While China has become a primary focus for agricultural trade, the North American Free Trade Agreement (NAFTA) countries, Canada and Mexico, represent the largest block of U.S. ag trade.
That doesn’t discount the value of China, which is responsible for about 90% of agricultural trade growth in recent years, says Michael Swanson, Wells Fargo economist. However, he believes it’s a mistake to focus solely on a handful of customers and competitors. A 15% yield growth in 100 other countries is more significant than what occurs in the U.S., Brazil and China alone, he says.
Swanson says it’s important to challenge conventional wisdom. For example, while many speak to the need to prepare for feeding a world population of 9 billion by 2050, that might not actually occur, he says.
"I doubt Africa will grow to the extent projections call for," he adds. The rate of population growth has dropped everywhere except Africa, and if the rate drops there, feeding the world becomes less problematic.
Population growth matters, Swanson says, "but income growth is more important."
Others see exploding global food demand that requires new acres and increased yields. "Demand is going up," says Chris Boerm, vice president, grain, Archer Daniels Midland Co.
From 2010 to 2050, the world’s population will increase by 38%, he says. Of that, Southeast Asia will grow by 45%, 55% in South Central Asia, and 110% in Sub-Saharan Africa. There’s also more spending power. From 1980 to 2012, per capita GDP grew 3,100% in China, 284% in India, 487% in Brazil and 310% in the U.S., Boerm says.
- January 2014