|Agrimoney.com - http://www.agrimoney.com/news/news.php?id=10746|
|Changing global dynamics to have 'big impact' on farming
By Emma Penny at Agrimoney LIVE - Published 23/05/2017
The election of Donald Trump as US president, and decision by the UK to quit the European Union, are only the start.
Major social and economic outlooks are changing across the globe, and will have implications for all agribusinesses, Agrimoney LIVE heard.
The shocks entailed in Brexit and Mr Trump's election will be joined by huge changes in China's approach to food production and the willingness of other countries to supply new markets.
One example of how short-term political shocks affecting markets was the huge sell-off of Brazilian soybeans last week spurred by the Brazilian real's devaluation – some estimates put sales at as much as 5m tonnes in day.
This will have implications for soymeal prices in Europe, affecting feed mills right through to farmers, said Rory Deverell from INTL FC Stone.
Power shifts to farmers
Another example where economic change could have huge market impact, but over a longer period, was in Central and Eastern Europe, where farmers were becoming better capitalised, Mr Deverell said.
"One result of this is that farmers have been able to spend money buying better seed and inputs, which has driven output.
"But they have also invested in storage capacity, which is changing selling patterns.
"Farmers used to have to sell everything at harvest, but now they don't need to sell - the power has moved towards farmers."
China to drive biggest shifts
China's approach to agricultural markets will drive the biggest shifts in markets, he said, and this had started with its move to get rid of its stocks.
"It has been 90% self-sufficient since the revolution, so it is going to become a big player in the grain market.
He said it had also moved from "buying land to buying knowledge" in its quest for food security.
Food safety savvy
Marc Sadler from the World Bank said this trend had become apparent with the $4.7bn purchase by China's Shuanghui International (now WH Group) of US-based pork giant Smithfield three years ago.
"It does give it [China] access to US pigs [to meet its growing demand for pork]," he told the conference, in London.
"But it also gives it food safety knowledge as they have had so many problems, and this is one of the fastest ways to solve it."
'Now it is the market'
Mr Sadler said he believed China's move towards buying-in beef to meet demand could see countries such as Brazil set up production units with 200,000 head of cattle focussed on producing 'value meat'.
"There is the potential for this to happen in Brazil, and it could be a game changer, but it would also put the Amazon under huge pressure."
"The biggest shifts are being driven by China," added Mr Deverell.
"For example, 20 years ago it was a bit player in the soya market, now it is the market."
Agrimoney.com has just published a report on agricultural trade in the era of Trump and Brexit, following on from a comprehensive briefing on the shake-up in Chinese farming. More information on the reports can be found by clicking here.
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