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Jim Hansen, Syd Cochrane, Getachew Nigatu Agricultural Economist

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Presentation on theme: "Jim Hansen, Syd Cochrane, Getachew Nigatu Agricultural Economist"— Presentation transcript:

1 Long-term Projections of International Agricultural Trade, ECOWAS Agriculture to 2025 and Model
Jim Hansen, Syd Cochrane, Getachew Nigatu Agricultural Economist USDA, Economic Research Service June 27, 28,

2 Presentation Outline Description of USDA 10 Year Commodity Projections
Macroeconomics, population, and energy ECOWAS Model US commodities and International trade ECOWAS agricultural projections Conclusion

3 USDA’s Agricultural Projections
10-year projection of major commodities - Supply, demand, trade, and prices. - Based on November 2015 market conditions. Released Feb 2016 Assumptions: - Continuation of current U.S. law - Continuation of existing international trade agreements - Population growth slows, strongest in developing countries - Macroeconomic growth – strongest in emerging markets Composite of Model Results and Analysts Judgment - Modeling system: dynamic partial equilibrium trade countries/regions, commodity markets Equilibrates: (Supply = Demand) & (Imports = Exports) Solves for prices and trade, clear world and country markets

4 Demand Structure: Per Capita GDP growth - Population growth - GDP growth Own and Substitute Prices Rural and Urban for some countries Diet Diversification in developing countries  GDP/Capita Growth  Urbanization  Income distribution equality  Food away from home The degree and rate of change of DIET DIVERSIFICATION increases with:  GDP/Capita Growth  Urbanization  Income distribution equality  DIET DIVERSIFICATION means * LESS consumption of: Roots and Tubers Low-quality grain varieties (switching to high-quality varieties may lower yields) * MORE consumption of: Fruits & Vegetables Vegetable Oils & processed ceral products Meat & dairy products => greater demand for FEED GRAINS

5 Changes in Food Consumption:
Greater consumption of: - Fruits & Vegetables - Vegetable Oils - Processed Cereal Products - Meats & Dairy Products Feed Demand Increases  Import demand for Feed grains Less consumption of: - Staple grains - rice in Asia, corn in Indonesia and Mexico - Low-quality grain varieties and switching to high-quality (high-quality varieties may lower yields) - Roots & tubers The degree and rate of change of DIET DIVERSIFICATION increases with:  GDP/Capita Growth  Urbanization  Income distribution equality  DIET DIVERSIFICATION means * LESS consumption of: Roots and Tubers Low-quality grain varieties (switching to high-quality varieties may lower yields) * MORE consumption of: Fruits & Vegetables Vegetable Oils & processed ceral products Meat & dairy products => greater demand for FEED GRAINS

6 ERS ECOWAS Model

7 Commodities in ERS ECOWAS Model
Livestock: (3 sectors) Beef, Pork, and Poultry Crops: (9 sectors) Wheat, Rice Corn, Sorghum, Other-Coarse-Gr (mostly millet) Other seeds (mostly peanuts), meal and oil Cotton, sugar, cocoa Blank sections no data – barley, soybeans meal oil,

8 Elasticity Partial Equilibrium model
Model in Excel Spread sheet - 3 main sheets Commodity models (Forecast) Parameters, Base-Scenario (table) Data Requirement for Model Macroeconomic variables Agriculture data (aggregate) – USDA Production, supply and Disappearance and FAO Prices and Policies

9 Modeling the Agriculture Economy:
Production & consumption Crops: area, yield, consumption, stocks and trade Livestock: animals inventory, production, consumption, trade, stocks Model as a System Accounting (0 = PROD+BSTK+IM-TCON-EX-ESTK) Number of different identities must hold Stock issue, government, farm household

10 Modeling Production: Production
Gross return = lagged prices x expected yield Yield = f(gross return, technology time trend) Area = f(gross return, alternative crops GR, tech) Production = Yield x Area Total Supply = Production + Imports + Beg Stocks

11 Modeling Consumption:
Per capita cons = f(own price, sub prices, income) Food cons = per capita cons x population Total cons = food cons + feed cons + waste + industry use Total Disappearance = Total cons + exports + end stocks

12 Modeling Stocks & Trade:
Ending and beginning stocks Beginning stocks = lagged(Ending stocks) Ending stocks = f(production or consumption, trend) Exports = f(consumer price, export price, trend) Imports = f(producer price, export price, trend) Imports and exports are also identities for some commodities Imports = Cons + endstocks – production – exports-begstocks

13 Closing the Model: Domestic prices solved in the model for some commodities Total Disappearance = Total cons + exports + end stocks Total Supply = Production + Imports + Beg Stocks Prices solved in the model until supply = demand 0 = Total Supply - Total Disappearance

14 ECOWAS Commodity Projections

15 ECOWAS Area Harvested (million ha)
Million hectares Other coarse grain Sorghum Corn Oth-oil seed Rice

16 ECOWAS Area Harvested (million ha)
Million hectares Rice Oth-oil seed Corn Sorghum Other coarse grain (Millet)

17 ECOWAS Yields: (mt/ha)
Metric tons per hectares Corn Rice Are the recent yield data correct?

18 ECOWAS Yields: (mt/ha)
Metric tons per hectares Other oil seed Sorghum Other coarse grain

19 ECOWAS Corn Production, and Consumption (million mt)
Million metric tons Total Consumption Production Food Feed

20 Imports and Exports (1,000 mt)
ECOWAS Corn Imports and Exports (1,000 mt) Thousand metric tons Imports Exports

21 ECOWAS Sorghum Production, Food, and Feed Consumption (million mt)
Million metric tons Production Food Feed

22 Imports and Exports (1,000 mt)
ECOWAS Sorghum Imports and Exports (1,000 mt) Thousand metric tons Exports Imports

23 ECOWAS Other Coarse Grain (Millet)
Production and Consumption (million mt) Million metric tons

24 ECOWAS Wheat Imports, Consumption, Exports and Production (million mt)
Million metric tons Imports Consumption Exports

25 ECOWAS Rice Total Consumption, Production and Imports (million mt)
Million metric tons Total Consumption Production Imports

26 ECOWAS Other Oilseeds (Peanuts)
Production, Exports, and Consumption (million mt) Million metric tons Total Consumption Production Crush Food Feed, seed & waste

27 ECOWAS Other Oilseeds (Peanuts) : Crush, Food,
and Feed, seed & waste (million mt) Million metric tons Total Consumption Crush Food Feed, seed & waste

28 Consumption

29 Per Capita Consumption (kg/capita)
ECOWAS Food Per Capita Consumption (kg/capita) Kilograms/person per year Rice Corn Wheat

30 Per Capita Consumption (kg/capita)
ECOWAS Food Per Capita Consumption (kg/capita) Kilograms/person per year Other Coarse Grain Millet Sorghum

31 Per Capita Consumption (kg/capita)
ECOWAS Food Per Capita Consumption (kg/capita) Kilograms/person per year Other Oilseeds Peanut Oil Peanuts

32 Pork, Poultry, and Beef Production
and Feed Demand

33 Production, Consumption and Imports (million mt)
ECOWAS Beef Production, Consumption and Imports (million mt) Million metric tons Consumption Production Imports

34 Production, Consumption and Imports (million mt)
ECOWAS Pork Production, Consumption and Imports (million mt) Million metric tons Consumption Production Imports

35 Production, Consumption and Imports (million mt)
ECOWAS Poultry Production, Consumption and Imports (million mt) Million metric tons Consumption Production Imports

36 ECOWAS Meat Production: Beef, Poultry and Pork (million mt)
Million metric tons Beef Poultry Pork

37 Feed Demand

38 Corn, Peanut-Meal, Peanuts, and Sorghum (million mt)
ECOWAS Feed Demand: Corn, Peanut-Meal, Peanuts, and Sorghum (million mt) Million metric tons Corn Increase flat mmt, Projection little growth Corn Other-Meal Peanut Other-Oilseeds Peanut Sorghum

39 Production, Exports, and Consumption (million mt)
ECOWAS Cotton Production, Exports, and Consumption (million mt) Million metric tons Production Exports Total Consumption

40 Total world grain & oilseeds1
Production, yield, area harvested, population & per cap production Index: 1970 = 100 Production Growth rates: Exponential Trend (%/year) Production % Yields Area Yield Area Harvested 1/Oilseeds = soybeans + rapeseed + sunflowers. Source: Compiled from USDA’s PS&D Database & Baseline Projections

41 Total world grain & oilseeds1
Production, yield, area harvested, population & per cap production Index: 1970 = 100 Growth rates: Exponential Trend Production Yields Population Area Capita/Pro Production Yield (green) Population (red) Area Harvested Per Capita/Production 1/Oilseeds = soybeans + rapeseed + sunflowers. Source: Compiled from USDA’s PS&D Database & Baseline Projections

42 Conclusions and Summary:
Strong global trade growth in most agriculture commodities, without significant increases in real world commodity prices. Strong income growth in developing countries and urbanization lead to increased import demand for grains, High Value Products Trade to remain very competitive Expanding production potential in Brazil & Argentina, FSU, EU Indonesia expands palm oil production. Uncertainties, Ethanol and trade, Bio-energy policies, BSE, Avian influenza, food safety, China and Brazil, natural resource constraints – water, changing demographics and effect on food demand

43 USDA-ERS Long-Term Projections
Thank you USDA-ERS Long-Term Projections briefing room

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