Agriculture’s outlook appears bright for the long term
When populations move from abject poverty to the middle class, a domino effect occurs. As people have more money, they start buying goods, services and experiences that were once only dreams.
Globally, spending among middle-class consumers is expected to almost triple by 2030, according to McKinsey & Company, a global management consulting firm.
The sweet spot for agriculture is when a population boom occurs simultaneously with a fast-growing economy, according to Vikram Mansharamani, a lecturer at Harvard University and Yale University.
This type of rapid two-part growth is happening in places such as Africa and India, he says, and the effects could potentially provide the demand shock the world needs. What will change? When people have more money, they tend to eat meat, drink wine, travel and buy cars and smartphones.
“There will be a gigantic explosion in consumption,” Mansharamani says. As incomes rise and more consumers enter the middle class, diets tend to include more protein, dairy products and processed foods.
“Farmers will need to produce more food in the next 50 years than has been produced over the last 7,000 years,” says Moe Russell, president of Russell Consulting. “I’m very bullish on the future of America and production agriculture.”
Mansharamani points out: “A little more protein demand equals a lot more grain demand. More middle-class spending could be good for anyone involved with commodity markets.”