On-farm storage and regional processing enabling food producers to get a fair return?

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bunge logoNew-York based Bunge’s global agribusiness sector is suffering as farmers in North and South America, dissatisfied with falling commodity prices, are holding on to their crops rather than selling them to processors.

This year’s global grain crop was expected to boost future returns for agricultural traders and processors but plunging grain prices led to ‘weak selling’ by North and South American farmers. Brazilian farmers have sold just 10% of the country’s new soybean crop, compared with the usual 30% by this point in the year. Cargill also noted “limited farmer selling in some countries” when it reported lower profits  this month.

There are regular ‘stand-offs’ between farmers trying to maximise revenues and merchants seeking the cheapest price in commodity markets, but the quarter ended September 30 saw some of the slowest farmer selling in recent memory in South America, according to Bunge, reporting profits below expectations.

Farmers ‘hoard’ – wealthy traders ‘corner’

on farm grain storage

Resistance is stigmatised as ‘hoarding’ by traders. Agrimoney reports one as saying: “Any drift by the (re-elected President Dilma Rousseff) to the failed leftist policies pursued by Argentina, that encourage farmer holding of beans as currency hedge, will raise concerns.”

The Wall Street Journal sheds light on the American development: “U.S. on-farm storage capacity has increased. This trend has dented revenues for the commodity-trading companies that buy grain from farmer cooperatives and grain elevators, processing crops into oils and feed or selling them to food companies and governments around the world”.

Is it too late for British farmers to increase storage, or – in the case of perishable products – process?

In 2011, the Grocer reported a plan by Farmers for Action to build a milk processing plant to convert milk to powder, taking about 30% of liquid milk out of the market & generating more money for dairy farmers. Other wholesome processing options would be cream, butter, yoghurt, ice cream and cheese.

Increased storage or processing could bring a just return to food producers and ensure the future of food production in countries where producers are unfairly treated. If large investors shy away, crowd-funding might succeed.

Sources include:

http://www.agrimoney.com/news/bunge-fans-fears-of-brazil-farmers-hoarding-crops–7660.html
http://www.ft.com/cms/s/0/e265e864-6051-11e4-833b-00144feabdc0.html#ixzz3Hn9tcozh
http://www.bunge.com
http://www.thegrocer.co.uk/fmcg/farmers-in-switch-from-milk-protest-to-milk-powder/216603.article
http://online.wsj.com/articles/bunge-agribusiness-sales-fall-8-2-1414668126
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