1. Risk Environment for Agriculture
Ag. Credit School
Ames, Iowa
June 5, 2012
Chad Hart
Assistant Professor/Grain Markets Specialist 1 1

2. Population 2010 2020 2050 (billion) World 6.831 7.558 9.202 China
2020
2050
(billion)
World
6.831
7.558
9.202
China
1.330
1.385
India
1.657
1.173
1.326
1.304
U.S.
0.310
0.341
0.439
Indonesia
0.243
0.268
0.313
Brazil
0.201
0.223
Ethiopia
0.278
Pakistan
0.177
0.204
0.276
Bangladesh
0.158
Nigeria
0.182
0.264
0.152
0.181
0.260
Russia
0.139
0.132
0.234
Japan
0.127
Mexico
0.125
Congo
0.189
Source: U.S. Bureau of the Census,
International Data Base

3. GDP Growth
Source: USDA-ERS

4. GDP Growth
Source: USDA-ERS

5. World Meat Consumption
Source: USDA-PSD

6. World Veg. Oil Consumption
Source: USDA-PSD

7. Corn Use for the Next Decade
Source: USDA-ERS

8. Soybean Use for the Next Decade
Source: USDA-ERS

9. (Million Barrels Oil Equivalent per Day)
Liquid Fuel Usage
2007
2015
2020
2025
2030
2035
(Million Barrels Oil Equivalent per Day)
(Percent of 2007 Value)
United States
20.6
98%
100%
102%
104%
107%
Canada
2.3
96%
Mexico
2.1
105%
110%
114%
129%
138%
Europe
15.3
92%
88%
89%
90%
Japan
5.0
84%
86%
82%
China
7.6
132%
153%
178%
201%
222%
India
2.8
139%
154%
168%
Africa
3.1
113%
116%
126%
135%
148%
Central and South America
6.0
112%
117%
125%
133%
World
86.1
103%
121%
128%
Source: DOE-EIA

10. U.S. Crude Oil Prices
Source: USDA-ERS

11. Ethanol Production
Source: DOE-EIA

12. Biodiesel Production
Source: DOE-EIA

13. U.S. Blended Gasoline Consumption
7.6 bil. gal.
7.4 bil. gal.
Source: DOE-EIA, via USDA-ERS

14. Crop Prices for the Next Decade
Source: USDA-ERS

15. Government Debt
Source: Fed. Res. Bank of StL, FRED

16. Employment
Source: Fed. Res. Bank of StL, FRED

17. Real GDP
Source: Fed. Res. Bank of StL, FRED

18. Budget Projections by Title
Budget Change ($ million)
Title I – Commodity
-17,639
Title II – Conservation
-6,374
Title III – Trade
Title IV – Nutrition
-4,024
Title V – Credit
Title VI – Rural Development
Title VII – Research
645
Title VIII – Forestry 9
Title IX – Energy
Title X – Horticulture
359
Title XI – Crop Insurance
2,748
Title XII – Miscellaneous
-466
Total
-24,747

19. Budget Projections by Crop
Budget Change ($ million)
Corn
-5,752
Soybean
1,459
Wheat
-6,409
Cotton
-6,077
Rice
-2,842
Sorghum
-505
Barley
-615
Oats
-11
Peanuts
-314
Dairy
-59

20. 2013-2022 Budget Change ($ million)
Commodity Title
Changes
Budget Change ($ million)
End Direct Payments
-44,622
End Countercyclical Payments
-1,008
End ACRE
-4,615
Adding Popcorn 91
Ag. Risk Coverage
29,240
Marketing Loans 35
Sugar Program
Dairy Program
-59
Disaster Assistance
3,297
AGI Limits
-95
Implementation
100
Total
-17,639

21. 2013-2022 Budget Change ($ million)
Crop Insurance Title
Changes
Budget Change ($ million)
Supplemental Coverage Option
682
CAT Rerating
-437
Enterprise Units
506
APH Adjustment
855
Stacked IP for Cotton
3,224
Peanut Rev. Insurance
239
Implementation 85
Index-Based Weather Ins. 50
Beginning Farmer Provisions
192
Ag. Mng. Assistance 6
Crop Prod. on Native Sod
-167
Participation Effects from ARC
-2,487
Total
2,748

22. Free Trade Agreements Recently, with South Korea, Colombia, and Panama
Previously, with Israel, Jordan, Singapore, Chile, Australia, Morocco, El Salvador, Honduras, Nicaragua, Guatemala, Bahrain, Dominican Republic, Costa Rica, Oman, and Peru
Most famous: NAFTA, with Canada and Mexico

23. Corn Planting
Source: USDA-NASS

24. Soybean Planting
Source: USDA-NASS

25. Input Costs
Source: USDA, Agricultural Prices

26. Corn
The next few years have changed that relationship. Crop prices are now much more responsive to tighter stocks.

27. Soy
The next few years have changed that relationship. Crop prices are now much more responsive to tighter stocks.

28. Iowa Corn Prices vs. Costs

29. Iowa Soybean Prices vs. Costs

30. Thank you for your time. Any questions. My web site: http://www. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: