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November 9, 2012 U.S. Ag Exports – China Focus 15 th Annual Farmer Cooperatives Conference
November 9, 2012
U.S. Ag Exports – China Focus
15th Annual Farmer Cooperatives Conference
Outline
• Global Demand for Food
• China Ag Situation
• U.S. Ag Exports to China
• Key Issues
• Outlook
The Economist
Global Population Density
Bottom Line:
Source: “Food Economics and Consumer Choice”, Jeff Simmons www.plentytothinkabout.org
Source: UN/FAO, deflated prices
What are these
markets telling us?
The world’s
poor bear
the brunt of
global food
inflation
Source: USDA, Euromonitor, *% of spending on food consumed at home
1 in 6
are
hungry
today UN/FAO
When Will Food Shortages Begin?
• They already have; an estimated 1 billion are considered “food insecure” today.
• 13,600 children perish every day due to malnourishment
This is unacceptable.
CHINA AG SITUATION
Source: China National Bureau of Statistics
Source: Weekly average of Chinese regional markets, USDA
CHINA PORK PRICES
With per-capita income doubling
every 6 years (over the past 18 years),
consumers can effectively pay twice
as much for pork every 6 years
without affecting their income…
Source: USDA/FAS
Source: USDA/FAS
Source: USDA/ERS
U.S. AGRICULTURE EXPORTS TO CHINA
Source: USDA/FAS
Source: USDA/FAS
Source: USDA/ERS
China/HK bought 7% of U.S.
pork production in Nov. 2011
KEY ISSUES
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Key China Ag Issues
Internal: • Acreage constraints, technology, self-sufficiency • Inflation – the “right” level • Regulation – food safety • Food safety scandals are building the brand of
“Imported Food” External: • WTO Cases (dumping/countervailing on US
poultry) • SPS (Sanitary/Phyto-Sanitary) Issues
– beta-agonist use in meat – genetically modified crops
An Inconsistent Triad
China’s Food
Self-
Sufficiency
China’s Food
Inflation (above
world prices)
Unfettered
Access for Ag
Imports
Pick any two, but only two…
China Ag Outlook
• China is losing grip on food self-sufficiency and will allow some import growth
• Rising incomes will continue shift diets; China will need more corn, pork, oilseeds, and dairy
• Economic growth will slow, yet likely remain around 7% in 2012; that rate will double incomes in 10 years. Where will our commodity prices be then?
We are living in extraordinary times!
What does this tell us about agriculture the past 100 years?
What about the next 100 years?
Source: US Department of Commerce, plus other published estimates
Cooperatives Perspectives
• Cooperatives have growing opportunities overseas due to the diverse demand for a wide variety of ag products
– Niche markets are growing around the globe
– Production / safety / consumer attributes are seeing rising demand globally
• Overseas companies often seek company-partnership-suppliers (possibly from U.S. companies)
Denver, Colorado
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Services Offered:
• Global market research
• Specific market reports
• Email alert service
• Monthly newsletter
• Webinars / presentations
Brett Stuart, Founding Partner [email protected]
303-803-8716
Other reports:
• Japan • China/HK • S. Korea • Australia • Mexico • Russia • Denmark
and Canada (exports)
