1. Extension and Outreach/Department of Economics Agriculture’s Realignment “Structural Transitions in Global Agriculture” 2014 Agricultural Symposium Kansas City, Missouri July 16, 2014 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911

2. Extension and Outreach/Department of Economics Source: USDA-NASS Iowa Crop Shifts

3. Extension and Outreach/Department of Economics Producer Adjustments  Net farm income projected to decline significantly  But remain above 10-year average  Crop returns had led the charge as livestock struggled  Now livestock prices are leading the industry

4. Extension and Outreach/Department of Economics Agribusiness Adjustments  Agribusinesses have been caught in a margin squeeze  High crop prices don’t necessarily translate to high agribusiness returns  Managing margins by controlling supply chains, tailoring products and messages to customers, boosting supplies, and focusing on international markets

5. Extension and Outreach/Department of Economics Rural Community Adjustments  Macke: “Rural communities either innovate or decline.”  More reliance on non-ag enterprises  Push back against trends: brain and wealth drain, homogenization, and competitiveness

6. Extension and Outreach/Department of Economics Ag Lending Adjustments  More cautious approach  Stronger combination of financial and risk management strategies  Broader perspective on:  Risks – policy, logistics, tax, trade, etc.  Opportunities – international, expansion, etc.

7. Extension and Outreach/Department of Economics Population growth 2014 to 2050 Source: U.S. Census Bureau, International Data Base

8. Extension and Outreach/Department of Economics GDP Growth Source: USDA-ERS

9. Extension and Outreach/Department of Economics Liquid Fuel Usage 200720152020202520302035 (Million Barrels Oil Equivalent per Day)(Percent of 2007 Value) United States20.698%100%102%104%107% Canada2.396% 100%104% Mexico2.1105%110%114%129%138% Europe15.392%88% 89%90% Japan5.084%86% 84%82% China7.6132%153%178%201%222% India2.8114%129%139%154%168% Africa3.1113%116%126%135%148% Central and South America6.0110%112%117%125%133% World86.1103%107%113%121%128% Source: DOE-EIA

10. Extension and Outreach/Department of Economics Chinese economic growth: 1990

11. Extension and Outreach/Department of Economics Dongguan, Dec. 10, 2005: McDonald’s opens first drive-thru in China; half of the 100 restaurants plan to open each year will have drive-thrus Chinese economic growth: 2005 AP photomcchronicles.blogspot.com photo

12. Extension and Outreach/Department of Economics 1000 more cars added to the streets of Beijing every day Chinese economic growth: 2008

13. Extension and Outreach/Department of Economics Open 24 hours Delivery 24 hours More than 1,800 McDonald’s in China, with 200 more on the way Chinese economic growth: 2011

14. Extension and Outreach/Department of Economics US agricultural trade with Canada NAFTA Two-way trade up 376% since NAFTA Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations

15. Extension and Outreach/Department of Economics US agricultural trade with Mexico NAFTA Two-way trade up 472% since NAFTA Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations

16. Extension and Outreach/Department of Economics Land Values and Income Source: Mike Duffy, ISU

17. Extension and Outreach/Department of Economics Land Values and Income Source: Mike Duffy, ISU

18. Extension and Outreach/Department of Economics Arable Land

19. Extension and Outreach/Department of Economics Thank you for your time! Any questions? My web site: http://www.econ.iastate.edu/~chart/ Iowa Farm Outlook: http://www.econ.iastate.edu/ifo/ Ag Decision Maker: http://www.extension.iastate.edu/agdm/