What is in this article?:
- Mike Dwyer, director of global policy for USDA’s Foreign Agriculture Service, said the best is yet to come for farmers in the U.S. and around the world.
- The 10-year outlook is for continued growth and prosperity, which will be driven by a handful of economic factors globally.
Not the case in emerging countries
In emerging economic countries around the world that is not the case. The Middle Class in China, India and a number of other Asian and Latin American countries around the world is growing at an alarming rate. These emerging markets will be primary buyers of U.S. farm goods for the next ten years, he added.
“In the history of the world there has never been a greater increase of wealth in such a short period of time as we are seeing in China. This plays right into our hands as an agriculture exporter,” Dwyer said.
The recession was a major speed bump for the U.S., Japan and western European countries, China and other emerging economies barely slowed down. That’s important to the U.S. agriculture industry, because their growth has a huge impact on food demand, but regardless of the state of our economy, food demand stays about the same.
“It doesn’t take a degree in economics to figure out that an upturn in demand for good and a level line in food production is going to be good for farmers,” Dwyer said.
In China, there are currently about 125 million households that are considered middle class. By 2020 that number is expected to jump by another 223 million that go from basically subsistence level to middle class. They are going to want to buy more high protein, processed food.
As the dollar goes down, commodity prices tend to go up. The value of the U.S. dollar has trended downward over the past 10 years, pushing the buying power of emerging nations up.
In the first quarter of 2012, the dollar rallied in value, but that’s primarily due to financial problems in Europe, and not a long-lasting trend, Dwyer said.
USDA projections are for a 14 percent decline versus major export competitors over the next 10 years. If these projections are accurate, it will bode well for any American farmer who sells his crop for export and will tend to keep crop value high in both domestic and export markets.
Fuel from cellulosic processes may be the wave of the future, but for the next few years first generation biofuels stocks will continue to come from corn, sugar-producing crops and soybeans.
Around the world, more than 30 countries in the Western Hemisphere have biofuel mandates, trying to replicate what the U.S. is doing with ethanol and biodiesel in the U.S.
To produce first generation biofuels, these countries are going to have grow or import corn, soybeans or sugar-producing crops — like sugarbeets and sugarcane.
The U.S. is the world’s leader in ethanol exports, and the biggest customer is Brazil.
Strange as that sounds, the price of corn versus sugarcane makes the U.S. the lowest cost ethanol producer in the world. Europe wants to be in a similar situation as the U.S. in biofuel production, but they are more interested in biodiesel.
This whole biofuel trend again bodes well for stabilizing prices for oil-bearing or sugar-bearing crops for the next decade.
“The U.S. chalked up $137 billion in export sales last year — never thought I’d see that level in my career,” Dwyer said.