Analyst: Ag prospects look bright
Farm News staff writer
Des Moines – U.S. farmers have enjoyed one of their most profitable years ever in 2011, and strong global ag demand is projected to support U.S. net farm income into the next decade.
“Ag is in a good place over the long term,” said Daniel Whitley, a deputy director with the U.S. Department of Agriculture’s Foreign Ag Service.
A number of key factors will impact U.S. and global food and agriculture markets during the next decade, Whitley said, who detailed these issues during the Iowa Farm Bureau Federation’s 93rd annual meeting in Des Moines on Dec. 7, including:
- Global economic growth. While the recession hit the United States hard in recent years, many developing countries performed better and grew faster than developed nations during this period.
This growth trend will likely continue through 2020, said Whitley, who noted that the rise of the middle class in developing countries will create many new opportunities for U.S. agriculture.
“The new customers for U.S. ag products will be in China, Southeast Asia and India. In China alone during the next decade, the middle class will add 200 million households.
“Compare that to the United States, where we only have 100 million middle-class households.”
For American agriculture, China’s economic growth is not good news – it’s great news.”
- The role of trade. U.S. agriculture will benefit from free trade agreements with Columbia, Panama and South Korea, said ” he said, “Whitley, adding that trade agreements provide access to markets, expand U.S. exports and put U.S. farmers in a better position to compete globally.
- The value of the U.S. dollar. Since commodities are inversely related to the value of the dollar, commodity prices tend to rise as the value of the dollar falls.
The dollar has been trending down since 2002.
Whitley said Farm Services Agency projects a 14 percent decline in the value of the U.S. dollar in the next decade. “I believe this estimate is conservative,” he added.
- Worldwide biofuel production. The United States was an early adopter in the biofuels industry and 36 countries around the world are now following America’s lead, said Whitley.
The industry drives demand for corn.
- Biotechnology developments. Feeding a growing world population will require farmers to increase yields. Science and innovation will drive these yield improvements, Whitley said.
Biotechnology allows growers to increase productivity in an environmentally sound way.
“I don’t see how we’ll meet global demands for food if the world doesn’t embrace biotech and its benefits.”
Grady Bishop, swine business unit director for Elanco, agreed that technology will be a vital ingredient to make a safe, abundant, affordable food a global reality.
Elanco is dispelling the myth that customers don’t want technology, preferring food that was raised with systems like those that were used 60 years ago.
Bishop cited that International Consumer Attitudes Study, which reflects 28 studies in 26 countries with more than 97,000 consumers from 2001 to 2010.
Consumers were asked unaided questions including, “How do you make your food selections at the meat case?” instead of aided questions like “Are you concerned about hormones in milk?” The questions were followed up with consumers’ actual spending patterns.
“The data show that 95 percent of consumers make their food choices based on taste, cost and nutrition,” said Bishop, who also spoke during the IFBF annual meeting.
“Factors like farmers’ production practices and locally grown products aren’t major issues with the sizeable majority of consumers.”
Bishop acknowledges, however, that 4 percent of consumers are “lifestyle buyers,” meaning they prefer to purchase luxury and gourmet foods, organic products and locally-grown items.
“This is an important niche that gives consumers choice, but it should not drive decisions on food production and technology,” he added.
The remaining 1 percent of consumers in the study represents the fringe and include activists who are focused on food bans and political action.
“This 1 percent is very vocal and well financed. That’s why we need to be more vocal about telling our story and helping dispel the misconception that consumers are overly concerned about food production practices and technology.”
To provide the most current data, Elanco commissioned the Nielsen Co. to survey more than 26,000 U.S. households in October 2010.
“The results were even stronger than the International Consumer Attitudes Study, with 98 percent of consumers saying they make their food choices based on taste, cost and nutrition,” Bishop said.
U.S. farmers are on the right track of providing consumers with a variety of food choices, added Bishop. Technology is helping to ensure sustainability, while feeding a hungry world.
This message has global implications that hit close to home, he said. While hunger is the No. 1 health problem in the developing world – killing more people than wars, AIDS and tuberculosis combined – the U.S. is not immune from this epidemic, Bishop said.
In Indianapolis, where Elanco is based, one out of four children in the inner city doesn’t get enough food to eat.
“Don’t just throw up your hands about this issue. Do what you can with what you have,” said Bishop, who encourages people to personalize the issue.
“Get involved in your community, and don’t take it for granted that your family and friends understand the importance of technology in modern food production.
“It’s important to have these conversations within your own circle of influence.”
You can contact Darcy Dougherty Maulsby at email@example.com.
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