The transition from agriculture to agribusiness and its impacts were one of the main issues of the conference entitled ‘Agribusiness Perspectives: a landscape for the next five years’, held by Agrenco Group in Venice, Italy.


The annual conference was co-sponsored by Marubeni Corporation, America Latina Logistica (ALL), FIA-USP and Finacom, the financial and treasury arm of Agrenco Group which is based here in Malta at Guardamanga.


Ray Goldberg, professor emeritus of agriculture and business at Harvard Business School, considered the “inventor” of the term “agribusiness ‘, explained the change from agricultural commodities to value-added products. In 1950s, farmers were responsible for 32% of food final price. This figure dropped to 15% in the year 2000 and should decrease to 10% in 2028.


“These figures do not mean that farmers are becoming less important. On the contrary, they just show that customer value offered by a product is increasing year by year,” he explained. “The market is migrating from commodities to higher value-added products.”


Speaking about biodiesel, Decio Gazzoni, researcher at Embrapa Soja – a worldwide-recognised Brazilian Agricultural Research Corporation – challenged the audience to speculate if green fuel should be seen as an agricultural product or as a new energetic matrix. “I believe that in future, many products that are now repudiated, such as babassu, buble bush, coconut and macauba, will become raw materials for biodiesel production,” said Gazzoni.


As worldwide consumption of meat increases and, as a consequence, so does soymeal demand for animal feed, Gazzoni predicts that the market will soon look for cheaper raw materials that can provide higher yield than soy oil. “While soy presents 18% oil content, babassu and coconut has 66% and 60% respectively. I believe that future research can create not only more adaptable varieties to be used on an industrial-scale, but also to fuel agricultural machines,” he added.


Fred van Hedel, from Rabobank, focused on higher international oil prices due to lack of governmental regulations that can assure how much from the crop should be destined to food system and how much should go to produce green fuel. “It is important to prepare meticulously a plan to avoid some commodities from rising prices.”


He believes that in face of higher worldwide biodiesel consumption, both petroleum and commodity prices, including soy oil and palm oil would increase. Besides, the fact that Europe has now established a goal to mix 5.75% of biodiesel into fossil diesel has created a market share for 30bn litres of green fuel. This will assure that investments are welcome in the sense that demand can be predicted.


Worldwide commodities “prices may increase due a race for raw materials for the production of biofuels and food, according to Ron Anderson, senior consultant at RJ O´Brien. Anderson said that if governments around the world do not adopt special policies aimed at expanding crops in order to react to an increasing demand for production of biofuels, prices will certainly rise further sometime between 2008 and 2010.
“I would say that soy, corn and sugar are among products that should be most affected,” said Anderson. Soy oil has been used in countries like Brazil to produce biodiesel. Corn itself is used on fuel-ethanol plants mostly in the US. And sugar has been used by Brazil’s federal government to manufacture ethanol.


“The demand is growing fast. At the moment, only the US has a well organised plan to increase corn production aiming to attend both biofuel and food demands,” added Anderson. He predicts that countries in Europe and also Japan shall import more biofuel in the near future.


Overcoming difficulties in the food supply chain and transforming them into good business opportunities was the theme of Yossi Sheffi, from the Massachussetts Institute of Technology (MIT). He mentioned critical points in the food supply system that could become good opportunities.