News and Issues
Renegotiating NAFTA. Canada and Mexico account for almost one third of U.S. agricultural exports.
Both countries have negotiated numerous other trade agreements since NAFTA took effect in 1994, so a fresh look at the agreements is timely. At the same time, how best to protect and expand benefits to agriculture, especially given the new U.S. administration’s focus on manufacturing? Market Solutions has long helped food, agriculture, beverage, fiber and textile clients and others understand opportunities and challenges in all three NAFTA markets, and strategies for success.
Commercial use of Drones, also called Unmanned Aerial Vehicles (UAVs), is generating substantial interest as a technology that can help increase productivity through support for precision agriculture. With new FAA Part 107 regulations expected to lead to a major increase in Commecial UAV use in the United States and new rules in Turkey, the American Turkish Council and Turkey U.S. Business Council asked Market Solutions LLC to provide a briefing on the issues and opportunities for U.S.- Turkey Cooperation. A copy of the presentation is available in the news section of the web site. Market Solutions LLC is also examining opportunities for robotics and artificial intelligence in food and agriculture.
What next for Trans Pacific Partnership (TPP) partners now that the U.S. has withdrawn from the agreement?
China is close to negotiating its own 16 country Regional Comprehensive Economic Partnership (RCEP) agreement with Asian Pacific partners. TPP promised improved access for U.S. food and agricultural exports to a number of key markets, including Japan and Vietnam, but it also introduced potential for new competition. RCEP is expected to improve market access for competitors, while setting lower standards than the TPP did in a number of areas, including labor, environmental, governance, intellectual property protections and internet/press freedoms.
India's Growth is Expected to Surpass China's in 2018. Middle class India's growing incomes are rapidly pushing up domestic demand and prices for a variety of premium food products. The IMF cut India's projected 2017 growth to 6.7% in October, but projects 2018 growth of 7.4% in India and 6.5% in China. Indian Prime Minister Modi's growth targets are more optimistic. Middle class India's growing incomes are rapidly pushing up domestic demand and prices for a variety of premium food products.
India has more than 1.2 billion people, half under age 25. India's middle class tripled over the last five years, and is expected to double again by the end of the decade. Modern food shopping and food service are increasing in both urban and rural India, introducing new opportunities for local manufacturing and trade despite many challenges. Market Solutions LLC has long experience supporting clients in both India and China, working with clients to understand the markets, challenge trade barriers and build business.
Consumer demand for Local, Organic and specialty foods continues to grow, requiring producers and their customers to look for better ways to connect supply and demand. More farmers are trying other marketing options including Farmers Markets, Food Hubs, Community Supported Agriculture (CSA) and working with wholesalers, distributors and direct with retailers, restaurants, hotels, schools and others. Explosive growth in demand for local, natural and organic products is presenting challenges in supplying these products. This has led to longer supply chains, food safety challenges and more interest among consumers and the distributors, retailers, and restaurants who supply them in knowing where their food comes from, how they can be sure it is safe, how it is raised and the impact on the environment of delivering it from farm to table. Consumer and technical research on topics from animal welfare to carbon footprints, sustainability and even water footprints sometimes result in surprising impacts on markets food and agriculture products. As food distribution and retailing become more concentrated, and concerns with food safety and security lead to more stringent supply chain requirements, the challenge faced by agricultural producers in supplying consumers interested in local products are increasing. Market Solutions LLC has worked with clients on projects to help preserve local crop and livestock industries, and support sales of local products through farmers' markets, chain and specialty retailers and distributors, and a variety of hotel, restaurant and institutional foodservice outlets.
Turkey, long a candidate for European Union (EU) membership, presents substantial opportunity for trade and investment.
With 76.7 million people, half under age 30, Turkey also hosts 32 million tourists annually and is a potential gateway to 1.5 billion consumers in Europe, Eurasia, the Middle East and North Africa. OECD previously forecast that Turkey would become the world’s third fastest growing economy after China and India in 2017. Despite strong inflation, the IMF raised its projection for real growth in 2017 to 5.1 percent in October, though it cut prospects for 2018. Market Solutions LLC has long experience working in Turkey, providing research-based support for trade and investment. Among Turkey's goals are to become a top five world agricultural economy and a top ten economy overall. It also seeks to double dairy and meat production by 2023.
A Transatlantic Trade and Investment Partnership (TTIP). What would it mean for food and agriculture in the United States, European Union (EU) and EU Candidate Countries, such as Turkey? What are likely opportunities and challenges for specific industries and companies?
The EU is proposing to eliminate tariffs on 96% of trade and provide increased import quotas for sensitive products like beef, pork and poultry if the U.S. will reciprocate. The U.S. and EU already account for nearly half of world GDP and 30 percent of world trade. Both are looking for a potential agreement that could enhance growth, jobs and competitiveness by addressing market access; regulatory issues and non-tariff barriers; and rules, principles, and new cooperation to address shared global trade challenges and opportunities. Market Solutions LLC has examined agricultural and trade policy issues for clients in many parts of the world. Our findings have been used to better understand issues, opportunities and threats, accomplishments and unintended consequences of reform, and options for improvement.
U.S. Free Trade Agreements with South Korea and Colombia are now in effect, opening a variety of new business opportunities. Negotiations continue for a Trans Pacific Partnership (TPP)and other agreements.
Market Solutions LLC works with clients to understand market opportunities and challenges from these and other agreements. Contact us for information on services to understand market opportunities and challenges and help develop your strategy to increase export sales.
What's Behind Commodity Price Volatility and Price
Basis? The Commodity Futures Trading
Commission (CFTC) and
U.S. Congress have sought to better understand
factors contributing to increased volatility of futures market
contracts for a number of agricultural commodities. Substantial
increases in commodity price levels as well as price basis, the
difference between cash prices and prices of nearby futures contracts,
are often blamed by some on speculation by hedge and index
funds, government support for biofuels, energy prices, exchange rates
and a variety of other factors. Proposed legislation and new regulations aimed at limiting speculative positions in futures and increasing transparency of swaps and other off-market transactions could have important impacts. Market Solutions LLC has examined these issues from a number of perspectives, including in-depth analysis of the changing role of transportation options in price basis for soybeans in different parts of the country, and the role that rail transportation costs have been playing in widening basis. (Visit our Newsroom for more details.)
The United States has lost 4.3% of its farms since 2007. According to findings of the 2012 Census of Agriculture, the U.S. had 2.1 million farms in 2012, about the same as is 2002, after an increase in 2007. Losses are primarily in medium sized farms, while numbers of small and large farms have remained stable. Farmers continue to get older, but also more diverse. Clients call on Market Solutions LLC to provide insights into the changing face of agriculture in order to better understand business opportunities and challenges, and how best to address them.
National Export Initiative (NEI) aims to double U.S. exports.
“…Ninety-five percent of the world’s customers and the world’s fastest-growing markets are outside our borders. We need to compete for those customers because other nations are competing for them. And that’s why, for the first time, the United States of America is launching a single, comprehensive strategy to promote American exports..." according to President Barack Obama. The NEI strategy includes: increased access to trade financing, stronger U.S. government advocacy on behalf of business, a battery of efforts to promote new markets and new opportunities for American exporters, partnerships to help firms break into new markets with the help of those who have been there, and work on new trade agreements and enforcement of current agreements to ensure fair and freer access to international markets. Market Solutions LLC has long experience providing research-based consulting support worldwide to help make exporters more successful. With our network of local alliance partners we provide the critical insights on market opportunities, challenges and competition to be overcome, and strategies, tactics and resources needed for success. Contact us today for a no-obligation discussion of your requirements.