Food sales boosted by Christmas trading

According to the BRC-KPMG Retail Sales Monitor, total food sales in December 2014 grew for the first time since April, with the three month average to December climbing to -0.3%.

Like-for-like retail sales in December were down 0.4% on the same period last year. On a total basis, the British Retail Consortium (BRC) said sales were up 1%, the slowest December growth since December 2008.

BRC director general Helen Dickinson said: “The figures for December show that the British public were in a shopping mood with total sales up 1% on the same period last year.

“It’s also worth noting that this has been the best month for food sales since Easter with many of us opting increasingly for premium ranges for our festive fare.

“It’s clear that targeted discounting has worked for the UK’s retailers – prices have been cut just enough to encourage customers through the doors but not so much that sales growth has been completely choked off. In one of the most fiercely competitive retail environments in recent years, retailers will be encouraged by the fact their strategy for December appears to have paid off.”

KPMG head of retail David McCorquodale said: “The grocers had rather a commendable Christmas, given the persistent price deflation that has dogged the sector throughout the year. Food sales reached a respectable level in December and the three month average has climbed to -0.3%, from a low in September of -1.7%.

“2015 is likely to bring more of the same, and the big four grocers have already signalled they will cut prices to secure sales.”

Source: BRC


Sudan dreams of becoming global sugar player

In a hangar-shaped factory hall in central Sudan a dozen workers rush to pack refined white sugar gushing from a funnel into paper bags to be loaded on three trucks parked outside.

Next year, the management at Kenana Sugar Company hopes the plant will be even busier as it plans to boost its output as the African country seeks to increase sugar exports.

Faced with the loss of most oil production after South Sudan seceded in 2011, Sudan has been scrambling to find new sources for state revenues and dollars to pay for imports. Developing its sugar industry is a priority as is searching for gold.

“There is plenty of land suitable for sugar cultivation and also the water is plenty,” says El Zein Mohammed Doush, head of the sugar business unit at Kenana’s main plant located 270 km (170 miles) south of the capital Khartoum.

Boosting sugar production also has political undertones. The sweetener is the most important food ingredient in a country where it is normal to put three spoonfuls in a small glass of tea or orange juice.

The price of sugar is so sensitive in the vast African country it can spark revolutions. A huge spike was one reason for street protests which led to the toppling of late President Jaafar Nimeiri in 1985.

President Omar Hassan al-Bashir has been facing for over a year small protests over a rise in food prices. Annual inflation hit 41.4 percent in April though critics say the real figure is much higher.

Thanks to a capital injection of $500 million from its main Gulf owners Saudi Arabia and Kuwait, Kenana wants to more than double its output to 1 million tonnes in 2015. Its affiliated White Nile Sugar Co eyes a production of 250,000 tonnes from next year.

That would help cover domestic demand of 1.2 million tonnes and leave room for more exports. Currently, all local plants produce between at least 600,000 and 700,000 tonnes in total annually, analysts estimate. By next year, the output could reach between 900,000 and one million tonnes.

Sudan, one of the biggest African sugar producers after Egypt and South Africa, hopes to become a global player by 2020 competing with world leaders such as Brazil.

In all the African country wants to produce 10 million tonnes by 2020 as more plants will go online by then, said Doush. Kenana alone plans two more factories, while the government has now put up for sale four state-owned plants which need modernisation.

Under a deal with Kenana’s Gulf investors, the company is allowed to export up to half of its output, which goes to African neighbours, the Gulf and Europe.

To diversify its products, Kenana also plans to more than triple the output of biofuels, a by-product of sugar production, to 200 million liters by 2015.

“Ninety percent of our ethanol goes to the European Union, France, Holland,” Ahmed Rabih, head of the ethanol business unit said.


Sudan has been in turmoil since the loss of southern oil but the economic situation is expected to improve soon after South Sudan resumes exporting crude through northern facilities.

The International Monetary Fund (IMF) has urged Sudan to use the $2 billion Khartoum expects to make from pipeline fees from South Sudan until 2015 to reform the agriculture sector to boost non-oil exports.

Unlike other Arab countries made up mostly of desert, Sudan is a prime location for food production due to its vast fertile scrubland and easy access to the River Nile water.

“Sudan has everything needed for success, the water, land, human resources,” Sheikh Ibrahim Ben Khalifah, head of the Arab regional center for Entrepreneurship and Investment Training, told a Khartoum food investment forum it co-sponsors on Monday.

But analysts say the sector has been badly managed like the rest of the country, which is widely associated with ethnic wars, corruption and coups.

The Gezira scheme, one of the world’s biggest irrigation projects built by British colonial rulers 100 years ago is a shadow of its former self.

The sugar industry, on the other hand, is in a better shape as it enjoys various subsidies and the main plants are run by Kenana, which is kept flush with Gulf money.

But Mohammed al-Jak, economics professor at the University of Khartoum, said the 2020 target of 10 million tonnes of output was unrealistic. “I think a lack of funding and infrastructure will be big obstacles for even to reach half of this goal.”

The expansion plans also come at a time of an economic downturn coupled with global excess supplies. Raw sugar benchmark futures trade about 16.80 cents per lb, less than half their peak price reached two years ago.

Harry Verhoeven, an expert on Sudanese economy at Oxford University, said Kenana was posting a profit and was one of the most sophisticated firms in Sudan but remained a long way from becoming a global player like sugar firms in Brazil and Turkey.

“Kenana has received billions in subsidies but is not there where it should be. It’s not a big player, a giant,” he said.

He said the government was undermining the sector’s efficiency by controlling the main sugar firms, shielding them from competition and pampering them with subsidies.

Analysts say the market gets distorted because the government is guaranteeing the firms a sugar price almost double their production costs, which opens the door for corruption.

Critics also say the sugar industry makes big profits while the mostly poor Sudanese benefit little from it. Kenana, which has a top-notch canteen and guest house, says it has hired 4,000 unskilled workers who get free medical care.

But with their mud-brick houses and unpaved roads, the villages neighbouring the plant look as poor as the rest of Sudan. They lack running water and families can be seen filling pots from a small lake near the road from the plant to Khartoum.


Japan Easing Decade-Long Ban on American Beef Imports

A ban on U.S. beef imports in place since “mad cow disease” outbreaks in 2003 has been eased by the Japanese Ministry of Agriculture, Forestry and Fisheries. The change will take effect on Monday, January 28.

The move was a further relief from 2006 rules that mandated only cows 20 months and younger could be imported, a step back from a full ban in 2003. Japan will now allow U.S. cows 30 months and younger to be brought into Japan.

The National Cattlemen’s Beef Association released a statement saying that the change “will result in hundreds of millions of dollars in additional exports of U.S. beef.”

“This is great news for cattlemen and women and is a significant milestone in our trading relationship with Japan,” said NCBA President J.D. Alexander. “Japan is a great market for U.S. beef and we look forward to continuing to meet Japanese consumer demands. This move is an important step forward in paving the way toward greater export opportunities to one of our largest export markets.”

Japan is an important market for U.S. beef exports, accounting for nearly $849 million and 130,000 metric tons in 2012, making it the second largest export market for U.S. beef.

Mad Cow Disease

Bovine spongiform encephalopathy (BSE), better known as “mad cow disease,” infects cattle and causes them to show behavioral and neurological aberrations. Infected cows’ brains appear to have holes when examined microscopically. The infectious agent of the disease can spread to humans through eating meat from an infected animal, and manifests as Creutzfeldt-Jakob disease.

The discovery of mad cow disease in American cows in December 2003 resulted in massive import bans against American beef from approximately two dozen nations, although many rescinded or eased those bans in the ensuing years. Japan has taken a more cautious stance, and the latest development represents a big opportunity for the U.S. cattle industry.

Lasting ffects of the Japanese import ban are apparent in comparisons between 2003 and 2012 statistics. According to the U.S. Department of Agriculture, in 2003 ranchers exported 375,455 metric tons of beef to Japan, worth $1.391 billion. In 2012, that figure dropped to 158,646 metric tons, worth $874 million.

Challenges Ahead

The cattle industry still faces increasing pressure from rising grain prices. A drought, coupled with competition from ethanol, has greatly increased the cost of feed and raised operating costs for cattle ranchers.

Ana Puchi-Donnelly, an agricultural commodities trader in London, deemed this year the “worst drought in the last 50 to 70 years in one of the hottest years on record.”

Although it remains to be seen whether cattle production can meet the new demand from Japan, the cattle industry is pleased nonetheless.

“This announcement is a shot in the arm to a market and producers facing continued drought, high input costs and increasing federal regulation,” said Alexander.


Food Prices Rise in March Due to Downfall Of Dairy Products

The United Nations’ food agency announced global food prices rose 1 percent in March, according to Fox Business News.

The rise in prices is due to dairy costs, which have been hard hit by drought this past year, according to the organization. Cereal prices, however, remain the same.
The Food and Agriculture Organization (FAO) price index, which measures month-to-month price changes in cereals, oilseeds, dairy, meat and sugar averaged 212.4 in March. The index was 210.7 in February, the highest since October 2012.

The dairy sub-index was effected a bit more and jumped 22 points in March to 225.3, one of the largest recorded changes ever. The sub-index is based on one of the world’s largest exporters of dairy, New Zealand, where prices have climbed due to buyers bidding against one another.
“All the dynamic this month comes from the dairy,” said FAO senior economist Concepcion Calpe. “In general the situation is relatively calm.”
The market price for dairy dipped a bit towards the end of 2012, but the last few months have seen prices rise back up. One reason for the spike in food prices was due to a record setting drought in the United States this past summer. Dry weather has plagued a large majority of other dairy producing countries as well.
“Dry weather in Oceania which has hit pastures and led to milk production falling off steeply and a subsequent decrease in processing of dairy products, which include butter, cheese and milk powder,” reports Fox.

However, the FAO remains confident that the prices will begin dipping in the upcoming months.
“We are optimistic for the coming crops,” Calpe said. “The previous year was particularly bad so barring something dramatic the direction should be upwards for production. If this is what happens we could see prices trending downwards.”