Real-life example of the economics of farming, relating to the potato. After
reading this, you can see why such high demand exists for Monsanto's new
potato (and other products) which reduces cost-per-acre dramatically. Put
another way, American farmers will be dying to plant the Monsanto potato in
order to compete with Canadian potato growers. And, even if the currency
situation didn't exist, the Monsanto potato would give net advantage to any
farmer using the product, in any country.
To me, looks like there is a "second agricultural revolution" going on here, and
Monsanto is leading it. Can Monsanto handle the dramatic demand for new
agricultural seed product? Look at recent investments in crop-seed cos...
Dan
(from from article)
''For the most efficient growers, we're at a break-even price.
This is an OK year,'' said Jim Chapman, executive director of the
Potato Growers of Idaho. Idaho produces nearly twice as many
potatoes as the next-highest state.
Although U.S. french fry exports have continued to rise, Chapman
said producers face competition from Canada for all forms of
potatoes. Canada's crop for next year is projected to set the
fourth consecutive record in production.
American processors buy potatoes from both sides of the border.
Because of the exchange rate, a Canadian farmer can sell his crop
for $3.50 per hundred pounds in this country and make $5 in
Canadian currency.
''That puts us at a tremendous disadvantage,'' Chapman said.
''Canada is killing us.''
***
(full article)
Asian Woes Threaten Fries Export
AP Online, Saturday, December 13, 1997 at 11:14
By CURT ANDERSON
AP Farm Writer
WASHINGTON (AP) - More than ever, in Japan, South Korea and
elsewhere in Asia, people are flocking to American fast-food
restaurants for an order of french fries.
One out of every three potatoes grown in the United States is
now sliced into french fries. And exports of those french fries
have doubled over five years, to almost 386,000 metric tons this
year.
''It's huge. The exports of frozen potatoes now account for
about 9 percent of U.S. production,'' said Steve Anderson,
president of the American Frozen Food Institute, which represents
processors.
Nowhere is the growth more pronounced than in Asia, where five
countries account for 75 percent of this year's U.S. shipments.
Japan leads the way with half of all french fry exports, followed
by South Korea, Hong Kong, Taiwan and the Philippines.
Rising incomes in Asia have brought American fast-food
restaurants to the region and their popularity is increasing, the
Agriculture Department said in a recent export report.
In Japan, there are about 5,000 fast-food hamburger restaurants
and two chains account for some 41 percent of U.S. french fry
purchases.
But now, the economic downturn in Asia could threaten that
burgeoning market. In particular, economists say french fry exports
could suffer in Indonesia, Malaysia and Thailand, which accounted
for 30,000 combined tons this year.
Still, Anderson said the relatively moderate price of a
fast-food meal with fries should prevent Asia's troubles from
hitting the crispy spuds too hard.
''People always have to eat. It's not like you're buying an
American car, or a vacuum cleaner, or a big-ticket item,'' he said.
''You're buying a fileside of fries.''
Restaurants in Japan, for example, have already begun
advertising campaigns to emphasis bargain meals. And the fast-food
chains still have plans to expand in smaller cities and towns
throughout Japan.
In this country, the increasing exports have helped bolster
prices for potato farmers, which last year suffered through a
difficult period that saw the U.S. government buy tons of potatoes
to prevent a market free fall.
The exports combined with lower production this year have
stabilized potato prices, which are projected as high as $6.80 per
hundred pounds for the coming year, compared with $4.93 last year.
''For the most efficient growers, we're at a break-even price.
This is an OK year,'' said Jim Chapman, executive director of the
Potato Growers of Idaho. Idaho produces nearly twice as many
potatoes as the next-highest state.
Although U.S. french fry exports have continued to rise, Chapman
said producers face competition from Canada for all forms of
potatoes. Canada's crop for next year is projected to set the
fourth consecutive record in production.
American processors buy potatoes from both sides of the border.
Because of the exchange rate, a Canadian farmer can sell his crop
for $3.50 per hundred pounds in this country and make $5 in
Canadian currency.
''That puts us at a tremendous disadvantage,'' Chapman said.
''Canada is killing us.''
Through September of this year, the United States exported
299,500 tons of potatoes but imported 206,500 tons, mostly from
Canada. For U.S. farmers, that means net exports of just 92,500
tons.
Other factors that give Canada a french fry edge include
proximity to eastern markets, improved quality and expanded
manufacturing capacity, according to the Agriculture Department.
For the processing industry, Anderson said the top priorities
are reducing trade barriers in other countries. The companies were
disappointed in President Clinton's failure to obtain authority
from Congress for ''fast-track'' authority to negotiate new trade
deals.
''We ought to knock down all of these trade barriers and let
companies slug it out in the market themselves,'' Anderson said. |
