The 39th annual Sosland Purchasing Seminar has come and gone with another year of record attendance. While presentations by nearly 30 speakers covered a broad range of ingredients and topics, the “buzz” often focuses on just a few. This year, the labeling of bioengineered (genetically modified organisms or G.M.O.s) ingredients, low egg prices, high soybean prices, summer weather, value of the U.S. dollar and the fall election appeared to generate ample questions and sideline discussions.
The topic with the greatest impact on the most ingredients likely was G.M.O.s, with the Vermont labeling law going into effect July 1, although some noted there is a six-month grace period for products already distributed. G.M.O. labeling is especially significant for beet sugar (nearly all is from bioengineered seed), soybeans (94% from bioengineered seed) including products such as soybean oil, soybean meal and soy flour, and corn (89% from bioengineered seed), including food and feed products and sweeteners.
The food industry has favored a national G.M.O. labeling law that would provide a uniform standard rather than potentially 50 different state laws, but such a law failed to get out of Congress earlier this year and for now, Vermont is leading the way. There was talk at the seminar of a new effort by some members of Congress to resurrect a national law.
Approaches by food manufacturers at the meeting ranged from “We’re pulling out of Vermont” to full-blown labeling of products for that state and nationally, although they noted it wouldn’t be without significant cost. There also was considerable opinion that there would not be a wholesale move by farmers to go back to non-bioengineered seed because the cost and yield benefits gained from the improved seeds are so great.
Eggs perhaps provided the sharpest contrast compared to information presented at last year’s seminar, going from record highs over $2 a dozen to multi-year lows under 20c a dozen currently. Last year’s price rise was the result of an outbreak of avian influenza in the heart of the egg-laying region, which also resulted in egg product shortages, a rise in imports and greater use of egg replacers. While producers have been rebuilding flocks, numbers still are below year-ago levels, but prices have plunged anyway.
Discussion at the seminar showed anecdotal evidence of perhaps a permanent, or at least lengthy, significant shift away from egg products to egg replacers by some major manufacturers. One company said it had reduced its use of egg products at least 30%, and one large baking company said its use had dropped by 50% to 70%, depending on product. Neither had any intention in switching back to egg products despite the current low prices. While egg and egg product prices certainly will rebound with the help of higher exports and culling of flocks, it would appear there has been some permanent loss in demand of egg products, not unlike the cocoa industry experienced a few years back.
At the opposite end of the spectrum was considerable talk about recent strength in grain and oilseed prices, led by a 30% surge to near $12 a bu in nearby soybean futures since mid-March. While several factors contributed, most of the strength was attributed to floods in Argentina that may limit that country’s exports of soybeans, meal and oil, boosting opportunities for U.S. exports. One analyst commented, though, that the Argentine floods seemingly had been traded on multiple times and most expect prices will pull back some, but not likely to levels forecast a few weeks ago.
Adding some support to soybean and grain prices was a forecast for hotter, drier weather in key U.S. growing areas this summer delivered at the seminar by meteorologist Drew Lerner, president of World Weather, Inc. He likened the summer forecast to that of 1980, which saw above-average temperatures and below-average precipitation in July and August across the southern Plains, western Corn Belt and Southeast. If realized, that would occur during peak corn pollination and soybean flowering periods, which are critical for setting yield potential for those crops. While Mr. Lerner did not forecast a crop disaster, his outlook certainly raised concerns.
Former Kansas City Federal Reserve economist Alan Barkema, now with Apical Economics L.L.C., talked about the U.S. and global economies, including the value of the dollar, which plays a key role in U.S. trade. He said he does not expect the dollar to return to recent multi-year highs, which was good news for U.S. exporters as a weaker dollar makes U.S. products less expensive for foreign buyers.
Finally, many presenters were asked to give their thoughts on the impact on agriculture, exports and the food industry based a certain outcome in the fall election, specifically a Donald Trump presidency. Most agreed neither candidate has talked much about farm policy, but few ventured to share their opinions.