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" I heard it
through the
AgLine"
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November 18, 2011
·
China economy
good news for US growers
·
Farmland has
golden glitter for investors
·
Tough row for
young farmers starting out
·
Nanny
government may kill family farms
·
Cuban
countryside leads free market reforms
China economy good news for US
growers
(Wire Services) FRESNO, CA – Amid American economic woes,
China is fueling the success of a particular business sector by leading a
strong export demand for U.S.-grown tree nuts, a trend that is likely to
continue, according to a research study issued this week by Rabobank's Food
& Agribusiness Research and Advisory group.
U.S.
almond, walnut, pistachio, pecan and hazelnut growers have experienced banner
years of crop prices recently, as China's once largely agrarian
country transforms its economy from export-driven to consumer-driven. The move
is giving China's
urban middle class more purchasing power to afford premium products such as
tree nuts. Additionally, an expanding worldwide health and wellness movement
has found fertile ground in China,
where these nuts play a key role in balanced nutrition. The two shifts have U.S.
tree nut farmers enjoying record prices and scrambling to plant more acreage as
the projected demand will last into the long term.
"The Chinese government is promoting an economy that is
favorable for many U.S.
exports, especially tree nuts," said the report's author, Karen
Halliburton Barber, assistant vice president and senior agricultural analyst
with the Food & Agribusiness Research and Advisory group. "As the
Chinese middle class grows, so will the demand for
almonds, walnuts, pistachios, pecans and hazelnuts. This is good news for
growers here in the U.S."
China has
long been viewed across many industries as a threat to the U.S. marketplace. Now, in many
sectors, China is becoming
the customer and the U.S.
is becoming the seller. As China's
middle-class economy grows, so does the standard of living and the products
demanded -- including food items once limited to the wealthy, or only purchased
for special occasions. The same growing middle class is also becoming more
in-tune with their health -- originating in the Chinese culture's long-standing
affinity for tree nuts in traditional medicine. This is good news for U.S. growers, but could pose a risk to U.S.
processors.
"U.S.
processors face a dual challenge: the rising cost of tree nuts and competition
from lower-cost processing in China,"
said Barber. "Many importers have been reducing their costs by buying
in-shell nuts directly from U.S.
growers and shipping them overseas for processing."
Barber contends that there are inherent risks with U.S. growers placing so much dependency on the
Chinese market, especially if the U.S.
cannot meet short-term demands and China develops trade relationships
with other countries who grow the same nuts. In addition, the increasing
strength of the dollar could raise the costs of the exports. Part of the
increased costs could be passed on to Chinese consumers, who may shy away from
increased prices. Barber notes that, while this is a concern, premium imported
tree nuts are already being purchased by higher income segments of the
population who are more likely to afford the higher prices.
The report provides individual outlook profiles for almonds,
walnuts, pistachios, pecans and hazelnuts, including each nut's challenges and
opportunities. The study also touches on other global export markets and their
effect on the short-, medium- and long-term demand for U.S. tree nuts.
Media can obtain the full report, "U.S. Tree Nuts
Feeding the Growing Appetite in China,"
by contacting Andy Frokjer at Rabobank,
N.A. or Brandon Souza at AdFarm.
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Farmland has golden glitter for
investors
(REUTERS)
- Where there's muck, there's money, the old expression goes.
With 7 billion people now needing food on this planet,
putting your money into soil and agriculture might be a long-term investment to
consider. You'd certainly be in good company: In recent years, high-profile
investors such as Jim Rogers and George Soros have made investments in
farmland.
What makes farm property attractive? It has a finite supply
and may become even scarcer with global warming, desertification and
development. And with a rising population, more tillable land will be needed.
Moreover, it could be a way to diversify your portfolio away
from financial markets wracked by global debt fears. Gold has been one
alternative, but farmland could be a better long-term bet. Unlike precious
metals, you can rent it out and use it to grow crops or feed livestock.
Although depressed somewhat by the economy's recent
weakness, U.S.
agricultural real estate prices have climbed 40 percent since 2004, according
to the U.S. Department of Agriculture (see
http://www.frbkc.org/publicat/mse/mse_0111.pdf).
Recent spikes in commodity prices have given a new lift to
farm prices. Interest rates have also been relatively low, which tends to boost
most commodity prices. And when there are weather-linked problems in major
agricultural zones such as the American Midwest or Russia's grain belt, supply-related
price increases often follow.
Buying individual parcels of prime agricultural land is
difficult for most people. You have to know how productive that land has been,
the cost per acre and the equivalent cost to rent it out. History offers a
plethora of boom and bust cycles, and land owners need to be long-term
investors to hang on through the dips.
For most investors, funds that invest in agricultural
commodities and the farm business funds are a good way to get limited exposure
and liquid enough to sell easily. They do not give a perfect correlation to
land prices, but they do tend to shadow farmland prices. These exchange-traded
funds (ETFs) can help you make targeted investments
in agriculture and related industries, and with a relatively small investment.
The funds do not invest directly in farmland, but they offer
a way to put some agri-dollars into diversified
portfolios. Here are a few:
-- Market Vectors Agribusiness ETF. This exchange-traded
fund invests in a basket of companies that derive at least 50 percent of their
business from agriculture.
-- PowerShares DB Agriculture ETF.
By investing in an index that reflects the performance of agricultural
commodities -- and futures contracts that represent them -- you can diversify
your portfolio with this fund. The farm economy, of course, directly tracks the
prices of key commodities.
-- Global X Farming ETF.This fund
follows the price and yield of a farming index. It is based on performance of a
diverse list of global companies in farming and farm products.
There's always a solid reason to be cautious with these
sector-oriented ETFs. They are subject to stock,
interest-rate, commodity, country and now climate-change risk. If interest
rates rise, commodities can move in the opposite direction. Land prices can
easily crash without any warning and sometimes for reasons related more to
finance and cash availability than crop prices.
You also need to be aware that the more investors who buy
into agriculture, the greater likelihood that a price bubble
will form. Midwestern cropland values soared some 20 percent in the fourth
quarter of 2010 alone, reports the Kansas City Federal
Reserve Bank (click http://www.frbkc.org/publications/research/mse/). Lofty
returns tend to attract more investors hoping to reap similar performance. In a
short period of time, these badly kept secrets feed speculative buying.
Even though farmland is becoming more valuable, you
shouldn't confuse investing in it with owning a government bond. The only thing
guaranteed in agriculture is uncertainty and volatility.
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Tough row for young farmers starting out
(The
New York Times) – Emily Oakley, who had worked on an organic farm in California, moved with her husband, Mike Appel, to Oaks, Okla.,
in pursuit of cheap farmland. But even though they had $25,000 saved, the
couple could not get a bank loan. When they applied for a government loan, the
loan officer threw back his head and laughed.
“He’d never met anybody coming in for a loan for an organic
vegetable production,” Ms. Oakley said. “He thought, ‘These are young, naïve,
romantic, idealistic kids who didn’t know what they’re getting themselves
into.’ ”
Similar stories prompted the National Young Farmers’
Coalition, a new group that has grown out of the Hudson
Valley in New York, to survey more than 1,000 young
farmers nationwide in an effort to identify the pitfalls that are keeping a new
generation of Americans from going into agriculture.
“Everyone wants young farmers to succeed — we all know
that,” said Lindsey Lusher Shute, who oversaw the
survey. “But no one was addressing this big elephant in the room, which was
capital and land access.”
Ms. Shute’s husband, Benjamin, runs Hearty Roots Community
Farm in the Hudson
Valley, which delivers
seasonal produce to 500 families. Ms. Shute said she hoped that the survey
results, released on Wednesday, would demonstrate to the United States
Department of Agriculture and to Congress that young farmers, although
passionate, have needs that must be addressed.
The obstacles are formidable. At Quincy Farm in upstate New York, Luke Deikis and Cara Fraver say they are living their dream, harvesting cabbage,
sweet potatoes and carrots on a 49-acre property on the Hudson
River. Still, even after three years of farming, Ms. Fraver, 30, waits tables, and Mr. Deikis,
31, moonlights as an engineer in the film industry, occasionally driving three
and a half hours to Manhattan
to pay the bills.
Tom Vilsack, the agriculture
secretary, appears to have championed their cause. The 2008 Farm Bill included
a program for beginning farmers and ranchers, and over the past year, the
Agriculture Department has allotted $18 million to universities and extension
programs to educate beginning farmers.
Speaking at the annual national convention of the F.F.A., or
Future Farmers of America, in Indianapolis
last month, Mr. Vilsack said: “The future of
agriculture is bright and will present the next generation with incredible
opportunities to pursue. Young people should continue to engage in policy that
affects them, but they shouldn’t be limited by it.”
Mr. Vilsack has often noted that
the average age of the American farmer is 57, and that that age is rising. He
has said he hopes a younger generation will emerge, not only to replace
retiring farmers, but also to reinvigorate rural areas. Last
spring, his deputy, Kathleen A. Merrigan, toured
colleges and cities to encourage young people to farm.
Six miles outside of Knoxville,
Iowa, Ethan Book, 31, chose to
raise livestock, as his family did 60 years ago. A former youth pastor, Mr.
Book became a farmer because he had high cholesterol and had read that
pasture-raised meat was healthier to eat. “In my mind,” he said, “our animals
are doing what they were created to do, eating the way they were created to
eat.”
Although Mr. Book does not regret his decision to farm, he
discourages others from entering the business. “It’s going to tear you down
financially, even if you make no mistakes,” he says.
Data from the Agriculture Department support his warning —
only 22 percent of beginning farmers turn a profit their first year. The
National Young Farmers’ Coalition found that 73 percent of young farmers must
work away from the farm; Mr. Book, a father of four, works 40 hours a week at a
farm store.
When he looks out the back window of his small farmhouse, he
sees a 3,000-acre corporate farm and machinery worth four or five times as much
as his operation. “People are demanding cheap food, they’re demanding a lot of
it — corn for fuel, soy for diesel,” Mr. Book said. “It does have an impact on
us in the sense that we’ve seen land prices skyrocket in Iowa. It does make it difficult for a
beginner to get into the game.”
From 2000 to 2010, the price of farmland doubled nationwide,
to $2,140 per acre from $1,090. For Mr. Deikis and
Ms. Fraver, buying property required creativity and
research. In 2007, they were tending their garden on Quincy Street in Brooklyn
when they decided to become farmers. First they met with landowners through a
land link program that pairs agricultural landowners with farmers to pass along
land, but the land that appealed to them was too expensive.
While they continued their search, they apprenticed on
established farms, which they realized later was crucial for their success.
Seventy-four percent of respondents to the National Young Farmers’ Coalition
said that apprenticeships — unsanctioned in many states — are the most
important programs for beginning farmers.
When Mr. Deikis and Ms. Fraver found a scenic spot for sale on the Hudson, across the river
from where the Battles of Saratoga were fought, they conjured a plan with two
conservation groups to create an agricultural easement on the property, which
lowered its value. The couple closed on the farm in April.
“We are in a wonderful spot in rural America, even if there aren’t hip
bars with good beer on tap,” Mr. Deikis said.
Ms. Oakley said young farmers rarely discussed that lack of
community, adding that she had seen the isolation break up marriages. At their
Three Springs Farm, she and her husband, both 34, grossed $60,000 by their
third season — a reason to celebrate by most standards — but they wished they
had more company.
“It was just the two of us, every job we did together,” Ms.
Oakley said. “It’s intense. We would gladly trade a little competition for more
community and collaboration.”
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Nanny government may kill family farms
(denverpost.com)
– On Colorado's farms and ranches, where sons and daughters work
shoulder-to-shoulder with parents to bring cows and hogs to market, there is
fear that new regulations could end a way of life.
Proposed revisions to U.S. Department of Labor child-labor
laws for agriculture are lengthy and detailed. But farm advocates say many
would kill the family farm and gut programs such as the Future Farmers of
America and 4-H Club.
One new rule would allow kids under age 15 to work only on
their parent's farm. Another would keep children under age 16 from driving most
power equipment.
Nonagriculture workers under 18
would be banned from grain elevators, silos, livestock exchanges and auctions.
And the provisions also would stop children younger than 15
from working near "sexually mature" livestock, including bulls and
boars or nursing cows and sows.
"In D.C., they really don't understand they are trying
to stop what are common practices out here," said Shawn Martini, spokesman
for the Colorado Farm Bureau.
Several farm groups successfully lobbied to extend the
comment period to Dec. 1. The extension was granted "because of the
interest expressed and the department's desire to obtain as much information
about its proposals as possible," the Labor Department said last month.
Agricultural groups hope to sway the Labor Department to
amend its proposals, Martini said.
"Most regulatory agencies do look at the comments and
respond to them," he said.
The intent of the revisions is to beef up safety standards
for children working in agriculture, farm advocates say.
Farming and ranching are among the most dangerous work in
the world. It's especially dangerous for young workers, with the second-
highest fatality rate for workers ages 15 to 24.
Officials say they just want to prevent a tragedy like the
one that killed Cody Rigsby, who was 17 when he
suffocated in a grain bin in May 2009.
In August, the grain company pleaded guilty to federal
work-safety violations and agreed to pay the boy's family $500,000 to settle
civil claims.
No farmer or rancher wants to see anyone get hurt on the
job, said Terry Fankhauser, executive vice president
of the Colorado Cattleman's Association. "But there are real concerns
about how the rules are written," he said.
Those under 15 also could not help raise animals as part of
a 4-H project or learn the newest techniques in animal husbandry as a member of
the FFA, said Les Hardesty, a Weld County dairy farmer.
"Where and how are kids supposed to learn how to farm
or ranch?" Hardesty said.
Susan Godsey — who works the
family farm in Yuma
County with her husband,
Ryan — worries that the new rules could block her three daughters and son from
walking across the street and helping out on their grandparents' farm.
"These rules just take the common sense out of the
equation," Godsey said. "We have a pretty
good idea of what our kids can do, and we are not going to let them get into a
hazardous situation."
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Cuban countryside leads free market
reforms
(Associated
Press) SANTA ISABEL DE LAS LAJAS, Cuba
— On sleepy streets plied by rickety horse-drawn carts
and rusting 1950s automobiles, the sounds of commerce are once again being
heard in Cuba's
countryside.
A private sandwich shop has opened in a town previously
served only by a grim state-run cafeteria. A woman sells trinkets from a small
spot of shade. A weathered farmer in dusty jeans has rigged up an ancient ice
cream machine and is selling cones for 8 cents a pop.
Out of sight of Cuba's dollar-spending tourists, in
areas where money from overseas relatives trickles in only sporadically, dusty
towns like this one slowly are being revitalized by a series of private
enterprise initiatives ushered in by President Raul Castro.
Visits to more than a dozen towns in the central
provinces of Cienfuegos and Sancti Spiritus found private businesses popping up on every main
street, places hard hit by the decline of Cuba's sugar industry and the
general economic malaise that has settled over the country after more than half
a century of Socialist rule.
Even in one-street hamlets like Yaguaramas,
small businesses are buzzing while many residents, and most canines and
livestock, lounge sleepily in the broiling midday sun.
The government says about 338,000 Cubans across the island
now have licenses to operate private businesses, including more than 4,500 in
Cienfuegos and 14,000 in Sancti Spiritus. While the
number has not changed significantly since April, it is still more than three
times the government's goal for the year. The businesses are the result of
Castro's plan to inject a measure of capitalism into Cuba's flatlining
Marxist economy.
The new businesses are exceedingly modest. The income
generated is nowhere near enough to transform Cuba's perennially weak economy.
But on the level of individual lives, or the hopes of a small town, residents
say the reforms have been a boon.
"It's a way of having something that is all
yours," said Alain Suarez, who along with his family has opened a
professional looking "guarapera," or
sugarcane juice stand, in Santa Isabel de Las Lajas,
about 25 kilometers (16 miles) from the central city of Cienfuegos up a bumpy
byway lined by tall fields of sugar cane.
The bright-faced 23-year-old points to a small pizza stand
across the street from his establishment, and another that sells sandwiches.
"All these businesses that have opened up recently have given the town new
life."
While he speaks to a reporter, a dozen schoolchildren come
over to buy drinks, and a huge press that Suarez's father concocted with an old
American electric motor whirrs from a back room, sending sugarcane juice
running down a metal trough and through a little window into a bucket near the
front counter. The children pay 4 cents each for a cup, and go off happy.
As Suarez's little juice stand shows, free enterprise starts
off small in a place where most residents make salaries of about $20 a month
and where all private businesses, from humble grocery stores to electronics
shops to giant factories, were taken over by the socialist state in the late
1960s.
The town was the birthplace of legendary singer Benny More
(pronounced mor-AY), who immortalized it in the 1955
song "Lajas, Mi Rincon Querido"
("Lajas, My Beloved Place"). But it has
experienced trying days since then, including the dismantling of one of its
giant sugar refineries in 2002 and the temporary closure of another since then.
Cuba,
once famed for its lucrative sugar trade, has seen production plummet, with
2010's harvest the worst in 105 years.
Other than a brief festival each year to honor More, Lajas rarely gets any tourists, and residents say few
receive remittances from relatives in South Florida
or elsewhere. And while Castro's plan to lay off half a million state workers
has stalled, Cuba has shed 127,000 government jobs, further thinning the ranks
of people with money to spend.
But Cuba's
countryside benefits from a quirk of the country's economic system. Because
big, inefficient state-controlled farms have trouble meeting the country's
demand for food, it may be the only place in the hemisphere where small-scale
private farmers are near the top of the income pile.
"Here, everything is reversed," Omar Everleny Perez, the lead economist at Havana University's
Center for Cuban Economic Studies, told The Associated Press in the first
interview that any Cuban government or university economist has given a foreign
news organization since the reforms were announced in October 2009.
Perez said Cuban farmers survived the lean years of the
1990s that followed the collapse of the Soviet Union
better than city dwellers because they were able to sell the food they grew at
relatively high prices to those desperate for nourishment.
"There are bank accounts worth 4 or 5 million Cuban
pesos ($160,000 to $200,000) in the hands of farmers," he said. Perez said
13 percent of Cubans hold 90 percent of the money in all of the island's
private bank accounts. "It is very concentrated, and much of it belongs to
the farmers," he said.
Perez has been unusually outspoken in his criticism of the
reforms so far, arguing in opinion pieces published by the Roman Catholic
Church and elsewhere that much more needs to be done to pull educated Cuban
professionals into the private sector, allow bank credits to would-be
entrepreneurs and establish a wholesale market to supply the new businesses.
But he said the changes are actually going better in the
countryside.
He pointed to a program started in 2008 that has turned over
more than 1.3 million hectares (3.2 million acres) of fallow government land to
small-time farmers. While it has been beset by complaints of inefficiency, the
program has put cash in the pockets of many rural families and some of it has
gone into patronizing or funding new private businesses.
Salvador Parra Maya, a 46-year-old musician in Rodas, a town of about 12,000 in Cienfuegos province, said his family had
invested $1,000 in a waist-high refrigerator, countertop and oven for a
take-out sandwich shop set up in the front room of its small apartment. Up the
block on the main street, a woman sold sticky peanut treats, and a barber had
expanded his kiosk with a license to sell bootleg DVDs. It may not be Fifth Avenue, but
for Rodas it's the closest thing.
"The town has improved," Maya said. "There's
more to buy, the quality of life is better. People are satisfied."
In Cienfuegos itself, a relative metropolis of about 170,000
along the southern Majagua peninsula, the economic
reforms have created a boom in private restaurants, or "paladares," said Santiago Gonzalez, an engineer who
opened a rock'n' roll-themed eatery called "El
Lobo" (The Wolf) in the center of the city.
The restaurant features posters of once-banned 1970s rock
groups and a painting of KISS frontman Paul Stanley,
with whom Gonzalez shares an eerie resemblance. Despite the somewhat shabby
interior, he says his place is always full, with a mix of tourists and Cubans,
and that he can clear up to 3,000 pesos ($140) a month after taxes, about seven
times what he earned as an engineer.
Gonzalez said the number of paladares
in the city had soared from just two before the reforms to between 40 and 50
today.
"From last year to this, you can just see the city
changing," Gonzalez said. "It is a city that is prospering."
Perez said most of the reforms until now have been designed
to alleviate the economic hardship of citizens, and they have been adopted
first because they don't cost the state anything. But he cautioned that the
pace of change must pick up significantly to pull Cuba out of its economic malaise.
In addition to bank credits and a wholesale market, Perez
has been advocating the creation of mid-sized cooperative companies that can do
business directly with the state - making boots for workers, or preparing
lunches, or selling transportation services - something that Cuban leaders have
promised but not yet implemented.
On Thursday, Cuba
announced the legalization of a real estate market, something the government
had been promising for more than a year.
"We are only at the beginning of the process," he
said. "The law allowing private enterprise ... is not sufficient to boost
the economy. Selling sandwiches isn't going to make the economy grow."
But in Lajas and other towns, the
reforms have been enough to change people's attitudes, and keep many young
people from going away.
"Fewer people are leaving town because they are finding
something to do here," said Arelis Contreras,
the mother of two young adults who says she used to worry that her children
would leave rather than make a go of it in a town that offered them little
work.
"Now, they won't have to go to Havana
or Santiago in
search of something better," she smiled. "Because they will have it
right here."
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End Transmission