Small Farmers And The Doha Round: Lessons From Mexico's NAFTA Experience

30.06.2008 787 views
The paper is divided into three parts: Section I briefly introduces how developing countries have sought to protect the interests of small and marginal farmers in the on-going Doha round and the current state of play in those negotiations. Section II discuses the integration of Mexican agriculture in global markets under NAFTA and why the brunt of the adjustment was borne by small and marginal farmers. And finally, Section III proposes an alternate model of agricultural modernization centered on small-farmers and why for developing countries the stakes are much higher than for Mexico.

I: Introduction - Special Products and the Special Safeguard Mechanism

At the heart of addressing livelihood concerns of small farmers in developing countries in the on-going Doha round of WTO negotiations is the designation of Special Products (SPs) and Special Safeguard Mechanisms (SSM) in the Agreement on Agriculture. Developing countries have argued that SPs - products linked to food security and livelihood security - should either be subject to no tariffs or small reductions. An SSM would allow a temporary increase of relevant tariffs in response to a pre-specified increase in import volumes or decline in price levels. In designing the use of both these instruments the G33 and other developing country groupings in the WTO have sought to amplify the policy space available to developing countries in dealing with livelihood concerns while continuing to integrate into the global economy.

The reason for framing livelihood issues in this manner is the understanding that small and marginal farmers, at least in most developing countries including India, lead an exceedingly precarious economic existence and are not positioned to compete effectively in relatively open agricultural markets, particularly given the levels of subsidies enjoyed by agricultural producers in developed countries. Therefore, first, in a situation where reasonable opportunities of migrating out of agriculture are limited even in rapidly growing economies, forcing farmers off their land through import competition is both economically and politically unsustainable. Second, given the above, the flexibilities sought in the use of instruments have to be put in the context of the seriously limited policy space available to developing countries in helping small and marginal farmers cope with import competition, given that direct production subsidies of various sorts are WTO-illegal.

In this light, Crawford Falconer's new negotiating text for the Agreement on Agriculture makes disappointing reading. By offering that the SSM be activated if prices decline by 30% or more and far fewer SPs than the G33 have asked for[1], the text makes a mockery of livelihood concerns of small farmers that is at the heart of the developing country and Indian position. Little wonder then that India has said that the new text is "totally unacceptable"[2]. More specifically, the G33 statement 26th May 2008 commenting on the draft text says "that specific fundamental elements of SPs & SSM have not been incorporated."[3] Equally pointedly, the statement of the Small Vulnerable Economies Group on the draft text notes, among other things, that as far as the SSM is concerned, "lamentably the text is very far from reflecting a possible agreement, because the dispositions contained therein turn it into a mechanism without utility for the developing countries."[4]

II: Mexico - NAFTA and agricultural modernisation

For anybody who doubts that, without safeguards, the brunt of adjustment costs of integrating relatively low-productivity agriculture into international markets is borne by small and marginal farmers, a close look at Mexico's post-NAFTA experience would be salutary. Even Felipe Calderon, Mexico's President and an acolyte of neoliberal economics, has had to acknowledge that Mexico, at least in part as a result of agriculture's integration into global markets, is faced with an unprecedented agrarian crisis. At a recent press conference in May when the German Chancellor Angela Merkel was visiting Mexico, he said that high levels of subsidies available to European and US farmers had a debilitating effect on the competitiveness of Mexican farmers, resulting in a large number of his compatriots migrating to the US "abandoning land, because it was simply impossible to compete with subsidies in other countries"[5].

To be sure all of Mexican agriculture's current problems cannot be ascribed to NAFTA. They go back at least to the early 1980s, when the "sowing petroleum" strategy – using oil revenues and public investment to subsidise agricultural growth and achievement of food-security - collapsed on the back of sharply declining oil prices and the subsequent debt crisis of 1982[6]. In the macroeconomic retrenchment that followed agriculture suffered sharp cuts in public investment and subsidy levels. But it was Mexico's accession into GATT in 1986 that made possible a new strategy based on global economic integration.

As a result in 1989, during Carlos Salinas's presidency, a strategy of agricultural 'modernization', centered around global integration, private investment and markets, was put in place. Salinas amended the Mexican Constitution to make it easier to buy and sell communally owned land, substantially reduced the role of the state in rural economic activity including the privatization of state-owned enterprises in distribution and storage and moved relative prices in favour of agricultural exports. This of course has to situated within the overall swing in Mexican economic policy making that took place in the late 1980s towards market fundamentalism. The hope was that secure property rights and a market-led economy would ensure a private investment driven revival of agricultural growth in line with comparative advantage[7].

NAFTA, which entered into force in 1994, essentially built on all of the above institutional changes and sought to lock-in agricultural trade among NAFTA partners in terms of comparative advantage. Vis-à-vis the USA (and Canada), Mexico was at a comparative dis-advantage in grains (corn, wheat, rice), oilseeds, cattle rearing and forestry. It has a comparative advantage in fruits, vegetables sugar cane and coffee[8]. It was also felt that as a result of relatively backward and low-productivity agriculture, the share of agriculture and allied sectors in its workforce - in 1991 it accounted for 27% - was much larger than was warranted given its level of development.

Comparative advantage driven modernization of agriculture therefore, it was hoped, would also help shift labour towards higher productivity non-agrarian occupations[9]. The hold of market fundamentalism was so strong among Mexico's business and economic policy making elites that market driven comparative advantage was an article of faith. There was very little discussion of the fact that what is important for growth is not static but dynamic comparative advantage. That markets left to themselves, do not automatically deliver dynamic comparative advantage, which depends upon the evolution of institutions and technological and learning capabilities[10]. That successful development experience is also the successful shaping of the evolution of dynamic comparative advantage through purposive public policy[11].

Be that as it may, as a result of NAFTA therefore, in agriculture and related trade, Mexico imports basic foodstuffs – corn, wheat, rice, soya, beef, pork, chicken meat, milk – and exports tomatoes, peppers, fruits, vegetables and beef cattle. Among agro-based products beer, tequila and canned fruits and vegetables are important. Some of the outcomes that designers of NAFTA had hoped for have come about. Agricultural exports have grown three-fold since the agreement and Mexico's agricultural exports are today much more diversified towards higher value products. And before the current spike in the price of foodgrains, agricultural exports had finally begun growing faster than imports, narrowing the agricultural trade deficit. Equally importantly, there has been improvements in agricultural productivity. As a result, some economists have argued that NAFTA has been good for Mexican agriculture[12]. Despite these improvements, agriculture overall has not performed very well. Not only has it, in the post-NAFTA period, grown slower then GDP, but equally importantly, growth has decelerated as compared with the decade earlier[13].

Whatever be the gains that have been achieved, and as we have seen, there have been some, the very nature of these gains has adversely affected small farmers. And the reasons are fairly straightforward[14]. 12% of Mexico's arable land is devoted to agriculture and 54% to cattle ranching. Of the cultivated land, 71% is devoted to grains and oilseeds and only 9% to fruits and vegetables. Therefore the bulk of cultivated area is adversely affected by import competition. 85% of Mexico's farmers are small and marginal and grow largely grains and oilseeds. About 16% of farmers grow fruits and vegetables and most of these are medium and large farmers, largely because the investment required for growing fruits and vegetables is beyond the reach of most small-farmers. Therefore it is small farmers that have borne the brunt of import competition.

The vacuum created by retreat of the Mexican state from agriculture was filled by large US and Mexican agribusiness. In the post-NAFTA period the bulk of FDI in agricultural sector has been in the agri-business and agro-processing rather than agriculture[15]. As a result a few large trans-national agribusiness firms, mostly US and Mexican, dominate storage, flour milling, grain trading[16] and meat processing. Put differently they dominate the intermediation chain that takes crop or cattle and makes it a marketable commodity. Transnational agribusiness has used this dominant position and a process of vertical and horizontal integration to establish an overwhelming presence in the market for wheat, rice, corn, soya, poultry, meat, pork and eggs. Transnational agri-business tends to have much closer links with larger farmers and producers, who have better access to land, irrigation and credit, all of which are scarce commodities for small farmers[17], particularly after the withdrawal of the state. And the little state assistance that remains tends to inordinately favour larger farmers. Little wonder then that it is the larger farmers that have taken advantage of global integration and changing cropping patterns and now account for a larger proportion of domestic markets.

Alongside this, as hoped for by designers of NAFTA, has been 'modernisation' - a sharp decline in the share of agriculture and allied sectors in the workforce. From nearly 27% in 1991 it declined to slightly less than 15% in 2006, losing more than 2 million jobs[18]. Again small and marginal farmers and agricultural labour bore the brunt, as evidenced by very sharp decline in the number of rural households. According to a study by Jose Romero and Alicia Puyana carried out for the federal government of Mexico, between 1992 and 2002, the number of agricultural households fell an astounding 75% - from 2.3 million to 575, 000[19].

There has been a significant increase in migration out of rural areas as livelihoods are lost and farms have been abandoned. The hope was that this migration out of low-productivity agriculture would be absorbed into higher-productivity non-agrarian urban employment. But anemic employment growth in the post-NAFTA period, particularly in manufacturing[20], put paid to that. And what little employment there has been has largely been in the informal sector. As a result there has been a change in the pattern of rural out-migration. In the 1980s the likelihood of migrating to urban Mexico was higher than that of migrating to the USA. Today, as a result of anemic employment growth, the likelihood of migrating to the USA is significantly higher[21].

The World Bank estimates that between 2000-05, 400,000 Mexicans migrated to the USA annually[22]. According to other estimates this number is closer to 500,000[23]. 300,000 of these are from rural Mexico and again mostly small, marginal farmers and agricultural labour[24]. To put this in context between 1994 and 2004, Mexico's labour force grew by approximately 1 million annually[25]. So effectively today Mexico imports food from the USA and exports farmers and agricultural labour.

Again to lay all the problems of Mexican agriculture at NAFTA's door would be incorrect[26], though few would disagree that it has been a contributing factor. The problems facing Mexican agriculture are the result of systematic underinvestment in agriculture from the early 1980s, way before NAFTA was signed[27]. But the reason why NAFTA complicates matters is because it is a multilateral agreement that essentially protected rights of big capital (investor protection) and enhanced its mobility (within North America)[28] to the detriment of other factors. In agriculture, it essentially protected the interests of large Mexican and US agri-business and adversely affected the ability of small and marginal farmers in Mexico to cope with import competition[29]. And this because their interests were not represented at the negotiating table[30]. It had been hoped that NAFTA would lead to an increase in investment in Mexican agriculture, but that did not materialize. A sector that accounts for more than 5% of GDP accounts for less than 1% of its investment and the underinvestment noted earlier has continued in the post-NAFTA period. And what investment there has been, as we have seen, marginalized small farmers even further by reducing their access to the intermediation chain and therefore their ability to compete in the market.

It is not just the fact that Mexico's small and marginal farmers have borne the brunt of the adjustment of Mexican agriculture's integration into global markets. The spike in food prices in the last couple of years has put enormous pressure on its BOP and the agricultural trade deficit that had begun narrowing has widened sharply, putting in sharp focus issues of food security. According to the Mexico's Inter-Institutional Working Group on Foreign Trade the import bill for cereals more than doubled in the first trimester of 2008 as compared with the same period last year[31]. Even though no where as sharp as the increase in the cereal import bill, price increases has meant that import costs of oilseeds, milk, eggs, meat and meat products has increased significantly. At the same time prices for most of Mexico's agricultural exports such as fruits and vegetables have either stagnated or declined.

In many ways therefore, despite the strides in agricultural exports, Mexico's NAFTA based transnational agri-business driven agricultural strategy must be deemed a failure. Food production has stagnated, cultivated area under food production has declined and the underinvestment that has characterized Mexican agriculture in the 1980s has not been reversed. The problem of food security has reappeared and because of large migration of farmers and farm labour to USA, depleting the rural countryside of the human resources it requires for an agrarian revival, even if public policy chose to focus on it.

III: An alternate modernisation model

If the declining share of agriculture in the workforce alongside increasing per capita incomes is one of the most robust stylizations in development economics, it does not follow, as the experience of Japan, South Korea and Taiwan tells us, that the brunt of this adjustment necessarily has to be borne by small farmers. At issue is the nature of the agricultural modernization model – should it be based on land alienation driven by large farmer and transnational agri-business interests, where both these dominate the rural landscape; or will it be a model based on mixed income households where small farmers are competitive because of achieving economies of scale and scope in the purchase of inputs and in processing, storing, marketing and distributing their crops and with a significant proportion of household labour involved in non-farm activity as well.

The key therefore lies in intermediating between the small farmer and the market in a way that enhances both his/her profitability and market opportunities. As Alicia Puyana commenting on the stagnation in Mexico's grain production and the widening gap between USA and Mexico notes "To make domestic products competitive, it is not sufficient to open markets to foreign competition."[32] What development experience does teach us, and Mexico is a good example, is that the market left to itself will not invest in intermediation infrastructure for small farmers – credit, storage, marketing, input purchase and extension. Wherever such investment has happened it has been through co-operative mechanisms or public sector involvement or a mix of both. India's dairy industry and the Amul brand are very good examples. Therefore both these – large farmer and trans-national agri-business centered and small farmer and co-operative agri-business centered - are feasible and extant models, even though most people (and most economists) associate modernization with the former.

As Dr. M.S. Swaminathan, architect of India's green-revolution and former Chair of the National Commission of Farmers, has repeatedly argued, India and other developing countries need a second green revolution but this time centered not around land alienation and large farmers but land conservation and small-farmers. He argues that the energy intensive agronomic practices of the first green revolution should be eschewed in favour of a small-farmer based green revolution where traditional methods of soil health enhancement and pest management should be refined and blended with modern technology[33].

A small-farmer centered green revolution alongside a co-operative and/or public sector driven investment in market intermediation infrastructure – credit, extension, input-purchase, storage, trading, marketing, and insurance – would ensure that small farmers are both profitable and productive. This strategy would, as he argues, address concerns about food-security, livelihood security, environmental conservation and sustainable growth. Therefore one part of the solution to the problem of food-security and sustainable growth is in the hands of 450 million small and marginal farmers (globally) that neoliberal economic policy has tried so hard to alienate from their land. And in addition if we are able to put in place a strategy of maximising non-agrarian employment growth, then rural-to-urban migration, which is necessary concomitant of per capita income growth, would be a matter of choice and not compulsion.

It is useful to remember that in 1991 – prior to the advent of NAFTA - agriculture and allied activities only accounted for 27% of Mexico's labour force. In other words, the occupational structure transition that is characteristic of increasing per capita incomes was already underway. For most developing countries including India however, even today agriculture and allied activities account for more than 50% of their workforce. Therefore an agricultural modernization programme that does not take into account the needs of small and marginal farmers and agricultural labour would not only economically but equally importantly, politically, unsustainable. Equally, it is important to remember that 95 percent of the world small and marginal farmers live in poor, developing countries and that 75% of the world's poor survive on agriculture. For developing countries therefore the key to both food security and livelihood security is the ability to protect small and marginal farmers from unfair competition and the policy space within which develop an agricultural policy centered around small-farmers and the maximization of employment growth.

Therefore whether or not Mexico's current agrarian crisis can be blamed entirely in NAFTA is beside the point. What it does suggest however is that when economies asymmetrically situated in terms of productivity integrate, then left to the market, the burden of adjustment is borne by agents with the lowest productivity – in this instance small farmers and agricultural labour in Mexico. This effect gets compounded when agents in the higher productivity economies are subsidized to maintain income levels (in this instance farmers in USA and Canada). But as we have seen integration and modernization does not have to be like this. Economies should be allowed to choose the pace and pattern of integration and modernisation, defined as sustained and sustainable increase in per capita incomes, depending upon their institutional structures and historical trajectories. Clearly one size does not fit all. Therefore if developing countries are not given the policy space within which to protect small and marginal farmers and modernize their agriculture, they should walk away from Doha. Most in any case do not even have Mexico's option of exporting farmers and farm labour to USA.

(Mritiunjoy Mohanty is an Assistant Professor of Economics at the Indian Institute of Management Calcutta (IIM Calcutta) in Kolkata. He is currently on leave and a Visiting Researcher with Institut d'études internationales de Montréal (IEIM) of the Université du Québec à Montréal (UQAM), Montreal, Canada. He is grateful to Maurice Dufour for comments on earlier versions. He can reached at

[1] See 'No trade deal without livelihood concerns: India', Hindu News Update Service, 20th May 2008. Available at

[2] See 'No trade deal without livelihood concerns: India', Hindu News Update Service, 20th May 2008.

[3] See page 3 of the G-33 Statement: COA-SS Open Ended, 26th May 2008. Available at

[4] See 'Intervención de República Dominicana en nombre Del Grupo de las Economías Pequeñas, Vulnerables', Reunión Informal del Comité de Agricultura en Sesión Especial, 26th May 2008. Translation mine. Available at

[5] See 'El país paga un "costo muy alto" para evitar aumentos de precios', Angélica Enciso, La Jornada, 20th May 2008. Translation mine. Available at

[6] See for example Mohanty, M., (1990) 'Structural Characteristics of the Mexican Economy, 1942-82', Social Scientist, Vol. 18, No. 5, May, pp 42-64

[7] See the discussion in section III of Yúnez-Naude, A., (2002) "Lessons from NAFTA: The Case of Mexico's Agricultural Sector." Background paper for D. Lederman, W.F. Maloney and L.Serven, (2004), Lessons from NAFTA for Latin America and the Caribbean, The World Bank, April

[8] See for example Appendini, K., (1994) 'Agriculture and Farmers within NAFTA: A Mexican Perspective' in V. Bulmer-Thomas, N. Craske, and M. Serrano (eds.), Mexico and the North American Free Trade Agreement: Who Will Benefit?, St. Martins Press, New York.

[9] See de Ita, A., (2008), 'Fourteen Years of NAFTA and the Tortilla Crisis', Americas Program Special Report, Center for International Policy. Available at

[10] On the importance of dynamic comparative advantage and the role of policy in shaping it see Chapter 6 in Krugman, P. and M. Obstfeld, (2006), International Economics : Theory and Policy, 7th Edition, Addison-Wesley

[11] See for example Chang, Ha-Joon, (2002), Kicking Away the Ladder: Development Strategy in Historical Perspective, Anthem Press, London and New York

[12] See for example Yúnez-Naude (2002). Also see Rosenzweig, A., (2005), El debate sobre el sector agropecuario mexicano en el Tratado de Libre Comercio de América del Norte, Serie Estudios y Perspectivas #30, Unidad Agricola, Cepal, Mexico; and Hufbauer, G.C. and J. J. Schott, (2005) NAFTA Revisited: Achievements and Challenges, Institute for International Economics, Washington, DC.

[13] See de Ita (2008), 'Fourteen Years of NAFTA and the Tortilla Crisis'.

[14] This paragraph is based on de Ita (2008), 'Fourteen Years of NAFTA and the Tortilla Crisis'.

[15] Carpentier, C.L., (2001), 'Trade Liberalization Impacts of Agriculture: Predicted vs. realized' Working Paper, North American Commission for Environmental Cooperation

[16] On the concentration of agri-business in Mexico see pp 71-72 in Rosenzweig (2005).

[17] On the problems facing small and marginal farmers see Romero, J. and A. Puyana, (2004), Diez años con el TLCAN, las experiencias del sector agropecuario mexicano, El Colegio de México, Mexico. See also the discussion on access to credit on pp 63-65 in Rosenzweig (2005).

[18] See de Ita (2008). Also see Polaski, S., (2006), The Employment Consequences of NAFTA, Testimony submitted to the Senate subcommittee on International Trade of the Committee on Finance

[19] See Romero and Puyana, (2004), Diez años con el TLCAN, las experiencias del sector agropecuario mexicano.

[20] See Polaski (2006), The Employment Consequences of NAFTA

[21] See Yúnez-Naude, A., and J.E. Taylor (n.d.) Los impactos del TLCAN en la emigración rural, Folletín informativo No. 2, PRECESAM, El Colegio de Mexico. Available at

[22] 'México, el mayor expulsor de migrantes del planeta, dice el BM' Roberto Gonzalez Amador, La Jornada, 16th April 2007. Available at

[23] See Spieldoch, A., (2008) 'NAFTA Takes the Political Spotlight: It's about time', 17th March, Commentary, IATP Observatory. Available at

[24] See 'Desempleo, migración y escasez' 26th December 2007, La Jornada. Available at

[25] See Polaski (2006), The Employment Consequences of NAFTA

[26] See Romero and Puyana, (2004), Diez años con el TLCAN, las experiencias del sector agropecuario mexicano

[27] See Romero and Puyana, (2004), Diez años con el TLCAN, las experiencias del sector agropecuario mexicano

[28] See for example McDonald, M., (1996) Yankee Doodle Dandy: Brian Mulroney & the American Agenda, Stoddart Publishing, Toronto; and MacArthur, J.R., (2001), The Selling of "Free Trade" - NAFTA, Washington, and the Subversion of American Democracy, University of California Press, Berkeley, California.

[29] See Appendini (1994), 'Agriculture and Farmers within NAFTA: A Mexican Perspective'

[30] See de Ita (2008).

[31] See 'Subieron 102% importaciones de cereales entre enero y marzo' Juan Antonio Zúñiga, La Jornada, 20th May 2008. Available at

[32] Quoted in 'El agro mexicano llega polarizado y mermado al último tramo del TLCAN' Miriam Posadas y Matilde Pérez , La Jornada, 29th December 2007. Translation mine. Available at

[33] See 'Global Food Crisis and Indian Response', M.S. Swaminathan, The Hindu, 2nd June 2008. Available at

Mritiunjoy Mohanty


A Practical Method for Adjusting the Premium Rates in Crop-Hail Insurance with Short-Term Insurance Data

The frequency of hailstorms is generally low in small geographic areas. In other words, it may be very likely that hailstorm occurrences will vary between neighboring locations within a short period of time. Besides, a newly launched insurance scheme lacks the data. It is, therefore, difficult to sustain a sound insurance program under these circumstances, with premium rates based on meteorological data without a complimentary adjustment process.


Malta - Vegetable production dropped 7% in 2018

Last year, Malta’s local vegetable produce dropped by 7% when compared to the previous year. The total vegetables produced in tonnes amounted to 58,178, down by 7% when compared to 2017. Their value too diminished as the total produce was valued at €30 million, down by 13% over the previous year. The most significant drop was in potatoes, down by 27% over the previous year. Tomatoes and onions were the only vegetables to have increased in volume, by 3% and 4% respectively but their value diminished by 9% and 24% respectively. The figures were published by the National Statistics Office on the event of World Food Day 2019, which will be celebrated on Wednesday. Cauliflower, cabbage and lettuce produce dropped by 10%, 3%, and 12% respectively. In the realm of local fruit, a drop of produce was registered here too apart from strawberries, which experienced a whopping increase of 58% over 2017. Total fruit produced in 2018 amounted to 13,057 tonnes, down by 1% when compared to 2017. The total produce was valued at €10 million, a 3% increase in value. Peaches produced were down by 35% and the 376 tonnes of peaches cultivated amounted to €0.5 million in value. Orange produce dropped by 10% and lemon produce dropped by 14%. There was no change in the amount of grapes produced and the 3,642 tonnes of grapes produced in 2018 were valued at €2.3 million. 70% of fruit and vegetables consumed in Malta is imported. The drop in local produce could be the result of deleterious or unsuitable weather patterns. Source -


USA - Greenhouse tomato production spans most states

While Florida and California accounted for 76 percent of U.S. production of field-grown tomatoes in 2016, greenhouse production and use of other protected-culture technologies help extend the growing season and make production feasible in a wider variety of geographic locations. Some greenhouse production is clustered in traditional field-grown-tomato-producing States like California. However, high concentrations of greenhouses are also located in Nebraska, Minnesota, New York, and other States that are not traditional market leaders. Among the benefits that greenhouse tomato producers can realize are greater market access both in the off-season and in northern retail produce markets, better product consistency, and improved yields. These benefits make greenhouse tomato production an increasingly attractive alternative to field production despite higher production costs. In addition to domestic production, a significant share of U.S. consumption of greenhouse tomatoes is satisfied by imports. In 2004, U.S., Mexican, and Canadian growers each contributed about 300 million pounds of greenhouse tomatoes annually to the U.S. fresh tomato market. Since then, Mexico’s share of the greenhouse tomato market has grown sharply, accounting for almost 84 percent (1.8 billion pounds) of the greenhouse volume coming into the U.S. market. Source -


World cherry production will decrease to 3.6 million tons

According to information from the USDA for the 2019-2020 season, world cherry production is expected to decrease slightly and amount to 3.6 million tons. This decline is due to the damages that the weather caused on cherry crops in the European Union. Even though Chile is expected to achieve a record export, world trade in cherries is expected to drop to 454,000 tons, based on lower shipments from Uzbekistan and the US. Turkey Turkey's production is expected to increase to 865,000. As a result of the strong export demand, producers continue to invest and improve their orchards, switching to high yield varieties and gradually expanding the surface for sweet cherries. More supplies are expected to increase exports to a record 78,000 tons, continuing its long upward trend. Chile Chile's production is forecast to increase from 30,000 tons to 231,000 as they have a larger area of mature trees. Between 2009/10 and 2018/19, the crop area has almost tripled, a trend that is expected to continue. The country is expected to export up to 205,000 tons in higher supplies. The percentage of exports destined for China has increased from 13 to almost 90% since 2009/10. China China's production is expected to increase by up to 24% and to amount to 420,000 tons, due to the recovery of the orchards that were damaged by frost last year. In addition, there are new crops that will go into production. Imports are expected to increase by 15,000 tons and to stand at 195,000 tons, as the increase in supplies from Chile will more than compensate for the lower shipments from the United States. Although higher tariffs are maintained for American cherries, the United States is expected to remain China's main supplier in the northern hemisphere. United States US production is expected to remain stable at 450,000 tons. Imports are expected to increase to 18,000 tons with more supplies available from Chile. Exports are forecast to decrease for the second consecutive year to 80,000 tons, as high retaliatory tariffs continue to suppress US shipments to China. If this happens, it will be the first time that US cherry exports experience a decrease in 2 consecutive years since 2002/03, when production suffered a fall of 44%. European Union EU production is projected to fall by more than 20%, remaining at 648,000 tons because of the hail that affected the early varieties in Italy, and the frost, low temperatures, and drought that caused a significant loss of fruit in Poland, the main producer. Lower supplies are expected to pressure exports to 15,000 tons and increase imports to 55,000 tons. Russia Russia's imports are expected to contract by 13,000 tons to 80,000 with lower supplies from Kazakhstan, Moldova, and Serbia. Source -


EU - 20% fewer apples and 14% fewer pears than last year

This year's European apple production is expected to come to 10,556,000 tons. That is 20% less than last year. It is also 8% less than the average over the past three years. The European pear harvest is expected to be 2,047,000 tons. This is 14% lower than last year and 9% less than the previous three seasons average. These figures are according to the World Apple and Pear Association, WAPA's top fruit prognoses. They presented their report at Prognosfruit this morning. Apple harvest per country Poland is Europe's apple-growing giant. This country is expected to process 44% fewer apples. The yield is expected to be 2,710,000 tons. Last year, this was still 4,810,000 tons. In Italy, yields are only three percent lower than last year. According to WAPA, this country will have an apple harvest of 2,195,000 tons. France takes third place. They will even have 12% more apples than last year to process - 1,652,000 tons. Pear harvest per country With 511,000 tons, Italy's pear harvest is much lower than last year. It has dropped by 30%. In terms of the average over the previous three seasons, this fruit's yield is 29% lower. In the Netherlands, the pear harvest is expected to be six percent lower, at 379,000 tons. This volume is still 3% more than the average over the last three years. Belgium has 10% fewer pears (331,000 tons) than last year. They are just ahead of Spain. With 311,000 tons, Spain who will harvest four percent more pears. Apple harvest per variety The Golden Delicious remains, by far, the largest apple variety in Europe. It is expected that 2,327,000 tons of these apples will be harvested this year. This is three percent less than last year. At 1,467,000 tons, Gala estimations are exactly the same as last year. The European Elstar harvest will also be roughly equivalent to last year. A volume of 355,000 tons of this variety is expected. Pear harvest per variety Looking at the different varieties, the European Conference is estimated to be 8% lower than last year. A volume of 910,000 tons is expected. The low Italian pear estimate will result in 34% fewer Abate Fetel pears (211,000 tons) being available. This is according to WAPA's estimate. This makes this variety smaller than the Williams BC (230.000 ton) in Europe. Source -


Spring frost losses and climate change not a contradiction in terms - Munich Re

Between 17 April and 10 May 2017, large parts of Europe were hit by a cold snap that brought a series of overnight frosts. As the budding process was already well advanced due to an exceptionally warm spring, losses reached historic levels – particularly for fruit and wine growers: economic losses are estimated at €3.3bn, with around €600m of this insured. In the second and third ten-day periods of April, and in some cases even over the first ten days of May 2017, western, central, southern and eastern Europe experienced a series of frosty nights, with catastrophic consequences in many places for fruit growing and viticulture. The worst-affected countries were Italy, France, Germany, Poland, Spain and Switzerland. Losses were so high because vegetation was already well advanced following an exceptionally warm spell of weather in March that continued into the early part of April. For example, the average date of apple flowering in 2017 for Germany as a whole was 20 April, seven days earlier than the average for the period 1992 to 2016. In many parts of Germany, including the Lake Constance fruit-growing region, it even began before 15 April. In the case of cherry trees – whose average flowering date in Germany in 2017 was 6 April – it was as much as twelve days earlier than the long-term average. The frost had a devastating impact because of the early start of the growing season in many parts of Europe. In the second half of April, it affected the sensitive blossoms, the initial fruiting stages and the first frost-susceptible shoots on vines. Meteorological conditions The weather conditions that accounted for the frosty nights are a typical feature of April, and also the reason for the month’s proverbial reputation for changeable weather. The corridor of fast-moving upper air flow, also known as the polar front, forms in such a way that it moves in over central Europe from northwesterly directions near Iceland. This north or northwest pattern frequently occurs if there is high air pressure over the eastern part of the North Atlantic, and lower air pressure over the Baltic and the northwest of Russia. Repeated low-pressure areas move along this corridor towards Europe, bringing moist and cold air masses behind their cold fronts from the areas of Greenland and Iceland. Occasionally, the high-pressure area can extend far over the continent in an easterly direction. The flow then brings dry, cold air to central Europe from high continental latitudes moving in a clockwise direction around the high. It was precisely this set of weather conditions with its higher probability of overnight frost that dominated from mid-April to the end of the month. There were frosts with temperatures falling below –5°C, in particular from 17 to 24 April (second and third ten-day periods of April), and even into the first ten-day period of May in eastern Europe. The map in Fig. 2 shows the areas that experienced night-time temperatures of –2°C and below in April/May. High losses in fruit and wine growing Frost damage to plants comes from intracellular ice formation. The cell walls collapse and the plant mass then dries out. The loss pattern is therefore similar to what is seen after a drought. Agricultural crops are at varying risk from frost in the different phases of growth. They are especially sensitive during flowering and shortly after budding, as was the case with fruit and vines in April 2017 due to the early onset of the growing season. That was why the losses were so exceptionally high in this instance. In Spain, the cold snap also affected cereals, which were already flowering by this date. Even risk experts were surprised at the geographic extent and scale of the losses (overall losses: €3.3bn, insured losses: approximately €600m). Overall losses were highest in Italy and France, with figures of approximately a billion euros recorded in each country. Two basic concepts for frost insurance As frost has always been considered a destructive natural peril for fruit and wine growing and horticulture, preventive measures are widespread. In horticulture, for example, plants are cultivated in greenhouses or under covers, while in fruit growing, frost-protection measures include the use of sprinkler irrigation as well as wind machines or helicopters to mix the air layers. Just how effective these methods prove to be will depend on meteorological conditions, which is precisely why risk transfer is so important in this sector. There are significant differences between one country and the next in terms of insurability and insurance solutions. But essentially there are two basic concepts available for frost insurance: indemnity insurance, where hail cover is extended to include frost or other perils yield guarantee insurance covering all natural perils In most countries, the government subsidises insurance premiums, which means that insurance penetration is higher. In Germany, where premiums are not subsidised and frost insurance density is low, individual federal states like Bavaria and Baden-Württemberg have committed to providing aid to farms that have suffered losses – including aid for insurable crops such as wine grapes and strawberries. Late frosts and climate change There are very clear indications that climate change is bringing forward both the start of the vegetation period and the date of the last spring frost. Whether the spring frost hazard increases or decreases with climate change depends on which of the two occurs earlier. There is thus a race between these two processes: if the vegetation period in any given region begins increasingly earlier compared with the date of the last spring frost, the hazard will increase over the long term. If the opposite is the case, the hazard diminishes. Because of the different climate zones in Europe, the race between these processes is likely to vary considerably. Whereas the east is more heavily influenced by the continental climate, regions close to the Atlantic coastline in the west enjoy a much milder spring. A study has shown that climate change is likely to significantly reduce the spring frost risk in viticulture in Luxembourg along the River Moselle1. The number of years with spring frost between 2021 and 2050 is expected to be 40% lower than in the period 1961 to 1990. By contrast, a study on fruit-growing regions in Germany2 concluded that all areas will see an increase in the number of days with spring frost, especially the Lake Constance region, where reduced yields are projected until the end of this century. At the same time, however, only a few preliminary studies have been carried out on this subject, so uncertainty prevails. Outlook The spring frost in 2017 illustrated the scale that such an event can assume, and just how high losses in fruit growing and viticulture can be. Because the period of vegetation is starting earlier and earlier in the year as a result of climate change, spring frost losses could increase in the future, assuming the last spring frost is not similarly early. It is reasonable to assume that these developments will be highly localised, depending on whether the climate is continental or maritime, and whether a location is at altitude or in a valley. Regional studies with projections based on climate models are still in short supply and at an early stage of research. However, one first important finding is that the projected decrease in days with spring frost does not in any way imply a reduction in the agricultural spring frost risk for a region. So spring frosts could well result in greater fluctuations in agricultural yields. In addition to preventive measures, such as the use of fleece covers at night, sprinkler irrigation and the deployment of wind machines, it will therefore be essential to supplement risk management in fruit growing and viticulture with crop insurance that covers all natural perils. Source - ttps://


Russia Livestock Overview: Cattle, Swine, Sheep & Goats

Private plots generate 48 percent of cattle, 43 percent of swine and 54 percent of sheep and goats in Russia.  The Russian government recently approved a new program that will succeed the National Priority Project in agriculture (NPP) titled, “TheState Program for Development of Agriculture and Regulation of Food and Agricultural Markets in 2008-2012,” that encourages pork and beef production and attempts to address Russia’s declining cattle numbers.  This program includes import-substitution policies designed to stimulate domestic livestock production and to protect local producers. In the beginning of 2007, the economic environment for swine production was generally unfavorable.  The average production cost was RUR40-45/kilo of live weight, while the farm gate price was RUR40/kilo live weight.  Pork producers have been expressing concern for years about sales after implementation of the NPP as pork consumption is growing at a slower rate than pork production.  As a result, the pork sector has been lobbying the Russian government to regulate imports in spite of the meat TRQ agreement. From January-September 2007, 1.38 million metric tons (MMT) of red meat was imported.  A 12-year decline in beef production has resulted in limited beef availability in the Russian market leading to a spike in prices.  In response, the Russian government has been force to take steps to increase the availability of beef by lifting a meat ban on Poland and by looking to Latin America for higher volumes of product.  Feed stocks decreased during the first 11 months of 2007 compared to the previous year which will likely create even greater financial problems for livestock operations in 2008 as feed prices continue to skyrocket.  Grain prices increased rapidly in Russia through the middle of July 2007 before stabilizing at high levels as harvest progress reports were released. The Russian pig crop is expected to increase by 6 percent in 2008, while cattle herds are predicted to decrease by 3.5 percent.  Some meat market analysts predict that by 2012, as new and modernized pig farming complexes reach planned capacity, pork production could reach 3.5 MMT – up 75 percent from 2008 estimates. According to the Russian Statistics Agency (Rosstat), 1/3 of all Russian “large farms” are unprofitable.  Many of these are involved in livestock production.  Small, inefficient producers are uncompetitive and have already begun disappearing from the market. The Russian veterinary service continues to playa decisive role in meat import supply management. Source -


Statistics Canada : Farm income, 2011

Realized net income for Canadian farmers amounted to $5.7 billion in 2011, a 53.1% increase from 2010. This rise followed a 19.0% increase in 2010 and a 19.6% decline in 2009. Realized income is the difference between a farmer's cash receipts and operating expenses, minus depreciation, plus income in kind. Realized net income fell in four provinces: Newfoundland and Labrador, Nova Scotia, Manitoba and British Columbia. In each, increases in costs outpaced gains in receipts. Farm cash receipts Farm cash receipts, which include market receipts from crop and livestock sales as well as program payments, rose 11.9% to $49.8 billion in 2011. This was the first increase since 2008. Market receipts alone increased 12.0% to $46.3 billion. Crop receipts, which increased 15.8% to $25.9 billion, contributed the most to the increase. Sales from livestock products rose 7.5% to $20.3 billion, the largest annual increase since 2005. Stronger prices for grains and oilseeds played a major role in the increase in crop revenues. For example, canola receipts increased 37.3% in 2011 on the strength of a 27.3% gain in prices. Grains and oilseed prices started rising in the last half of 2010 as a result of limited global stocks and strong demand. Even though prices peaked in mid-2011, prices for the year, on average, remained well above 2010 levels. Crop receipts rose in every province except Manitoba and Newfoundland and Labrador. In Manitoba, difficult growing conditions reduced marketings of most grains and oilseeds. In Prince Edward Island and New Brunswick, increases in potato prices and marketings helped push crop receipts higher. It was also stronger prices that were behind the rise in livestock receipts. Hog receipts increased 15.5% to $3.9 billion on the strength of a 14.7% price increase. Cattle prices rose 19.5% in 2011, while receipts increased 1.1% because of a reduced supply of market animals. Hog, cattle and calf prices increased in 2010. The upward trend continued throughout most of 2011, primarily because of low North American inventories and high feed grain costs. Receipts for producers in the three supply-managed sectors-dairy, poultry and eggs-increased 7.9% as rising prices reflected higher costs for feed grain and other production inputs. A 14.9% rise in chicken receipts exceeded increases for eggs (+8.7%) and dairy products (+5.3%). Program payments increased 11.2% to $3.5 billion in 2011. Increases in Quebec provincial stabilization payments as well as crop insurance payments in Manitoba and Saskatchewan accounted for much of the rise. Farm expenses Farm operating expenses (after rebates) were up 8.4% to $38.3 billion in 2011, the second-largest percentage increase since 1981. This increase followed two consecutive years of modest declines. Higher prices for fertilizer, feed and machinery fuel contributed to the increase in operating expenses. According to the Farm Input Price Index, both fertilizer and machinery fuel prices were up by over 25% in 2011. At the same time, feed grain prices increased by more than 30%. When depreciation charges were included, total farm expenses increased 8.2% to $44.1 billion. Depreciation costs rose 6.9%. Total farm expenses advanced in every province in 2011. The largest percentage increases occurred in Saskatchewan (+12.3%), Quebec (+9.5%) and Alberta (+9.0%). Total net income Total net income reached $5.8 billion, a $3.3 billion gain. There were large increases in Saskatchewan (+$2.1 billion), Alberta (+$567 million) and Ontario (+$470 million), while Newfoundland and Labrador, New Brunswick and Manitoba saw declines. Total net income adjusts realized net income for changes in farmer-owned inventories of crops and livestock. It represents the return to owner's equity, unpaid labour, and management and risk. The total value of farm-owned inventories rose by $165 million in 2011. A strong increase in deferred grain payments together with the first increase in cattle inventories since 2004 contributed to the rise. Note to readersRealized net income can vary widely from farm to farm because of several factors, including commodities, prices, weather and economies of scale. This and other aggregate measures of farm income are calculated on a provincial basis employing the same concepts used in measuring the performance of the overall Canadian economy. They are a measure of farm business income, not farm household income. Financial data for 2011 collected at the individual farm business level using surveys and other administrative sources will soon be tabulated and made available. These data will help explain differences in performance of various types and sizes of farms. For details on farm cash receipts for the first three quarters of 2012, see today's "Farm cash receipts" release. As a result of the release of data from the 2011 Census of Agriculture on May 10, 2012, data on farm cash receipts, operating expenses, net income, capital value and other data contained in the Agriculture Economic Statistics series are being revised, where necessary. The complete set of revisions will be released in the November 26, 2013, edition of The Daily. Table 1 Net farm income 2009 2010r 2011p 2009 to 2010 2010 to 2011 millions of dollars % change + Total farm cash receipts including payments 44,599 44,466 49,772 -0.3 11.9 - Total operating expenses after rebates 36,052 35,315 38,276 -2.0 8.4 = Net cash income 8,547 9,151 11,496 7.1 25.6 + Income-in-kind 39 40 45 2.6 11.1 - Depreciation 5,471 5,483 5,864 0.2 6.9 = Realized net income 3,115 3,709 5,677 19.0 53.1 + Value of inventory change -281 -1,157 165 ... ... = Total net income 2,834 2,551 5,842 ... ... Table 2 Net farm income, by province Canada Newfoundland and Labrador Prince Edward Island Nova Scotia New Brunswick Quebec millions of dollars 2010r + Total farm cash receipts including payments 44,466 118 407 500 479 7,171 - Total operating expenses after rebates 35,315 106 367 422 406 5,472 = Net cash income 9,151 12 41 78 73 1,699 + Income-in-kind 40 0 0 1 1 10 - Depreciation 5,483 8 41 59 54 727 = Realized net income 3,709 4 0 19 20 983 + Value of inventory change -1,157 -0 18 0 9 13 = Total net income 2,551 4 18 19 29 996 2011p + Total farm cash receipts including payments 49,772 120 477 527 533 7,967 - Total operating expenses after rebates 38,276 114 391 448 424 6,018 = Net cash income 11,496 6 86 79 109 1,949 + Income-in-kind 45 0 0 1 1 11 - Depreciation 5,864 9 43 62 55 767 = Realized net income 5,677 -2 43 18 55 1,194 + Value of inventory change 165 -0 -12 2 -50 -24 = Total net income 5,842 -3 31 20 5 1,170 Source -

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