Ag News, Monday October 12, 2015

TPP Likely Means More Consolidation of Japanese Farms

The Wall Street Journal predicts the Trans-Pacific Partnership will likely spur further restructuring in Japan’s agriculture sector accelerating a push toward consolidation of small farms and a shift toward premium exports. The deal sees sharp reductions in Japanese duties on pork and beef for the United States. Japanese farmers fear that will lead to consolidation as large ham and sausage makers prefer to use inexpensive foreign pork. Of the world’s small farms—defined as less than 2 hectares or about 5 acres—87% are in Asia Pacific, according to the National Australia Bank. For Japan, Prime Minister Shinzo Abe has made revitalizing the agriculture sector a priority.  He wants to see young, enterprising farmers focused full-time on producing superior products and has aimed at doubling food exports by 2020. The trade deal will likely further those efforts by injecting some competition into the market. Proponents of restructuring say fundamental change is essential to saving the sector from further decline. With the number of farmers declining every year, and their average age now 67 and rising, even farmers acknowledge that change must come.

FAO Food Price Index up Slightly From August

The FAO Food Price Index* averaged 156.3 points in September 2015, up one point from its sharply reduced August value, but still18.9 percent less than one year ago. The Food and Agriculture Organizations of the United Nations reported sugar and dairy products firmed last month, other commodities remained close to, or slightly below, their respective August levels.  The Cereal Price Index averaged 154.8 points in September, nearly unchanged from August. Meanwhile, the Vegetable Oil Price Index averaged 134.2 points in September, marginally below the previous month but the lowest level since March 2009. The Dairy Price Index averaged 142.3 points in September, up 6.8 points (5 percent) from August and the Meat Price Index averaged 170.5 points in September, almost unchanged from the previous month. Finally, the Sugar Price Index averaged 168.4 points in September, up 3.2 percent from August.

Recession Seeming More likely for the U.S., Still, Chances Remain Low

The chance of the U.S. heading into a recession has jumped, according to Bloomberg, but remains small, at 15 percent. That does mark the highest level since October of 2014, according to economist surveyed by Bloomberg. The survey has held at roughly 10 percent for the last 13 months. The Economists cites the delayed Federal Reserve Rate hike and turmoil in global equity markets. Concerns over China and the potential spillover to other economies have led economists to cut their third-quarter growth forecasts to 2 percent from as high as 3 percent in July. China also had worried Fed officials, who cited it as a risk to their outlook for economic growth and inflation. There is a bright spot, though: In a separate survey, economists projected the U.S. won't enter a recession until 2019.

NAFB News