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Bean Day market outlook
April 24, 2003

Market View - Beans Day presenters discuss 2003 outlook

 

 

 

 



 

 

 


Tino Breuer

The navy market is changing, says Tino Breuer, general manager of the Ontario Bean Producers' Marketing Board. It no longer acts like a commodity market, Breuer says.

Two recent developments have made it clear that the navy market is becoming a more tightly controlled market - more like a specialty crop market than a commodity market. They are:

* Increased use of long-term contracts. This is driving navy production to the lowest-cost acres. Buyers have closer relationship with producers. You may not even have access to the market unless you have a contract.
* Reverse Internet auctions. A canner or packager asks shippers and dealers to bid for its business. It conducts the auction on the Internet and the seller is able to see his rank in the auction. "It is a fact that under auction conditions (regular estate auctions where buyers come) the bidder will get wrapped up in the action and likely overbid. I am sure this auction psychology is prevalent in these e-auctions, particularly if the seller 'needs' the buyers' business," he says.

Breuer advises growers to rethink the use of long-term and price-delayed contracts. They give processors ownership of the beans without having to pay for them, he says. Processors can feed the market without having to bid up the price to get beans from farmers.

"I have nothing against long-term contracts as long as they give growers a margin (profit) for their entire production. I, however, feel deferred pricing and price later contracts have worked against a grower because the 'commodity' or production is no longer his," Breuer says. He suggest that you look for full production, rather than partial production, contracts.

Go to a processor and tell him what you need up front to grow the crop, he says. Negotiate for your price.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pinto market
Export and domestic consumption news will likely dominate the pinto bean market this year, according to Paul Montgomery, president of P.W. Montgomery, Inc.
North America has a large crop - the largest since 1998. As with all large crops in the past, prices will hinge on how well the industry can move the beans.
Here are some numbers Montgomery says are key to the market:
* Per capita consumption - 3.6 pounds.
* U.S. population - 280,000,000.
* Per capita consumption x U.S. population = 10,080,000 cwt consumption.
* Exports = 2,005,000 cwt.
* Total Disappearance (consumption + exports) = 12,085,000 cwt.

Mexico market outlook
Don't look for Mexico to significantly increase its imports of U.S. dry beans this year. Mexico has had one of its best crops of dry beans in years, reports Judd Keller, Trinidad Benham Corporation.

He toured Mexico in the fall of 2002 as part of a National Dry Bean Council (NDBC) trade team. Each year, NDBC sends members to Mexico to assess the size and quality of the country's crop.

In fact, the Mexican government has temporarily stopped bean imports that would normally enter Mexico through payment of the tariff. The Mexican government has also delayed the announcement of the auction for the tariff-free bean import permits under the NAFTA Agreement Quota. These actions are to allow Mexican growers more time to market this year's large crop without competition from U.S. bean imports.

Also, pressure by Mexican growers is mounting to renegotiate parts of the North American Free Trade Agreement (NAFTA). Critics in Mexico claim that NAFTA is hurting its small-plot farmers. They argue that under NAFTA, the U.S. is increasing subsidizes on commodities that compete with Mexican growers. The Mexican small plot growers feel they cannot compete with the efficiencies of the U.S. bean producer.

NAFTA calls for the reduction of Mexico's tariff on dry beans to decline to 0% in 2008. Prior to NAFTA, the import tariff was 139%. NAFTA also calls for an increase in the import quota, or the amount Mexican companies can import tariff-free between now and 2008.

Year Duty Quota cwt. % Increase
2002 70.4% 1,396,360
2003 58.7 1,438,250 3%
2004 46.9% 1,481,398 3%
2005 35.2% 1,525,839 3%
2006 23.2% 1,571,610 3%
2007 11.8% 1,618,764 3%
2008 0%


 

 

 

 

 

Source: Judd Keller

The Cuba strategy
How can we sell more dry beans to Cuba?
By getting the U.S. government to keep taking steps - however small - to lift the embargo.
That's the strategy John Kavulich II, president of the U.S. Trade and Economic Council, Inc., outlined at the Northarvest Bean Grower Association's Bean Day.

Despite the success of trade efforts with Cuba in 2002, neither Congress nor President Bush will move to eliminate trade restrictions soon, he says. There is too much anti-Castro sentiment in Florida, a state that wields significant political power in U.S. elections.

But after hosting a round of trade talks and buying $200 million in products from many of the key agricultural states in the U.S., Cuba wants something in return. Ultimately, it wants U.S. tourists to be able to vacation in Cuba.

Cuba is talking about spending another $200 million in the near future. But Kavulich says the U.S. will have to show some progress on easing trade restrictions for Cuba keep buying.

The U.S. must keep pushing the door open, he says.


 

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Northarvest Bean Growers Association | 50072 East Lake Seven Road | Frazee, MN 56544
Ph: 218-334-6351 | Fax: 218-334-6360 | Email: nhbean@loretel.net