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CHRISTIAN JOERGCHRISTIAN JOERGGROWING IMPORTANCE OF THE BLACK SEA – HOW SUSTAINABLE?

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Source: Times Magazine, July 11, 2011

OutlineOutline

• Global food/feed trends• World grain production and use• Global food/feed trends• World grain production and useWorld grain production and use• World exports• Global food prices and use

World grain production and use• World exports• Global food prices and use• Global food prices and use• Climate change

L d il bilit

• Global food prices and use• Climate change

L d il bilit• Land availability• Ukraine – agricultural overview• Land availability• Ukraine – agricultural overview• Summary• Summary

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Trends in world food/feed demandTrends in world food/feed demand

• Global population expanding by 80m every year• Movement from country to cityo e e t o cou t y to c ty• Transition from rice dominated diets to meals including

meat and dairyy• Demand for food and feed is expected to increase by

15% or 300mmt in the next 10 years y

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ChallengesChallengesgg

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ChallengesChallengesgg

Limited availability of arable land Continued depletion of top soilsCo t ued dep et o o top so sReceding levels of ground water available for irrigationClimate changeClimate changeDemands for food and feed must be met by increased production from South America Russia Ukraineproduction from South America, Russia, Ukraine, Kazakhstan and southern Africa

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World grain production and use – mtWorld grain production and use – mtg pg p

2,700 600

U

2 3912,419

2,449 2,4692,505

2,5332,571 2,595

2,500

400

Use

Change in EndingStocks

2,242 2,234

2,3542,391

2,265

2,188

2,300

400StocksProduction

2,044

2,126

2,018 2,005

1 900

2,100 200

-93 -84

49

-46

82 35

-50

8 16 14 15 2 5 3 11 7-13-14-30

221,8211,8631,846

1,880

1,700

1,900

0

1,500 -200

/01

5/06 /1

1

5/16 /21

Source: USDA, FAO, OECD

2000

200 5

2010

2015

2020

7

World grain use, by sector - mtWorld grain use, by sector - mtg , yg , y

0 8

3,000

Feedstuff Food Ethanol

155 165 175 178 180 180 182 182 183 181

8 95 32 051

,103

2,16

0

2,19

9

2,23

8

2,27

7

2,34

5

2,37

6

2,40

5

2,43

4

2,46

7

2,50

0

2,52

9

2,56

0

2,58

8

2,500

Feedstuff Food Ethanol

3 9 26 44 463

481

499

,518

29 31 39 43 48 56 72 95 114 135 150 155

1,86

6

1,91

0

1,91

4

1,94

8

1,99 2,0 2,0 2, 2

2,000

1,14

3

1,17

0

1,16

9

1,19

2

1,19

5

1,22

4

1,23

7

1,25

3

1,28

0

1,29

6

1,31

5

1,33

5

1,38

1

1,39

3

1,40

9

1,42 1,44 1,4 1,4 1,4 1,

1,000

1,500

94 09 06 13 52 52 42 55 766

767

773

787

799

808

818

829

842

855

866

878

889500

1,000

69 70 70 71 75 75 74 7 7 7 7 7 7 8 8 8 8 8

0

00/0

1

05/0

6

10/1

1

15/1

6

20/2

1

Source: USDA, FAO, OECD

200

200

201

201

202

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World wheat exports – mtWorld wheat exports – mtpp

144160

109 112117

112117

144136

126 128

120

140 Others

102 106 106 109 112 112

100

120

Ukraine

60

80

Russia

40

Top 5 Exporter

0

20Top 5 Exporter(USA, Canada,EU, Australia,Argentina)

00/01

01/02

02/03

03/04

04/05

05/06

06/07

07/08

08/09

09/10

10/11

11/12

Source: USDA

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World barley exports – mtWorld barley exports – mty py p

25

1 1718

20

1720

Others

17 1716 16

15 15 1517

15

1315 Ukraine

10 Russia

5Top 5 Exporter

0

1 2 3 4 5 6 7 8 9 0 1 2

p p(USA, Canada,EU, Australia,Argentina)

00/01

01/02

02/03

03/04

04/05

05/06

06/07

07/08

08/09

09/10

10/11

11/12

Source: USDA

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World corn exports – mtWorld corn exports – mtpp120

77 77 78 78 82

9499

84

9791 93100

Others

77 75 77 78 78

60

80 Ukraine

40

60

Serbia

20 Top 5 Exporter(USA, India,

0

0/01

1/02

2/03

3/04

4/05

5/06

6/07

7/08

8/09

9/10

0/11

1/12

Brazil, SouthAfrica, Argentina)

00/0

01/0

02/0

03/0

04/0

05/0

06/0

07/0

08/0

09/1

10/1

11/1

Source: USDA

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Food prices - high volatilityFood prices - high volatilityp g yp g y

200 Swine (pork), 51-52% lean Hogs, U.S.

160

180 Sugar, Free Market, Coffee Sugar and Cocoa Exchange(CSCE) contract no.11 nearest future position,

M i ( ) U S N 2 Y ll FOB G lf f M i U S

140

160 Maize (corn), U.S. No.2 Yellow, FOB Gulf of Mexico, U.S.

Wheat, No.1 Hard Red Winter, ordinary protein, FOB Gulfof Mexico,

100

120

60

80

40

60

995

996

997

998

999

000

001

002

003

004

005

006

007

008

009

010

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Source: IMF

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Global food use growth stronger than wheat yield growthGlobal food use growth stronger than wheat yield growthwheat yield growthwheat yield growth

115

110

115

Net agricultural per capitafood consumption indexwheat yields

105

100

95

902000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20102000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: FAO, OECD, USDA13

Price development (%)Price development (%)p ( )p ( )

80

506070 Base 2008-10

Base 2001-10

203040

01020

-30-20-10

30

Whe

at

Mai

ze

Ric

e

Oils

eeds

ed m

eals

Veg.

Oils

aw S

ugar

Bee

f

Pigm

eat

Poul

try

Fish

But

ter

Che

ese

O

Oils

ee V

Ra

Source: FAO, OECD14

Challenge climate changeChallenge climate changeg gg g

North America Europe•More precipitation in the winter months•Warmer winters in Canada and in the north of the USA•Vegetation period in Canada becomes longer•Drier, warmer summers

Asia• More precipitation in northern and eastern China•Yield increases in northern and eastern China

Europe•Less precipitation in southern Europe•More precipitation in northern Europe•Hot, dry summers in southern Europe

and eastern China•Yield losses in China

Australia•Less precipitation in the south and west•Yield losses in the west and south•Heavier bush fires

South America•More precipitation from December through February•Yield increases for corn and soybeans

Africa•Yield losses in North Africa•Loss of arable land of up to 90m ha

Source: IPCC

Yield increases for corn and soybeans•Wheat yield losses due to worse seeding and growing conditions

in large parts of Africa•75-250m people affected by climate change until 2020

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Ukraine – agricultural overviewUkraine – agricultural overviewgg

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Country profilesCountry profilesy py p

A t liA t li Uk iUk i C dC d

• Population: 21.5 million (UN, 2010)

• Population: 45.4 million (UN, 2010)

• Population: 33.8 million (UN, 2010)

AustraliaAustralia UkraineUkraine CanadaCanada

(U , 0 0)• Area: 7.7 m sq km (2.9 m

sq miles)• Life expectancy: 80 years

( ) 84 ( )

(U , 0 0)• Area: 603,700 sq km

(233,090 sq miles)• Life expectancy: 64 years

( ) 74 ( )

0 0)• Area: 9.9 m sq km (3.8 m sq

miles)• Life expectancy: 79 years

( ) 84 ( )(men), 84 years (women)• GDP per capita: US

$43,770 (World Bank, 2009)

(men), 74 years (women)• GDP per capita: US

$2,800 (World Bank, 2009)

(men), 84 years (women)• GDP per capita: US $42,170

(World Bank, 2009))

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Ukrainian agriculture strengthsUkrainian agriculture strengthsg gg g

• Fertile soils across the country• Fertile soils across the country

• Soils with a high water retention capacity

• Climate supportive for crop growth

• Soils with a high water retention capacity

• Climate supportive for crop growth• Climate supportive for crop growth

• Large scale farms

• Climate supportive for crop growth

• Large scale farms

• Access to Black Sea ports and the key import nations• Access to Black Sea ports and the key import nations

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Wheat yield developmentWheat yield developmenty py p

3A t li

Basis average wheat yields 1992-2010

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Australia

Canada

Ukraine

+1: above average yield0: average yield

-1: below average yield

1

1

0

-2

-1

-300/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11

Prevention of lack of supply: Diversification of investments: In case of below normal yields, above normal yields are noted elsewhere

00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11

Source: Viterra, USDA19

Farmland developmentFarmland developmentpp

200,000

160,000

180,000

100 000

120,000

140,000 Average 1993-1997

Average 1998-2002

60 000

80,000

100,000Average 2003-2008

20,000

40,000

60,000

0

USA

Indi

a

Rus

sia

Chi

na EU

Bra

zil

anad

a

stra

lia

krai

ne

entin

a

hsta

n

Source FAO

R C B

Ca

Aus U

k

Arg

e

Kaz

akh

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Total nitrogen use per ha of arable land Total nitrogen use per ha of arable land g pg p

350

300

200

250Average 1998-2003

100

150 Average 2004-2008

50

100

0

USA

Indi

a

ussi

a

Chi

na EU

Bra

zil

anad

a

stra

lia

krai

ne

entin

a

hsta

n kg/ha

R C B

Ca

Aus U

k

Arg

e

Kaz

akh

Source: Viterra, FAO21

Summary Summary yy

World grain and oilseed use will increase furtherExport potential out of key export nations must be po t pote t a out o ey e po t at o s ust beextendedUkraine is the breadbasket of EuropepHigh potential to increase yieldsTrade of agricultural commodities will growTrade of agricultural commodities will growInvestments in Ukraine are helping to reduce the risk of supply lossessupply losses

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Source: Times Magazine, July 11, 2011

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Source: Times Magazine, July 11, 2011