Who will be providing food for Puerto Rico?
What is the meaning of this?
Flawed though the marketplace may be, under regulated with far too often the pretense of competition by oligarchs—a term currently confined to Russia, but applicable to the corporate few—yet nevertheless the marketplace is the best tool we have. As Frank Norris noted in the Octopus, the reality of modern agriculture is that farmers must make their planting decisions based on the price determined in the commodity pits of Chicago. This is our best hope.
As the Financial Times has reported, global low commodity prices (among other factors) have placed Bunge and other international grain and soybean trading companies in economic distress. I am convinced that Puerto Rico’s catastrophe represents a likely global future of high commodity prices as high protein wheat farmers face drought in the US and disruptions in the energy sector globally— petroleum is, after all, the single largest raw material in agriculture—result in likely agricultural scarcity even in the developed world. Whatever the future brings, the reality is that Bunge, Cargill et al. will be supplying Puerto Rico’s human and revived livestock population with essential corn, rice, and wheat. I am trying here to describe the players and suggest that now is the time for Puerto Rico to establish a new and economically enlightened food and farm policy.
SOPAKCO is one of the three companies that produce Meal, Ready-to-Eat (commonly known as the MREs) for the U.S. military. Their “Sure-Pak 12” product has been the longest-available civilian MRE on the market. In addition to not being especially tasty, MREs are not an economical way of feeding a population of 2.4 million people for months at a time if not longer. This is a photograph of a box of emergency ration meals currently being distributed in Puerto Rico. http://www.mreinfo.com/civilian-mres/sopakco-sure-pak-mres/
Quicker than one might think, Puerto Ricans will move from emergency ready to eat meals to imports of corn, wheat and rice. Now, my screen shows vivid portraits of an agricultural economy dead—rotting livestock corpses on the screen.
Now there is an economic opportunity to consider an efficient future—a new farm economy and a rational food import policy. Now is the time to plan. What model should be used? A distinct figure comes to mind. W.R Poage, once the autocratic chairman of the House Agriculture Committee. Standing on the floor of the House, his 1974 defense of isolationist New Deal policies in the form of the Sugar Act defeated. Here I am trying to clarify why an agriculture policy based on government control does not work. http://www.joelsolkoff.com/blog-things-rep-w-r-poage-waco-texas/
Hurricane Maria. destroyed all agriculture in Puerto Rico.
The 3.4 million people living in Puerto Rico are running out of food
“’Whatever little bit you had is running out,’ he said. ‘The trucks with food do not come. No trucks come with anything. You go to the supermarket, and it’s almost empty.’”
Within the Commonwealth, the roads cannot transport food; where there are passable stretches truck drivers have a hard time finding gas; helicopters are not the best vehicle for carrying supplies
The extent of the catastrophe goes on and on. See the exemplary Rachel Maddow.
Who would I call first to obtain supplies of wheat, corn, soybeans, and rice not only immediately but in the months and months ahead?
First, I would call Cargill, the multinational, privately-held secretive but incredibly efficient grain and oil seeds trading company based-who-knows-where, but I would use Cargill’s Minneapolis number. 800-227-4455 (English).
I would also call:
BUNGE LTD – 10-K
Complete text (80 pages plus appendix)
Agribusiness In the Agribusiness segment, we purchase, store, transport, process and sell agricultural commodities and commodity products. Profitability in this segment is affected by the availability and market prices of agricultural commodities and processed commodity products and the availability and costs of energy, transportation and logistics services. Profitability in our oilseed processing operations is also impacted by volumes procured, processed and sold and by capacity utilization rates. Availability of agricultural commodities is affected by many factors, including weather, farmer planting and selling decisions, plant diseases, governmental policies and agricultural sector economic conditions. Reported volumes in this segment primarily reflect (i) grains and oilseeds originated from farmers, cooperatives or other aggregators and from which "origination margins" are earned; (ii) oilseeds processed in our oilseed processing facilities and from which "crushing margins" are earned-representing the margin from the industrial separation of the oilseed into its protein meal and vegetable oil components, both of which are separate commodity products; and Demand for our purchased and processed agribusiness products is affected by many factors, including global and regional economic conditions, changes in per capita incomes, the financial condition of customers and customer access to credit, worldwide consumption of food products, particularly pork and poultry, population growth rates, relative prices of substitute agricultural products, outbreaks of disease associated with livestock and poultry, and demand for renewable fuels produced from agricultural commodities and commodity products. We expect that the factors described above will continue to affect global supply and demand for our agribusiness products for the foreseeable future. We also expect that, from time to time, imbalances will likely exist between oilseed processing capacity and demand for oilseed products in certain regions, which impacts our decisions regarding whether, when and where to purchase, store, transport, process or sell these commodities, including whether to change the location of or adjust our own oilseed processing capacity. Additionally, price fluctuations and availability of commodities may cause fluctuations in our working capital, such as inventories, accounts receivable and borrowings over the course of a given year. For example, increased availability of commodities at harvest times often causes fluctuations in our inventories and borrowings. Increases in agricultural commodity prices will also generally cause our cash flow requirements to increase as our operations require increased use of cash to acquire inventories and fund daily settlement requirements on exchange traded futures that we use to hedge our physical inventories.
Earlier this year, I got into a twitter spat with a radio agricultural journalist in North Dakota. I had said that the U.S. Department of Agriculture (in the aftermath of the 1970s grain sales to Russia) no longer controls our countries food policy. Cargill, Bunge and the other highly-competitive trading companies do.
Here is what Bunge says about its competition:
We face intense competition in each of our businesses.
We face significant competition in each of our businesses and we have numerous competitors, some of which are larger and have greater financial resources than we have. As many of the products we sell are global commodities, the markets for our products are highly price competitive and in many cases sensitive to product substitution. In addition, to compete effectively, we must continuously focus on improving efficiency in our production and distribution operations, as well as developing and maintaining appropriate market share, and customer relationships. We also compete for talent in our industries, particularly commercial personnel. Competition could cause us to lose market share and
The Big Five
to be continued;meanwhile, buy my book, please.
In The Politics of Food, you can read the last time public information was available on Cargill. It was 1976. A senate hearing.
Meanwhile, I will obtain Securities and Exchange Commission 10-K forms on Bunge and other grain and oil seed trading companies. Plus, I will tell you about Riceland Foods in Stuttgart, Arkansas where (surprise surprise) I would buy large quantities of rice were I to run Puerto Rico.