Iowa Public Television


Investment Trends Affect Food Producers, Purveyors

posted on December 20, 2002

Hello, I'm Mark Pearson.

Economists and retailers alike are still wrestling with the question of how strong the holiday shopping season has been. Factors encouraging shoppers include low inflation, low interest rates and near panic discounting by retailers.

Factors impeding holiday sales include a rising tide of consumers who are fearful about racking up debt, and who are generally uncertain about the future.

That angst is being played out within the here- to-recently sophisticated financial community. The Wall Street whiz kids who rode the bull market through the 90's seem roundly intimidated by the new century's bear market.

Their uncertainty is confirmed by collapsing balance sheets of traditional market stalwarts, falling market indices, and the flow of investor dollars to more traditional "stores of value".


Investment Trends Affect Food Producers, Purveyors

Coming off a substantial harvest in a year when surrounding states suffered drought, prices for Iowa farmland hit their highest level since 1981. That was the year land prices peaked, and then plummeted into the financial abyss known as the farm crisis.

According to a study conducted by Iowa State University the average value of an acre Iowa farmland is 2-thousand 83 dollars, an increase of 8.7 percent from a year ago. The jump is attributable to the prospect of ample government subsidies, low interest rates and investors seeking higher returns than what Wall Street currently offers. p> Investor angst was underscored this weekend by the announcements from a couple of high profile boardrooms.

MacDonald's corporation reports the company will record its first quarterly loss ever. The company is already restructuring. Moves include closing underperforming restaurants in the U.S. and pulling out of several countries. Worldwide company sales have fallen 2 percent for the first 11 months of this year. Analysts attribute the fall of the burger giant to shifting consumer tastes, and the fact the U.S. fast food market is simply saturated.

Biotechnology giant Monsanto is also reporting some problems. Through the first three quarters of this year the company reports losses of 1.7 billion dollars. The fall off is blamed on sharply weaker sales of the company's Round-Up herbicide. The patent on the popular farm chemical expired in 2000. The brand now must compete with generic copycats. Round-Up sales are expected to fall by 20 percent this year.

Monsanto's genetically modified seed continues to dominate the market. This year more than 100 million acres of corn, soybeans and cotton were planted with Monsanto G-M-O varieties. But years of campaigning against the deployment of genetically altered food by environmental and consumer groups have hindered sales growth. The company has twice lowered its earnings projections for this year and the value of its stock has fallen by more than by more than 50 percent.


Tags: agriculture investing Iowa news real estate