IFCNR's Weekly Blog - Fall 2009

MOVE OVER TYSONS, THE BRAZILIANS ARE HERE

What do the names Gus Swift, Aubry and Bo Pilgrim, Joseph and Joe Jr. Luter have in common with José Batista Sobrinho also known as Zé Mineiro? In 2007 Zé Mineiro bought the company Gus founded. The next year, he added the beef component of the Luters' Smithfield operations. This year rumors around the industry are that the Brazilian meat magnate will add chicken giant Pilgrim's Pride, now in Chapter 11 reorganization, for a reported $2.5 billion to its international collection of meat enterprises bolstering its claim to be "the world's largest" in beef and meat in general.

If approved, the Pilgrim's Pride purchase brings $8.5 billion in sales (2008), 41,000 employees in the U.S. and Mexico, 31 chicken processing plants, 8 prepared food plants, 23 distribution centers, and the capability of processing nine billion pounds of poultry and providing 42 billion dozen eggs per year into the JBS SA fold making it a global rival of the industry leader, Tyson's. Pilgrim's Pride and Tyson are equal rivals in the U.S. poultry market holding 22 percent each. The addition of Pilgrim's Pride boosts JBS' U.S. revenues ($20 billion) to nearly Tyson's $27 billion in the U.S.

If the Pilgrim's Pride deal goes through, industry observers predict JBS just may be in for closer scrutiny by the U.S. Justice Department's anti-trust division.

COULD FARMERS REAP BENEFITS FROM CLIMATE CHANGE MEASURES?

Talk about wind-driven energy sources and carbon offsets just may proved an untapped source of revenue for farmers.

The Center for Rural Affairs released a study of Department of Energy data on the potential returns from the American Clean Energy Leadership Act in August suggesting that Iowa, Kansas, Nebraska, and South Dakota could see thousands of new jobs in the areas of construction, maintenance and operations of the huge wind turbines needed to reach proposed alternative sourcing goals ranging from 12 to 20 percent of the nation's electricity needs.

Jobs aside nationwide projects show some $21.5 million may well flow into South Dakota farmers and ranchers alone for fees allowing the big wind mills to be built and stationed on private ranch and farm lands. That figure is based on a $5000 annual leasing fee per turbine.

Close on the heels of that study came the announcement that Duke Energy will construct a 200-megawatt wind energy project near Casper, Wyoming. Dubbed the Top of the World project, the new wind energy site will be spread across approximately 17,000 acres of private and public land under long-term lease in Converse County. By the end of 2010, the project hopes to generate electricity to power the equivalent of 50,000 to 60,000 per year.

The Congressional Budget Office predicts that the carbon offset trade may be a $60 billion enterprise by 2012. That puts it up with corn and wheat as a potentially lucrative venture for farmers and others via a commodities-like trading system. The Chicago Climate Exchange reports 3000 to 5000 contracts being traded daily between large polluters in the U.S., Europe and China and carbon credits derived from existing forest pools. A typical forest pool covers 100,000 acres. Some include southern pine plantations, mixed forests, and southern hardwood acreage.

With carbon offsets currently in the $4.25 per metric ton range, forest owners could be making $300 dollars extra per acre.

Protocols for farmers and ranchers are being constructed to allow farmers, ranchers and landowners to participate.

MICHIGAN BLUEBERRY RESEARCH FOILED BY WEST COAST VIRUS

Blueberry shock is a virus most common among West Coast crops yet it made a dramatic appearance in Michigan forcing the destruction of 20 years' work at Michigan State University's agricultural research station. The virus presence is not thought to present an immediate threat to the states 19,000 acre, $124 million berry crop, but it did form a dark cloud of uncertainty among Michigan growers. A second virus, Blueberry scorch was found on two southwestern Michigan farms.

Blueberry shock and Blueberry scorch are currently incurable. The former, believed native to the Pacific Northwest, brings sudden death to plants flowers and leaves. It is spread by bees bearing infected pollen. The latter, common to both North American coasts, is spread by aphids.

The outbreak at the Trevor Nichols Research Complex about four miles from Lake Michigan affected four acres of blueberries used since the early 1990s for research on a variety of subjects ranging from pesticide residue to bee pollination, fruit funguses and insect infestation. The destruction of the research plants comes with a four or five year period of dormancy before replanting can begin.

Of the nation's 407 million pound crop, 110 million pounds originate in Michigan making that state the country's number one blueberry grower. New Jersey with 42 million pounds came in second last year. Among the nation's blueberry growers, a distinction is made between "high bush" states and "low bush" or "wild" states. Michigan is a "high bush" growing state while Maine lays claim as the countrys most productive "low bush" blueberry producer. Blueberries are the largest fruit crop of Canada.

Blueberries are actually classified as "false berries." Other "false berries" are cucumbers, cantaloupes, watermelons, cranberries, squash and pumpkins. They are considered one of the highest antioxidant containing fruits and, research shows, may have a very positive affect in postponing some age-related memory loss.

Currently while the Michigan State researchers are rushing to gather as much data as possible about the virus before they destroy their plants, the Michigan Department of Agriculture is investigating the source of the infection. Because pollination requires tens of thousands of beehives to be trucked to blueberry fields (for example, Maine requires 50,000 hives most from out of state) chances are the culprit may be one or more of the itinerant hives.