K-State Risk & Profit Conference: U.S. producers positioned to help feed global food, feed demand
Oct 3, 2008 10:22 AM
With global grain stocks at historically low levels, economies strengthening in some countries and production problems in others, U.S. growers are positioned to play a key role in satisfying growing demand for food, according to two Kansas State University agricultural economists.
"Global wheat production is up 9 percent this year," said Mike Woolverton, speaking at the K-State Risk and Profit Conference Aug. 14-15. "Farmers have responded to higher prices by producing more, but there is still plenty of demand for that wheat."
Woolverton cited Iranīs recent purchase of 1 million tons of U.S. wheat - its first from the United States in more than 25 years. That purchase and others were sparked in part by a drought in the Middle East, he said.
Global demand for corn is also strong, which the economists expect will drive stocks 3 percent lower this year.
K-State Research and Extension economist Dan OīBrien said that grain and oilseed carryover from one year to the next has been less consistent since the U.S government "got out of the grain storage business" in the mid-1980s.
Some countries with the largest populations do not have as much land suitable for growing crops as the United States, Woolverton said. China, with 1.33 billion people has 342.5 million acres of farmland; India with 1.15 billion people has 355.6 million acres; Brazil at 191 million people has 144.8 million acres and Russia, with 140 million people has 30.1 million acres. In comparison, the United States has 304 million people and 407.8 million acres of farmland.
Much of Brazilīs best cropland, Woolverton said, is far from ports and other transportation routes, and has hampered Brazilīs ability to significantly boost trade with other countries. Improving their infrastructure enough to be able to handle large quantities of exports will take years, he added.
"Many of the importers (of U.S. feedgrains) have built livestock herds fed by imported U.S. grains," Woolverton said, adding that he expects that demand to remain firm.
One point of contention in recent months has been the idea that U.S. demand for corn to fuel ethanol production has cut into corn supplies needed to feed the livestock industry. Ethanol demand has underpinned corn prices, Woolverton said, but other factors such as economic and income growth in developing countries, livestock feeding both domestically and internationally and growth in the global population, also are playing significant roles.
"Ethanol is not gobbling up all of our corn," he said. Although there are 163 ethanol plants operating in the United States this year compared with 97 just two years ago, that growth trend is unlikely to continue.
"Funding for new ethanol plants has dried up," Woolverton said. "I donīt expect to see many more ethanol plants built. It hasnīt been that profitable."
With the recent price of corn, much of an ethanol plantīs profits are coming from distillerīs grains, he added.
In the 2008-09 crop year, the United States is expected to use about 33 percent of the corn crop for ethanol, Woolverton said. That is up from 23 percent in 2007-08.
Soybean stocks are tight and expected to be tight again next year, he said.
"Even though global soybean production will rebound this year to near a 'normal' level, the global stocks-to-usage ending ratio will decline for the third year in a row," Woolverton said. "Production is struggling to keep up with the growth in global demand."
The fact that millions of acres are due to come out of the U.S. Department of Agricultureīs Conservation Reserve Program over the next few years will allow U.S. producers the option to put more acreage into crop production if market forces drive such an expansion.
Rice is a potential bright spot for the United States on the world market, Woolverton said.
"We donīt eat a lot of rice in this country, but we export a lot of it," he said, citing USDA data that show the United States as the worldīs third largest exporter, behind Thailand and Vietnam, but ahead of Pakistan and India.
More information about the K-State Risk and Profit Conference, including the proceedings, is available on the Web: http://www.agmanager.info.
K-State Economists Provide Information on Global Farm Land Per Capita
Kansas State University agricultural economists Dan OīBrien and Mike Woolverton believe that with the land, technical and human resources available to U.S. producers, the United States can hold its own when it comes to helping provide food and feed on the world market.
As part of a presentation at the K-State Risk and Profit Conference, the economists provided data from the Central Intelligence Agency World Fact Book that showed the amount of farmland available per person around the world.
For example, there are 6,671,226,000 people in the world with farmland per capita at .73 acres. In comparison, China has 1,325,264,000 people (19.87 percent of global population) and .26 acre per capita; India has 1,136,264,100 (17.03 percent of population) and .36 acre per capita.
The United States has 304,746,000 people (4.57 percent) and 1.45 acre per capita. Other countries have smaller populations than the U.S., but also less farmland per capita except Russia, which has 141,888,900 people (2.13 percent of global population) and 2.10 acres per capita.
More information about the K-State Risk and Profit Conference, including the proceedings, is available on the Web: http://www.agmanager.info.
(New Course)
