This is one of the slides that Mike Boehlje of Purdue showed during the July KCFRB agricultural symposium. There was a global cropland expansion of 147 million acres in the past eight years. Most of these acres came from South America, the FSU, and East Asia, and most of those acres went into growing corn, followed by soybeans. Note that some of the added acres are from double cropping.
In mid-July, the Federal Reserve Bank of Kansas City hosted its annual agricultural symposium titled, “The Shifting Nexus of Global Agriculture.” I considered attending but did not, so instead I read the twitter feeds of those who tweeted the event and there are some good nuggets in the (modified) tweets which follow.
1) From speaker Mike Boehlje, Professor at the Dept. of Agricultural Economics, Purdue:
• Citing a new report he had just seen in the WSJ, Boehlje said that the IMF had decreased projections for world economic growth for the 4th quarter in a row. He said that this article has huge implications for agriculture including in China, India, and Brazil, too.
• Don’t drink the Kool-aid that the agribusiness sector is feeding. Growth in INCOME counts, not population growth. (K.M. Note: This was my favorite quote from this whole post, as I about go ballistic every time I see that “How are we going to feed… ” headline, which is far too often and gets the question wrong! …there are many other things that count besides growth in income, too, but it most certainly isn’t just about production.)
• Boehlje said he’s a pessimist on long-term U.S. livestock industry competitiveness, which was based on cheap feed. The U.S. demand for animal protein is “mature at best and probably declining.” Larger multinationals may well off-shore production.
He named 12 things to watch:
• EU debt crisis
• U.S. economic recovery
• changing value of the USD
• unpredictable Asian growth
• current short crop supplies – weather supply shocks
• livestock regulations
• increased global acreage for crops
• farm policy uncertainty
• interest rates
• fertilizer, seed, chemical, energy prices (input costs)
• farm income and land values
• counterparty risk
2) Univ. of Missouri’s Pat Westhoff:
• Don’t count on $7 corn “unless the world changes in very fundamental ways.” He sees sub-$5 corn the next 10 years.
3) Gavilon’s Ray Wyse:
• The FAO food index has tripled since the RFS was implemented, and land prices have increased five fold.
• There are still more acres to be had in the FSU region, and double cropping is growing steadily around the world.
• Some people are now looking at the People’s Republic of Congo as “the next Brazil.”
• Is it possible to double-crop corn in certain regions of the U.S. as Monsanto develops shorter season varieties?
• We will miss our corn export market when its gone.
4) Texas A&M economist Joe Outlaw:
• You don’t write a farmbill for the good years, you write it for the bad years. Policy makers have to focus on that reality.
5) Next, are a few tweets about farmland. Sorry, I don’t have all of the sources of the quotes.
• In fiscal 2012, Farmers National Company has sold more than 600 farms, for over $450 million. Active farmers continue to dominate the buy-side of the market.
• Investors purchased between 25-30% of FNC’s 2012 sales. Traditional investors about half, non-traditional investors growing.
• Jim Farrell: A new phenomenon we’re seeing is the 80+ year old cash buyer. He’s doing this since there’s no return on investment in CD’s or other “safe” investments. (K.M. Note: I’ve also seen this going on with home purchases where I live here in Boulder, Colorado. You’d think 75 year olds would downsize, but instead they upsize – presumably for a place to safely invest with a better chance of return on their investment.)
• Joseph Bond: Ag expansion in the Black Sea region will require billions of dollars of investment in modern agriculture techniques.
• William Mott: More concerned about infrastructure and logistics costs with international farming operations than cost of production.
6) Informa’s Kenneth Eriksen:
• There are “center pivots going up all over the map” in central and southern Illinois.
END WHAT I GLEANED FROM TWITTER.
(Thanks to @Feedstuffs @ianberry and @HoardsDairyman for tweeting the event.)
The KCFRB’s links to talks and slides from the event may be found here: http://kansascityfed.org/publications/research/rscp/rscp-2013.cfm?ag=02-071713