Food & Inflation: Truth & Consequences February 8, 2012
Growth in agriculture is mostly driven by food needs Population is growing fast in developing countries Global Population by Type of Economy (M)
World is urbanizing Global Population by Type of Community (M)
Global middle class is growing rapidly Population earning between $1020/day (M)
+770
Source: UN
2 2
Food & Inflation: Truth & Consequences
GDP Purchasing Power Parity, Thousands
Worldwide GDP Growth 103
105
97 92 87
85
79
83
74 66
Global economic expansion driven by BRIC
61
65
45
70 70
57
46 42 44
49
52
OECD modest growth in spite of Eurozone troubles Rise in rest of world supported by Asia, Mideast, and Africa
25
(15) BRIC
OECD
Source: IMF World Economic Outlook 3
Food & Inflation: Truth & Consequences
Rest of World
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
5
Consumption growth driven by GDP and population China accounts for about 18% of world growth consumption and is the main driver for growth China Consumption
World Consumption (MMT) 2,500
500
2,400 450 2,300 2,200
400
2,100 2,000
350
1,900 300 1,800 1,700
250
1,600 1,500
Source: Food and Agriculture Policy Research Institute, Iowa State University 4
Food & Inflation: Truth & Consequences
200
Which means the consumption gap narrows Meat Consumption
Oil Consumption 18
17
US at 36 KG Per Person
US at 117 KG Per Person
60 51
16 50 14
13
13
42 40
12 10
11
KG Per Person
10
8 6
6
35 32 30
27 23
20
4 10 2 0
0 1990
2000
India, per cap
World, per cap
Source: USDA & UN Population Division 5
2010
Food & Inflation: Truth & Consequences
1990
China, per cap
2000
2010
World, per cap
Biofuel also drives demand for agricultural commodities Biodiesel and corn based ethanol 30
Biodiesel production 25
growth phase
MMT
20
15
10
5
0 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20
Vegoil Required to Meet Mandates 6
Food & Inflation: Truth & Consequences
Biodiesel Forecast
Biodiesel demand: A significant share of veg oil production and trade 250
200
MMT
150
100
50
0
Veg Oil Production
Veg Oil Trade
Major Oilseeds: Soybean, Rapeseed, Sunflower Seed, Palm Source: Food and Agriculture Policy Research Institute, University of Iowa. 7
Food & Inflation: Truth & Consequences
Biodiesel Production
Trend is for world Stocks-to-Use to remain tight Corn, soybeans and wheat
Source: Food and Agriculture Policy Research Institute, University of Iowa. 8
Food & Inflation: Truth & Consequences
World Consumption by Type (MMT) Growth in consumption is in feed grains (mostly corn) and oilseeds, while food grains stay steady. 1,400
1,200
1,000
800
600
400
200
-
Food Grains
Source: Food and Agriculture Policy Research Institute, Iowa State University 9
Food & Inflation: Truth & Consequences
Feed Grains
Oilseeds
Acreage Expansion 700
600
500
440 431 433 434
457 479 456 458 470 485
507
501
485 492
504
515
519
523
528
532
510
Global acreage expansion to address demand increase
400
300
Acres’ supply increase derived from the US, Argentina, Brazil.
200
100
0
BRIC
OECD
Source: USDA 10
Food & Inflation: Truth & Consequences
Rest of World
Global Acreage remains flat, gains will come via yield improvements Global Grain and Oilseed Production 700,000
3.80 3.60 3.40
650,000
3.20 3.00 2.80
600,000
2.60 2.40 2.20
550,000
2.00
Yield Source: Food and Agriculture Policy Research Institute, Iowa State University 11
Food & Inflation: Truth & Consequences
All Acres
Growth in Global Grain and Oilseed Production MMT 68
2,334
From Yield
2020 Production
263
170
2,003
From Yield
2010 Production
225
1,607
2000 Production
From Acres
Source: Food and Agriculture Policy Research Institute, Iowa State University 12
Food & Inflation: Truth & Consequences
From Acres
Meeting the World’s Demand How will the needs be met… 1.16 Billion MT increase from Yield advances 210 MMT increase from more intense cropping 135 MMT increase from acreage expansion
Source: Bruinsma, Jelle. “The Resource Outlook to 2050.” FAO Expert Meeting on How to Feed the World in 2050
13
Food & Inflation: Truth & Consequences
14
Food & Inflation: Truth & Consequences
Ag Biotechnology Supply / Demand balance has shifted Change from production push to consumer pull Sustainability & Food Security have become core values Ag Biotechnology requires increased management & oversight in Global Supply chains Functional Characteristics – Specific food / feed usage specific starch properties – Product purity Zero Tolerance poses huge risk / problems Cross contamination of export grains / oilseeds Contamination of transportation means – truck, rail, barge, vessel Coexistence is imperative for US to grow destination options Connectivity across the globe provides a consumer that we want to better educate, sell grains, oilseeds, and their respective by products. The US competitive situation will continue to deteriorate as other origination points show they can produce a competitive food/feed source at these price levels 15
Food & Inflation: Truth & Consequences