Swine Grist
VOL 2 ISSUE 4 | WINTER 2015
A P E R I O D I C N E W S L E T T E R P R O D U C E D B Y G R A N D V A L L E Y F O R T I F I E R S LT D .
Jim Ross, Chairman Dear Friends, Another year has rolled around and here we are celebrating Christmas once again. Soon we will open the New Year’s door to 2016. What will it bring? We hope and pray for less turmoil, conflict, pain and suffering and instead, more love, peace, joy and happiness. We believe you will find the topics featured in this issue of the Grand Valley Swine Grist interesting and informative as we look at the positive outlook for the future of our hog industry in Canada. Wishing you good farming this winter. Sincerely, Jim Ross, Founder & Chairman
AGRI-FOOD EXPORTS VERY PROMISING
by: PETER HALL Vice-President and Chief Economist Export Development Canada
F
ood shortages in Southeast Asia grabbed the headlines back in early 2008. We’ve all but forgotten this, as financial and economic crisis engulfed the globe. Given the mediocre performance of the world economy since then, it’s tempting to think that those shortages were localized and insignificant. However, it’s quite possible that those shortages were the first signal to a planet-wide problem. Have we entered a new era of demand for food? Growth itself has seen a revolution. The exponential rise of technology in the past three decades has, among many other things, brought many markets into the mainstream that formerly were isolated. The best-known is China, with its 35-year march to the front lines of economic heft. But it’s not alone – multiple emerging markets have experienced sustained growth at rates three to five times the pace of the average developed economy. Although most are still well behind a Western standard of living, their fast ascension is transforming the balance of worldwide demand. Has that stalled? Many think so. Myriad of analysts see the meager growth of the past seven years and conclude that the crisis of 2008–09 was too hard on us, and that structurally, we are in some kind of lowgrowth new normal. In actual fact, prior to the 2008 crisis the world saw five to six years of plenty – excessive activity that could not be sustained – and for the past six years has been working off those excesses. They’re now gone, and the world is again gearing up for more normal growth. It’s a slow process, but it is well on its way. The US economy has been in recovery-mode since mid-2013, and still has a lot of growth to look forward to. Europe has been reviving for more than a year. With these
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twin engines firing up, other markets are also reviving. The world is waking up, and the spread of growth is reinvigorating demand. The rise of activity is stoking a dynamic that has been present for years: the rise of the emerging market middle class. Millions are ascending into this wealthier cohort every year. China’s case is the most dramatic: it’s adding to its middle class by 35 million, the equivalent of Canadian population – every year. China is not alone. India is adding an estimated 10–20 million people to the middle class every year, with a stated goal to reach 30 million a year. Indonesia is adding 7 million a year, Brazil 5 million, and the list goes on. What is clear is that as people cross this income threshold, they consume more, and they consume higher quality goods. And they start with food. In general, they eat more meat. According to expert analysis, it takes seven to ten times the amount of grain to generate the same caloric intake from meat than from consuming the grains themselves. That sounds like the population trend is putting exponential pressure on the world’s crops. Indeed it is, in a way that puts upward pressure on the entire agri-food continuum, from raw crops and meats to processed foods of all kinds, agricultural machinery, fertilizer and farm process technology. Projections on meat consumption are fascinating. According to the Food and Agriculture Organization (FAO), per capita meat consumption will rise worldwide through 2050, but most aggressively in South and East Asia. Multiply that by actual population, and for sheer volumes of meat consumption, East Asia – principally China – is a standout. By 2030, demand vaults well past the developed world, and continues at a torrid pace through 2050 [see graph]. FAO projections are clear: East Asia will not be able to meet its own demand for meat; it will have to increase its imports. Detailed calculations are available for the pork industry, and are fascinating. Growth in demand is dramatic enough, but what is even more fascinating is the implied growth in the import requirement. Between now and 2020, FAO numbers show that annual growth in imported pig
Ian Ross, President & CEO | Jim Ross, Chairman Clarke Walker, VP & COO Dr. Martin Clunies, Monogastric Nutritionist David Ross/Patti Bobier, Publishers