Headlines
Wet Weather Sours US Sugarbeet Harvest
As U.S. farmers begin pulling sugarbeets out of the ground, the crop is looking smaller than expected, which could crimp supplies of the sweetener this season and drive up prices for consumers.
The U.S. Department of Agriculture trimmed its forecast for sugar produced from beets by almost 4% to 4.58 million short tons.
Abnormally wet weather this spring and summer delayed the planting of the crop, the source of more than half of the country's domestically produced sugar. The beets require about six months underground to produce the maximum amount of sugar and are usually planted in April.
This year, the wettest in nearly a century for the northern Midwest where many of the beets are grown, planting started nearly a month late in some areas.
"We've had a rough go of it," said Tom Knudsen, vice president of the Minn-Dak Farmers Cooperative in Wahpeton, N.D., in the heart of the country's largest sugarbeet-growing region. "We had continuous rain. It causes disease, rot."
Knudsen said the co-operative's 2,000 farmers increased their planted acreage by 7% this season, but output will likely be one-third lower than last year.
Ray Van Driessche, community and government relations manager for the Michigan Sugar Company, said the crop produced by the growers-owned cooperative will be about 8% smaller than last year due to the late plantings.
"We had a lot less growth time," he said.
The U.S. consumes about 11 million short tons of sugar annually and needs to import some of the sweetener each year to meet demand. But the USDA limits the amount of low-tariff or duty-free sugar that can be imported each year to protect domestic sugarcane and sugarbeet farmers.
The USDA has set the limit at the minimum dictated by the World Trade Organization for the 2012 fiscal year that starts Oct. 1, as it has done every year since 2006. But the USDA admitted supplies of the sugar are running low and over the summer it expanded the period that low-tariff or duty-free sugar can enter the country by one month on either side of the fiscal year.
But if that isn't enough to meet demand, consumers could be facing higher prices at home, especially if a cold snap hurts the U.S. sugarcane crop, which is harvested in the winter.
"We could be looking at higher prices for the consumer," said Sterling Smith, an analyst at brokerage Country Hedging. "We are vulnerable here and we're also coming into a cold spot with potential frost.
Raw sugar futures for October delivery on IntercontinentalExchange settled Monday at 29.57c a pound, up 1.8% on the day, still more than 44% higher than an eight-month low touched in May.
Protest Threatens Key Chinese Rice Project In Cameroon
Several land-owning villagers have vowed to recover thousands of hectares acquired by authorities and handed to a Chinese project for rice production, some of the villagers said.
Villagers Joseph Embolo Fa'a and Celestin Ze Evina were among many arrested in May while protesting against their land being taken for a 6,000-hectare rice project in the town of Nanga Eboko, located some 150 kilometers east of Yaounde.
The two appeared in court Monday for their first trial. They were arrested and detained after felling trees and blocking a passage used by cartographers demarcating the land for the project.
China's IKO Agriculture Development Ltd. reached an agreement with Cameroon's government in 2006 to obtain 10 hectares to experiment the growing of rice and other crops for eventual expansion to boost the West African nation's output.
"But within four years the IKO project has expanded its acquisition of land to 6,000 hectares, without considering traditional customs of the owners," Fa'a said in court.
Officially, Cameroon imports around 500,000 metric tons of its annual yearly consumption of 600,000 tons. The government plans to lift output to cut imports.
France's 2011-2012 Soft Wheat Harvest Seen At 33.4M Tons
French soft wheat production is likely to fall to 33.4 million metric tons in the July 2011 to June 2012 season from an estimated 35.7 million tons in the same period a year earlier, France AgriMer said.
The agency raised its estimate for 2011-12 from a previous forecast of 32 million tons two months ago, as rains in June boosted yields, after a hot, dry spring.
"Even if yields vary greatly from one region to another, rains in June reversed some of the spring damage," the agency president, Remi Haquin, said.
Talking Points
Investors Search For Land Of Opportunity
With food prices relatively strong even during recent market turmoil, investors remain keen for exposure to agriculture. One popular theme: investing in land.
Bringing more land under cultivation is crucial to meeting global food demand, as crop yields stagnate. From 1990 to 2007, farmers squeezed about 1% more maize, rice or soybeans per year from their land, down from the 2%-3% growth between 1961 and 2007, according to OECD figures.
So the search is on for more land to plant. Brazil alone could have 190 million hectares of under-utilized land, according to Renaissance Capital, equivalent to the European Union's total farmland. One answer has been to transform large areas of scrub land, known as cerrado, into arable land, by reducing the soil's acidity to make it suitable for cattle grazing and soybean cultivation.
Agrifirma, a private investment company backed by financier Lord Rothschild, raised $159 million in 2008 to invest in 40,000 such hectares. With cerrado land prices rising fast, and more crops being harvested from the land, it hopes to generate a 20% internal rate of return for its investors over a five to seven year period. Last week, it transferred around half of its assets to a new joint venture with Brazilian private equity firm BRZ Investimentos, which will majority-own the company and invest a further $82 million.
Technological development, available land and adequate property rights made the cerrado attractive to Agrifirma. Such a happy confluence of factors may be hard to find elsewhere. With 85% of the world's farmland held in smallholdings of two hectares or less, many countries are nervous of foreign investors looking to build large land banks that disrupt rural life. Brazil itself is considering laws to restrict foreign land ownership, one factor behind Agrifirma's deal with BRZ.
Agricultural companies can't escape the underlying volatility of commodity prices, or land values. SLC Agricola, a listed Brazilian cotton and soybean producer, saw its return on equity fluctuate from 15.9% in 2008, to 0.7% in 2009, back to 14.1% in 2010, with its land value returns moving wildly. Adecoagro, another Brazilian company, saw first half earnings at $28 million this year after a $70.6 million loss in the same period in 2010.
Agrifirma itself recently shelved plans for a Hong Kong flotation. But with market volatility spiking, appetite will likely return for the ultimate hard asset: land.
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