Prospects for World Agriculture Baseline Projections to 2014

Prospects for World AgricultureBaseline Projections to 2014

Ronald TrostleEconomic Research Service

U.S. Department of Agriculture

Foro de Perspectiva Agroindustrial, 2005 27 y 28 de Julio, 2005. Buenos Aires, Argentina

28 July, 2005 Prospects for World Agriculture: USDA/ERS

Presentation Outline

• Summary of projections

• Main assumptions

• Developments influencing world agriculture

• Projections for farm commodities

• Uncertainties

• Conclusion


USDA Baseline Projections

• 10-year projections for major farm commodities - Supply, demand, trade, and prices.

• Projections based on:- Economic models

> Crop-area allocation model - for the USA> Models for individual commodity markets in the USA> Linked Country Model (“Linker”) ( Links 23 commodity markets in 39 countries & regions )

- Analysis and judgments by commodity analysts, country analysts and policy analysts.

• Assumptions: - Basline projections based on many assumption- The baseline is not a forecast; but a projection of what might occur under a specific set of assumptions

• Projections made November, 2004.


80

100

120

140

160

180

200

1975 1980 1985 1990 1995 2000 2005 2010 2015

Production

Yield

Area Harv

Percap Use

Population

Index: 1975 = 100

Peak

Peak

Total World Grain & Oilseeds1 Area, Yield, Production, & Percap Consumption; and Population

Exponential trendgrowth rates: 1975-95 95-04 06-14Prod 1.6 0.7 .09Yields 1.8 1.3 0.8Area -0.26 -0.59 0.11Percap Use 0.08 -0.04 -0.18Populatio 1.68 1.23 1.05

1 Total oilseeds = soybeans + rapeseed + sunflowers


100

150

200

250

300

1975 1980 1985 1990 1995 2000 2005 2010 2015

Global Meat1

Production & Percap Consumption; and Population

Index: 1975 = 100

Per capita Consumption

Population

Production

1Meat = Beef + Pork + Poultry


Main Assumptions


-5

-3

-1

1

3

5

World Developed UnitedStates

EU-25 FSU Developing

1971-80 1981-90 1991-2000 2001-14

Strong Economic GrowthGDP growth rates, by decade averages

Percent

Source: USDA Agricultural Baseline Projections to 2014, February 2005.Economic Research Service, USDA.


0

1

2

3

4

1970's 1980's 1990's (2002-2014)

Population Growth Rates Decline (Percent by Decade)

Percent

Developed

World

MiddleEast

AsiaDeveloping

Latin America

Africa


0

5

10

15

World Developed United States Developing

1971-80

1981-90

1991-2000

2001-14

Inflation Rates Generally Decline

Percent


60

80

100

120

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

U.S. Dollar Projected to Strengthen1

Index values: 2000=100

1/ Real U.S. agricultural trade-weighted dollar exchange rate, using U.S. agricultural export weights.


0

5

10

15

20

25

30

35

40

45

1990 1995 2000 2005 2010 2015

Crude Oil Prices

$ per barrel

Refiners' acquisition cost of crude, imports

Refiners' acquisition cost, adjusted for inflation


Policy Assumptions

• Domestic agricultural and trade policies in most countries either do not change, or they continue to evolve along their current path.

• All countries fully comply with all existing bilateral and multilateral agreements.


Other Global Influences

• Technical developments enhance productivity:- Biotechnology increased farm productivity- Developments in transportation, processing, energy use- Increased availability of data and information

• Globalization: Markets more integrated from farm to table.• Environmental Policy: Will influence farm production.• Renewable energy: Will reallocate production resources.• Food Safety: Will affect production, processing &

marketing.• New producers exporting to niche markets: Will mean

increased competition. • Aging World Population: Will change eating habits.


Changes in Food Consumption

• Greater consumption of:- Fruits & Vegetables- Vegetable Oils- Processed Cereal Products- Meats & Dairy Products

• Less consumption of:- Staple grains - rice in Asia, corn in Mexico & Africa- Low-quality grain varieties (switching to higher quality)

(high-quality varieties may have lower yields)

- Roots & tubers • Feed demand increases:

import demand for feed grains & protein meals


Oilseeds, Grains and Cotton


50

75

100

125

150

175

1984 1989 1994 1999 2004 2009 2014

Global trade: Wheat, Coarse Grains, and Soybeans & Soybean products

Million metric tons

Soybeans and soybean products 1/

Coarsegrains

1/ Soybeans and soybean meal in soybean-equivalent units.

Wheat


0

20

40

60

80

100

84/85 89/90 94/95 99/00 04/05 09/10 14/15

S. American Exports: Grain & Soybeans

Million metric tons

Oilseeds

Rice

Coarse grains

Wheat


0

20

40

60

80

100

1985 1990 1995 2000 2005 2010

0

2

4

6

8

10

12

14

16

Global exports: Soybeans, soybean meal, and soybean oil

Soybeans and soybean meal, million metric tons

Soybeans

Soybean meal

Soybean oil

Soybean oil, million metric tons


0

10

20

30

40

50

60

70

80

90

100

1990 1995 2000 2005 2010

Other

China & Hong Kong

N. Africa & M. East

L.Amer & Mexico

East Asia

European Union 1/

Global Soybean Imports

Million metric tons

1/ European Union-15 prior to 1999, EU-25 thereafter. Excludes intra-EU trade.


0

10

20

30

40

50

60

70

1990 1995 2000 2005 2010

Other

FSU & OE 1/

N. Africa & Middle East

L. America & Mexico

East Asia

European Union 2/

Global soybean meal imports

Million metric tons

1/ Former Soviet Union and Other Europe; prior to 1999, includes Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia.2/ European Union-15 prior to 1999, EU-25 thereafter. Excludes intra-EU trade.


0

2

4

6

8

10

12

14

1990 1995 2000 2005 2010

Rest of w orld

Other Asia 1/

India

China

N Africa & Middle East

Latin America 2/

Global soybean oil imports

Million metric tons

1/ Asia less India and China. 2/ Includes Mexico.


0

20

40

60

80

100

120

140

160

180

89/90 94/95 99/00 04/05 09/10 14/15

Global Exports of Soybeans & Products1

Million metric tons

Brazil

United States

Argentina

Other

1Soybeans + bean equivalent of soymeal.


0

20

40

60

80

100

120

1994 1999 2004 2009 2014

China

Other

S & SE Asia 1/

Latin Am 2/

NAFTA

Afr & M East

East Asia

Global Corn Imports

Million metric tons

1/ Includes Oceania. 2/ Excludes Mexico which is part of NAFTA.


0

3

6

9

12

15

1985 1990 1995 2000 2005 2010 2015

0

3

6

9

12

15

China: Corn Imports and Exports

Million metric tons

Exports

Imports


0

20

40

60

80

100

1985 1990 1995 2000 2005 2010

Other 1/

China

Argentina

United States

Global Corn ExportsMillion metric tons

1/ Republic of South Africa, Brazil, EU, former Soviet Union, and others.


0

25

50

75

100

125

150

175

200

1985 1990 1995 2000 2005 2010

Other 1/ FSU & OE 2/ China Africa & Middle East NAFTA Latin America East Asia European Union 3/

Global Wheat Imports

Million metric tons

1/ Predominantly South and Southeast Asia. 2/ Former Soviet Union and Other Europe; prior to 1999, includes Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia.3/ European Union-15 prior to 1999, EU-25 thereafter. Excludes intra-EU trade.


0

25

50

75

100

125

1985 1990 1995 2000 2005 2010

United States

FSU & OE 1/

Argentina

Australia

Canada

Other

European Union 2/

Global Wheat Exports

Million metric tons

1/ Former Soviet Union and Other Europe; prior to 1999, includes Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia.2/ European Union-15 prior to 1999, EU-25 thereafter. Excludes intra-EU trade.


0

10

20

30

40

1974 1979 1984 1989 1994 1999 2004 2009 2014

China

South Asia 3/

Southeast Asia 2/

Other

Latin America 1/

East Asia

EU, FSU, & OE 4/

Global Cotton Imports

Million bales

1/ Includes Mexico. 2/ Malaysia, Philippines, Thailand, and Vietnam.3/ Bangladesh, India, and Pakistan. 4/ European Union, former Soviet Union, and Other Europe.


0

10

20

30

40

1985 1990 1995 2000 2005 2010

Other

Former Soviet Union

South America

Australia

Sub-Saharan Africa

United States

Global Cotton Exports

Million bales


Livestock and Meats


0

1

2

3

4

5

6

1984 1989 1994 1999 2004 2009 2014

North Africa & Middle East European Union 2/ Russia East Asia NAFTA

Beef and Veal Imports: Major Countries1

Million metric tons

1/ Selected importers.2/ European Union-15 prior to 1999, EU-25 thereafter. Excludes intra-EU trade.


0

1

2

3

4

5

1985 1990 1995 2000 2005 2010

United States Mexico Russia China East Asia

Pork Imports: Major Countries1

Million metric tons

1/ Selected importers.


0

1

2

3

4

5

1985 1990 1995 2000 2005 2010

East Asia

China

Russia

Saudi Arabia

EU 2/

Mexico

Poultry Imports: Major Countries1

Million metric tons

1/ Selected importers.2/ European Union-15 prior to 1999, EU-25 thereafter. Excludes intra-EU trade.


0

4

9

13

17

21

26

1984 1989 1994 1999 2004 2009 2014

Meat Exports from Major Exporters

Million metric tons

Beef & veal

Pork

Poultry


0

1

2

3

4

5

6

7

8

1975 1980 1985 1990 1995 2000 2005 2010 2015

S. Amercia: Meat Exports

Million metric tons

Poultry

Pork

Beef


Uncertainties - General

• Economic growth: Will it be less rapid than projected?

• Energy prices: Will petroleum & natural gas prices drop from current highs -- or rise even further? What will be impact on fertilizer and fuel costs?

• Diseases: Will Avian influenza, BSE, FMD and Asian rust spread to other countries?

• Supply response: How fast can world ag production respond to future shocks in production?

• Additional crop land: How much can be brought into production -- on a sustainable basis?

• Water shortages: Agriculture competition with residential, commercial and industrial demand?


Uncertainties - Country Specific

• Argentina: Expansion in crop area? Productivity growth? Expansion in cattle feed-lot sector?

• Brasil: Expansion in crop area? Infrastructure improvements (transportation & on-farm storage)?

• China: Becomes a net corn importer? Soybean imports continue to rise? Possible revaluation of Yuan? Water shortages constrain farm production?

• Eastern Europe: Becomes the bread basket for Europe and a major exporter?

• Asian Rice Consumption: Trend in per capita consumption continues to decline?


Conclusions


0

1

2

3

4

5

6

7

8

1984 1989 1994 1999 2004 2009 2014

Farm Prices1

Corn, Wheat, and Soybean

$ per bushel

Corn

Wheat

Soybeans

1Nominal U.S. farm prices


30

40

50

60

70

80

90

1994 1999 2004 2009 2014

Livestock Prices1

$ per hundredweight

Beef cattle

Broilers

Hogs

1Nominal U.S. prices


Conclusions

• Demand: Strong income growth in developing countries and increasing population increases import demand for bulk commodities and high-value products.

• Production: Slower producivity growth, but still nearly sufficient to maintain global level of per capita production.

• Trade: Continued growth in global trade in most agriculture commodities. But trade continues to be very competitive.

• Prices: Prices for farm products, after adjusting for inflation, will decline more slowly than in past decades.

Prospects for World AgricultureBaseline Projections to 2014

USDA-ERS baseline briefing room

http://www.ers.usda.gov/briefing/baseline

Gracias, Obrigado, y Thank you

Ronald TrostleEconomic Research Service

U.S. Department of Agriculture

Documents

Prospects for World Agriculture Baseline Projections to 2014