow law enforcement investigations and lead to more politicized enforcement decisions. Instead of creating a new office, Congress should simply ensure that the existing law enforcement agencies have the necessary tools and resources to do their jobs.

Similarly, the cattle price bill would displace free market fundamentals with government-controlled pricing. In a nutshell, the bill would require cattle feeders to sell cattle to packers, and packers to buy from feeders a mandatory minimum of fed cattle on a cash, spot market. As a result, the bill would reduce the ability of all levels of the supply chain to negotiate freely through formula and contract sales, also known as alternative marketing arrangements—a system that has helped to increase consumer demand and improve beef quality by effectively transmitting market signals about consumers’ preferences to producers.

In other words, the bill would replace a market structure that has evolved naturally over time with one created and managed by bureaucrats in Washington. When has that ever been a good idea? Instead, Congress should let these post-COVID markets adjust naturally. Indeed, fed cattle prices reached a seven-year high earlier this year, benefitting suppliers up and down the chain, and these price signals ultimately will work to expand production and keep prices in check for consumers.

Beyond their obvious flaws, these bills buy into the White House’s faulty narrative that beef markets are suffering from a lack of competition. In fact, total beef production reached record levels in 2020, and meat prices fell in the five years before the pandemic. Since 2007, the economy has become less concentrated; indeed, the four-firm concentration ratio in fed cattle beef packing has not changed meaningfully in more than 25 years.

The USDA itself recognizes that “[h]igh feed costs, increased demand, and changes in the supply chain have driven up prices for wholesale beef and dairy.” Former Treasury Secretary Lawrence Summers, a senior official in both the Clinton and Obama Administrations, has explained that macroeconomic trends are raising prices around the globe. Higher food prices are resulting from increased demand, COVID-related supply chain disruptions, and higher input costs, especially energy and labor.

Rather than expand the government’s role in the economy, create new regulatory burdens, or hire new, duplicative regulators, Congress should explore other avenues to encourage competition and lower prices for consumers. Sensible policies would reduce tariffs, raise supplies of fossil fuels, encourage people to return to work, and relax economic harming regulations. In the near century since the New Deal, we have learned that all of these tools, along with sensible monetary policy, help markets operate more effectively and efficiently, to the benefit of consumers and producers alike.

The Sugarcane Industry Sets a World-Class Example in Sustainability

Press Room Team — Mon, 06 Jun 2022 12:49:15 +0000

Sugar cane cultivation in Brazil has existed since colonial times and was associated for many years with degrading working conditions, low productivity and high pollution, but it’s now one of the best examples of sustainable development in the region.

Brazil has the largest sugar-energy industry in the world, driving a long production chain. The sector plays a fundamental role in the economy, producing different forms of agro-energy, including sugar, ethanol, electricity and other products; and it’s also one of the best examples of sustainable development in the largest country in Latin America and the Caribbean.

According to 2019 data from the Ministry of Agriculture, Livestock and Supply, Brazil has 371 sugar-energy plants in the country, the majority (255) being of mixed production (sugar and ethanol). Currently, the sector represents around 2% of the country’s Gross Domestic Product. Sector estimates are for the 2022/2023 harvest to total 596.1 million tons, up 1.9% compared to the 2021/2022 harvest. The average productivity of the sugar cane fields in this harvest is estimated at 72.61 ton/ha.

The production of sugarcane in Brazil is distributed throughout the country, but it’s most concentrated in the Southeast Region, which accounts for about 63% of national production.

This crop has existed since colonial times and was associated for many years with degrading working conditions, low productivity, high environmental pollution levels, water sources and air quality degradation, deforestation of protected areas and other environmental impacts. However, we are now witnessing a true revolution driven by professionalization, technological innovation and great advances in socio-environmental impact management and mitigation.

For starters, working conditions have changed significantly as a result of the sugarcane planting and harvesting mechanization. In the past, those tasks required large pools of unskilled labor, which were recruited both locally and far from the actual work sites. The recruiting agents’ influence was pervasive, making false promises and offering workers degrading working conditions. Worker accommodation was very poor, with inadequate living and sanitation conditions. At the end of the planting and harvesting season, temporary workers were massively dismissed, giving way to conflict and social tension.

Today, the planting and harvesting mechanization process has reduced or eliminated the demand for migrant workers. Most plants now demand full-time labor and invest in worker training, offering adequate legal, salary, health and safety, and job stability conditions. Although the total number of workers is smaller than in the previous model, the job quality has improved, training opportunities are offered, there is a marked decrease in demand for migrant labor, and the risks of slave-like working conditions and child labor have been drastically reduced.

To control remaining contracts with temporary workers, plants have invested in robust administrative systems that monitor suppliers’ legal and socio-environmental performance, including compliance with labor laws. The mechanization of the planting and harvesting stages will go a long way toward eliminating degrading forms of labor.

Another important topic is pollution reduction. In the past, sugarcane fields were burned during the harvest period to eliminate the straw, producing a large amount of smoke emissions and degrading the air quality over large areas. This practice was replaced with mechanized harvesting. By automatically cutting the cane and leaving part of the straw on the ground, this process contributes to organic matter recycling, erosion control and soil fertility preservation.

This activity, however, also generated large amounts of solid and liquid waste which was dumped with little control. Today, sugarcane milling and processing waste is fully utilized, to the point of being considered a by-product. Modern plants use these residues as fuel to produce energy. Approximately one third of the energy generated is used for plant operation, while the rest is sold to create an additional source of revenue for companies.

Another type of waste produced in large volumes is vinasse—a liquid rich in organic matter from ethanol production, which is used in the fertigation process to irrigate and fertilize crops. Filter cake is also an abundant residue, produced during the cane juice decantation process after crushing. Today, plants adopt a circular economy approach, whereby the waste that is not reused is adequately managed through solid waste management plans.

To reduce pesticide usage, plants implement advanced technologies, such as biological pest control techniques and herbicide microdosing equipment. The current production model avoids the deforestation of new areas through the environmental licensing of plantation areas.

Environmental licenses determine the areas that can be exploited and, if necessary, used for crop expansion. Most modern plants seek to expand production by extending land lease agreements and using technology that seeks to increase per-hectare productivity.

Better control of water resources is another quantum leap in terms of mitigating the climate change impacts. Most plants implement water reuse systems in their process, and crop irrigation is done through fixed and mobile systems that optimize water use. Using vinasse for fertigation also helps reduce crop water demands.

It should also be noted that most sugarcane mills produce ethanol, an important biofuel. From an entire fuel life-cycle standpoint, using ethanol in place of gasoline helps reduce greenhouse gas emissions drastically, while providing Brazil with credits that can be traded on the stock exchange.

Why Agricultural Exporters Should Consider Organic Certifications

Press Room Team — Fri, 08 Apr 2022 01:05:49 +0000

Organic agriculture is a rapidly expanding market that can provide countries in Latin America and the Caribbean (LAC) with opportunities to differentiate their products and diversify their foreign sales away from commodities.

To understand this potential, we examine the effects of organic certification on firms’ foreign sales. In so doing, we focus on two Latin American exporting countries: Argentina, the country with the largest area of agricultural farmland in the region; and Peru, the country with the most organic producers in the region. On the importing side, we concentrate on the United States, which accounted for approximately 42% of worldwide retail sales of organic foods and drinks – by far the largest organic market in the world in 2019 (FiBL-IFOAM, 2021). We explore how USDA organic certification affects overall firms’ exports and their different components, especially export prices (unit values). The evidence suggests that USDA organic certification is associated with a 20% increase in sales to the United States. This increase can be traced back to larger volumes, more frequent shipments and, importantly, higher unit values.

Organic Agriculture and Certification

Demand for organic products has expanded at an accelerated pace over the last two decades. Worldwide organic food and drink retail sales grew seven times since 2000 to reach almost US$ 120 billion in 2019. The number of organic producers and area of organic farmland have evolved accordingly and topped 3 million and 72 million hectares (HA), up from 200,000 and 11 million HA 20 years ago, respectively. LAC countries are key players in this growth, hosting 7% of organic producers and 11.5% of organic agricultural land in 2019 (FiBL-IFOAM, 2021).

Firms must be certified to label and sell their products as organic. This requires undergoing a formal process through which an official certification body verifies that the firm complies with regulations in the country in question (e.g., US Department of Agriculture –USDA- in the United States).[1] Consistent with demand expansion, the number of certified firms has increased substantially in recent years. For instance, the total number of establishments certified as organic by the USDA exceeded 44,500 in 2019 after growing approximately 65% since 2013. LAC firms accounted for 21% of this total (Figure 1).

Organic-Certified Firms Are Increasingly Important Actors in Agricultural Exports

Firms certified as organic by the USDA accounted for roughly 40% of Argentina’s and Peru’s total exports of agricultural products in 2018, almost doubling since 2013 (Figure 2, left panel). USDA-certified firms were concentrated in a handful of agricultural product categories and the largest of these categories were fruits, coffee/tea, and flours (Figure 2, right panel).

Organic certified firms were responsible for a disproportionate share of countries’ total exports of specific product groups. For instance, USDA-certified firms accounted for just 30% of the total number of cocoa exporters but approximately three-fourths of total exports of cocoa products from Argentina and Peru. Similarly, USDA-certified firms represented 30% of exporters selling flours and coffee/tea yet generated more than 50% of the respective total export values. This suggests a relatively high concentration of exports in certified firms in these sectors. In contrast, only 35% of the fruit exports were associated with the roughly 25% certified firms, thus indicating a more even distribution of these sales (Figure 3, right panel).

Organic-Certified Firms Sell More and at Higher Prices

Organic-certified firms registered higher foreign sales, even after controlling for differences across firms and their products over time (e.g., changes in firms’ productivity in producing specific goods) and across destination countries and sectors over time (e.g., changes in countries’ demand for goods in given sectors). In particular, exports to the United States were 20.3% larger for firms with USDA organic certification. The increase in export value arises from the growth in export volumes, primarily because of more frequent shipments and a rise in unit values (Figure 4, left panel). Furthermore, we find that producers selling goods for less than their peers seem to gain the most from certification (Figure 4, right panel).[2]

Countries Need More Data and Analysis to Design Organic Agriculture Policies

The expansion of organic agriculture can provide opportunities for developing countries to diversify their exports. This can benefit smaller producers, thereby reducing poverty in rural areas and helping the environment through the adoption of more sustainable practices.

For these benefits to materialize, countries should implement policies that address the possible market failures that can prevent producers from getting certified. This could include reducing information barriers that firms typically face when looking for business opportunities abroad and assessing the costs and conditions to obtain organic certifications and the advantages thereof. The same applies to the coordination problems that may arise in the provision of the necessary training to address these barriers and help firms upgrade to meet relevant organic requirements.

Trade promotion agencies can play an important role in this regard. For instance, in 2018, Costa Rica’s PROCOMER launched a “Green Growth Program” to assist firms in improving their sustainability practices and outcomes through adequate changes in their production processes. This program is now supported by the Inter-American Development Bank through the Integration and Trade Sector and includes organic products as one of the priority criteria for eligibility, thus connecting sustainability and organic agriculture.

Facilitation of organic trade through international agreements (e.g., Mutual Recognition Agreements -MRAs- between countries) is another important area in which countries should keep working. For example, Chile has already signed and implemented these types of agreements with several partners.

To properly design these policies and ensure their effectiveness, countries need to systematically collect firm- and transaction-level data on agriculture, including on primary producers, their suppliers, customers, and intermediaries. They should use these data to perform periodic research and impact evaluation of the relevant programs; and conduct regular benchmarking to identify best international practices.

The IDB is supporting LAC countries in implementing this agenda. An important initiative in this regard is LAC Flavors, an annual food and beverage business forum that the Integration and Trade Sector has held 12 times throughout the region since 2009. During these forums, buyers from as far as Dubai closed deals with suppliers from LAC. This was, for instance, the case with Organic Rainforest, a Peruvian producer and exporter of organic cacao, which has been able to open new markets and differentiate its products by getting organic, kosher, and fair-trade certifications.

[1] There is an increasing number of mutual recognition agreements (MRAs) between countries (e.g., between the United States and the European Union).

[2] In other words, unit values below the median drove the impact of organic certifications on unit values. This is consistent with available empirical evidence, according to which initially lower quality farmers tend to benefit more from certification than their higher-quality counterparts who can already obtain good prices.

[3] The dependent variables are (the natural logarithms of) those that appear in the y-axis, and the main explanatory variable is a binary indicator that takes the value of one for the United States if the firm is certified as organic by the USDA in the year in question and zero otherwise along with firm-product-destination, firm-product-year and destination country-product-year fixed effects. Estimated effects that are not significantly different from zero at the 10% level are reported as zero. The figure on the right presents quantile fixed effect estimates for the (natural logarithm of the) unit values. In the figure on the left, estimated percentage effects are shown, i.e., [exp^{(estimated coefficient on USDA organic certification)}-1]x100, whereas in the figure on the right direct estimates are presented.

Florida Department of Economic Opportunity to Assess Damages to the State’s Agriculture from Freezing Temperatures

Press Room Team — Mon, 07 Feb 2022 19:51:45 +0000

TALLAHASSEE, Fla.- The Florida Department of Economic Opportunity (DEO) activated the Business Damage Assessment Survey to assess the impact freezing temperatures had on the state’s agriculture businesses. Survey responses will allow the state to gather data and evaluate resources impacted businesses may need to recover after the freezing weather that occurred during the weekend of January 28-30, 2022.

“The agriculture business in Florida is an integral part of the state’s economy, and we are going to do everything we can to help the farmers who were impacted by freezing temperatures this past weekend,” said Governor DeSantis. “I am urging impacted businesses to complete the business damage assessment survey so we can help our farmers get back on their feet.”

“At the direction of Governor DeSantis, we encourage any business impacted by the freezing weather event to complete the Business Damage Assessment Survey at FloridaDisaster.biz,”said DEO Secretary Dane Eagle. “This invaluable data will help the state evaluate the extent of the damage and provide businesses with additional resources as needed.”

Because of foregoing conditions, Governor Ron DeSantis issued Executive Order 22-27 declaring a state of emergency in Brevard, Broward, Charlotte, Citrus, Collier, DeSoto, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lake, Lee, Manatee, Martin, Miami-Dade, Monroe, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Sarasota, Seminole, St. Lucie, Sumter, and Volusia counties. All businesses impacted should complete the survey.

Results from this survey will be shared with various federal, state, and local agencies to implement appropriate relief. Businesses can complete the survey online by clicking here or by going to FloridaDisaster.biz and selecting “Freezing Weather Event January 2022” from the dropdown menu. If you need additional assistance with your business, please call 850-815-4925 or email ESF-18@em.myflorida.com.

About DEO

The Florida Department of Economic Opportunity combines the state’s economic, workforce, and community development efforts, expediting economic development projects to fuel job creation in competitive communities and promote economic resiliency. For more information, including valuable resources for employers and job seekers, please visit www.FloridaJobs.org.