Prospects for World Agriculture Baseline Projections to 2014 Ronald Trostle Economic Research Service U.S. Department of Agriculture Foro de Perspectiva Agroindustrial, y 28 de Julio, Buenos Aires, Argentina

28 July, 2005Prospects for World Agriculture: USDA/ERS Presentation Outline Summary of projections Main assumptions Developments influencing world agriculture Projections for farm commodities Uncertainties Conclusion

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

28 July, 2005Prospects for World Agriculture: USDA/ERS Total World Grain & Oilseeds 1 Area, Yield, Production, & Percap Consumption; and Population Exponential trend growth rates: Prod Yields Area Percap Use Populatio Total oilseeds = soybeans + rapeseed + sunflowers

28 July, 2005Prospects for World Agriculture: USDA/ERS Global Meat 1 Production & Percap Consumption; and Population Index: 1975 = 100 Per capita Consumption Population Productio n 1 Meat = Beef + Pork + Poultry

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

28 July, 2005Prospects for World Agriculture: USDA/ERS Strong Economic Growth GDP growth rates, by decade averages Percen t Source: USDA Agricultural Baseline Projections to 2014, February Economic Research Service, USDA.

28 July, 2005Prospects for World Agriculture: USDA/ERS Population Growth Rates Decline (Percent by Decade) Percent Developed World Middle East Asia Developing Latin America Africa

28 July, 2005Prospects for World Agriculture: USDA/ERS Inflation Rates Generally Decline Percent

28 July, 2005Prospects for World Agriculture: USDA/ERS U.S. Dollar Projected to Strengthen 1 Index values: 2000=100 1/ Real U.S. agricultural trade-weighted dollar exchange rate, using U.S. agricultural export weights.

28 July, 2005Prospects for World Agriculture: USDA/ERS Crude Oil Prices $ per barrel Refiners' acquisition cost of crude, imports Refiners' acquisition cost, adjusted for inflation

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

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

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

28 July, 2005Prospects for World Agriculture: USDA/ERS Oilseeds, Grains and Cotton

28 July, 2005Prospects for World Agriculture: USDA/ERS Global trade: Wheat, Coarse Grains, and Soybeans & Soybean products Million metric tons Soybeans and soybean products 1/ Coarse grains 1/ Soybeans and soybean meal in soybean-equivalent units. Wheat

28 July, 2005Prospects for World Agriculture: USDA/ERS S. American Exports: Grain & Soybeans Million metric tons Oilseeds Rice Coarse grains Wheat

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

28 July, 2005Prospects for World Agriculture: USDA/ERS Global Soybean Imports Million metric tons 1/ European Union-15 prior to 1999, EU-25 thereafter. Excludes intra-EU trade.

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

28 July, 2005Prospects for World Agriculture: USDA/ERS Global soybean oil imports Million metric tons 1/ Asia less India and China. 2/ Includes Mexico.

28 July, 2005Prospects for World Agriculture: USDA/ERS Global Exports of Soybeans & Products 1 Million metric tons Brazil United States Argentina Other 1 Soybeans + bean equivalent of soymeal.

28 July, 2005Prospects for World Agriculture: USDA/ERS Global Corn Imports Million metric tons 1/ Includes Oceania. 2/ Excludes Mexico which is part of NAFTA.

28 July, 2005Prospects for World Agriculture: USDA/ERS China: Corn Imports and Exports Million metric tons Exports Imports

28 July, 2005Prospects for World Agriculture: USDA/ERS Global Corn Exports Million metric tons 1/ Republic of South Africa, Brazil, EU, former Soviet Union, and others.

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

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

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

28 July, 2005Prospects for World Agriculture: USDA/ERS Global Cotton Exports Million bales

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

28 July, 2005Prospects for World Agriculture: USDA/ERS Beef and Veal Imports: Major Countries 1 Million metric tons 1/ Selected importers. 2/ European Union-15 prior to 1999, EU-25 thereafter. Excludes intra-EU trade.

28 July, 2005Prospects for World Agriculture: USDA/ERS Pork Imports: Major Countries 1 Million metric tons 1/ Selected importers.

28 July, 2005Prospects for World Agriculture: USDA/ERS Poultry Imports: Major Countries 1 Million metric tons 1/ Selected importers. 2/ European Union-15 prior to 1999, EU-25 thereafter. Excludes intra-EU trade.

28 July, 2005Prospects for World Agriculture: USDA/ERS Meat Exports from Major Exporters Million metric tons Beef & veal Pork Poultry

28 July, 2005Prospects for World Agriculture: USDA/ERS S. Amercia: Meat Exports Million metric tons Poultry Pork Beef

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

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

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

28 July, 2005Prospects for World Agriculture: USDA/ERS Farm Prices 1 Corn, Wheat, and Soybean $ per bushel Corn Wheat Soybeans 1 Nominal U.S. farm prices

28 July, 2005Prospects for World Agriculture: USDA/ERS Livestock Prices 1 $ per hundredweight Beef cattle Broilers Hogs 1 Nominal U.S. prices

28 July, 2005Prospects for World Agriculture: USDA/ERS 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 Agriculture Baseline Projections to 2014 USDA-ERS baseline briefing room Gracias, Obrigado, y Thank you Ronald Trostle Economic Research Service U.S. Department of Agriculture