fapri outlook prospects for the next decade: the new ag/energy nexus william h. meyers professor of...
TRANSCRIPT
- Slide 1
- FAPRI Outlook Prospects for the Next Decade: The New Ag/Energy Nexus William H. Meyers Professor of Agricultural Economics and Co-Director, FAPRI University of Missouri LINK Meeting Saint Petersburg, Russia 4 June 2009
- Slide 2
- Outline A new and market environment with stronger agriculture and energy linkages Recent grain market developments FAPRI projections of global market prospects Highlights of results Key movers and shakers Main uncertainties Challenges and opportunities Policy priorities Short term Long term
- Slide 3
- Slide 4
- Why did prices rise, then decline? Can it ALL happen again? Why prices rose Reduced grain production in Europe, Australia Economic growth in Asia and elsewhere Weaker dollar Higher petroleum prices Rapid biofuel expansion Policy interventions Speculation rose Why prices fell Sharp increase in global grain production in 2008 Financial crisis and world economic slowdown Stronger dollar Lower petroleum prices Slower biofuel growth Many interventions stop Speculation declined
- Slide 5
- Corn and petroleum prices
- Slide 6
- Grain production, million metric tons (WASDE May 12, 2009)
- Slide 7
- Grain stocks, million metric tons (WASDE May 12, 2009)
- Slide 8
- Grain stocks to use ratios (WASDE May 12, 2009)
- Slide 9
- World grain stocks and real prices, Oct 2008
- Slide 10
- World grain stocks and real prices (WASDE May 12, 2009)
- Slide 11
- FAPRI-Missouri/ISU - Consortium University of Missouri U.S. Agriculture ___FAPRI est. 1984____ Iowa State University CARD World Agriculture United Nations- Project LINK Global Macro IHS Global Insight U.S. and Global Macro Texas A&M University AFPC Representative Farms - 1989 Texas Tech Cotton - 2003 University of Arkansas AFAPC World Rice - 1990 Arizona State NFAPP Fruit & Veg. - 1995 Univ. of Wisconsin Dairy - 2003
- Slide 12
- Historical and projected real commodity prices, 2007$
- Slide 13
- Why do projections differ?
- Slide 14
- Key elements of baseline assumptions Macroeconomic Variables Agricultural Policies Technology Normal Weather
- Slide 15
- Macroeconomic drivers: GDP 2009 recession and rapid recovery (IHS GI) Strong global outlook from 2011 onward 3.3 % average annual GDP growth rate India and China average 7.8 and 8.2%, respectively
- Slide 16
- Real GDP growth rates
- Slide 17
- Macroeconomic drivers: exchange rate U.S. Dollar strengthens in 2009 Real depreciation of $ resumes in 2010 against many currencies Most Asian currencies appreciate in real terms against the U.S. dollar China experiences significant real appreciation
- Slide 18
- Exchange rate, major trading partners, FC/US$
- Slide 19
- Macroeconomic drivers: oil price Projected petroleum prices in the near term are well below forecasts made in 2008 Below $60/barrel through 2010 then increases to $80/barrel as global economy recovers and demand grows
- Slide 20
- Petroleum price forecasts from IHS Global Insight *NYMEX July futures, 5/27/09
- Slide 21
- Global macro drivers: income Economic recovery fuels next 10 years growth Dairy product consumption increases 13 kg per capita (milk equivalent) from 2008 to 2018 Per capita meat increases 5.6 kg Per capita vegetable oil increases 3.1 kg Food grain consumption per capita declines Production of meats increases 38.6 mmt or 18% Trade in meats increases 4.1 mmt or 24.3%
- Slide 22
- Changes in per capita food consumption 2008-2018
- Slide 23
- World meat production and trade
- Slide 24
- Dairy product consumption in Asia
- Slide 25
- Meat production and feed use
- Slide 26
- World grain prices
- Slide 27
- Crop outlook: world feed grain outlook overview Growth in livestock sector drives the increase in demand for feed grains. Feedstock use for ethanol production boosts demand Stronger prices increase area and, with yield growth, production increases. Increase in area grows supply in the short-run, while yield improvement is the major source of growth in the long-run.
- Slide 28
- World corn use and per capita consumption
- Slide 29
- World corn area and yield
- Slide 30
- World corn stocks-to-use ratio vs. price
- Slide 31
- World food grain outlook overview Food grain per capita consumption declines with growth in income as consumers trade- up to protein rich products. With declining per capita consumption, demand growth comes mainly from population growth. Growth in consumption in regions such as Asia, Africa, and the Middle East fuels growth in trade and strengthen food grain prices. Long-run production growth driven by yield improvement.
- Slide 32
- World wheat feed and food consumption
- Slide 33
- World wheat area and yield
- Slide 34
- World wheat stocks-to-use ratio vs. price
- Slide 35
- World rice production, use, and per capita consumption
- Slide 36
- World rice area and milled yield
- Slide 37
- World oilseed outlook overview Oilseed sector grows with strong demand for both oil and meal products driven by population and income growth, expansion of the livestock sector China soybean imports grow by nearly 60 % from 2008 to 2018 Increasing interest in renewable fuels and biodiesel mandates drives increase in industrial use of vegetable oil and their prices. Room for area expansion in South America dampens price growth in the next decade.
- Slide 38
- World vegetable oil consumption
- Slide 39
- World soybean area and yield
- Slide 40
- World oilseed prices
- Slide 41
- World vegetable oil prices
- Slide 42
- World Protein Meal Prices
- Slide 43
- FOB Northern European dairy product prices
- Slide 44
- Movers, shakers and uncertainties Good weather and yields in 08/09, but costs and poor weather dampen 09/10 growth, except soybeans Price surge has abated, but NOT in some LIFDCs Trade safeguard interventions mostly gone Biofuel growth slowed, but policies remain Strong influence of energy markets continue Major uncertainties (stochastic analysis) Oil price US dollar The global financial crisis and impacts on demand growth, trade financing Weather
- Slide 45
- Oil price distribution
- Slide 46
- Maize US farm price uncertainty
- Slide 47
- Wheat US farm price uncertainty
- Slide 48
- A more uncertain future 1. Road to economic recovery? 2. Timing and size of oil price volatility? 3. Will biofuel policies change? 4. Will other policies be unstable? 5. Wider range of possible outcomes 6. Farmers and agribusiness can easily get on wrong side of output and/or input markets 7. Complicated decision making and planning 8. Larger impacts on low income consumers
- Slide 49
- Challenge and Opportunity 1. Challenge - how to provide safety net measures for the most vulnerable populations 2. Opportunity - higher prices can increase incomes from food production in rural areas where agriculture is the main source of income and employment 3. National and international policy actions need to be considered Short run Long run
- Slide 50
- CONTACT INFORMATION: EMAIL: [email protected] WEB: [email protected] Spasibo!