can agriculture survive cheap oil? brian clancey
TRANSCRIPT
Can agriculturesurvive cheap oil?BRIAN CLANCEYWWW.STATPUB.COM
Agriculture since 1961
World Population Up 108%
Land in Field Crops up 17%
Field Crop Production up 246%
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Land in Field Crops(million hectares)
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World Field Crop Output(million metric tons)
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World Production by Crop Sector
(million metric tons)
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Per Capita Field Crop Output
All crops up 18% since 1961
Oilseeds up 160%
Vegetables up 92%
Cereal grains up 19%www.statpub.com
Uptrend in Productivity(kilograms per human being)
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Why The Uptrend?
Improved varieties and technology
Subsidies in industrial world
Access to credit
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Africa Less Productive(kilograms per person in Africa)
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Americas More Productive(kilograms per person in Americas)
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Steady Gains in Asia(kilograms per person in Asia)
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Europe Losing Edge(kilograms per person in Europe)
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Moisture Issues Plague Oceania
(kilograms per person in Oceania)
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Human Beings Eat Too Much
Average Woman Needs 2000 Calories
Average Man Needs 2700 Calories
Average Human Eats 19% Too Much
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More Food = Fatter People(average daily calories consumed)
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Pulses Lag Population Growth
World Population Up 108%
Pulse Production up 38%
Per Capita Production down 34%
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Slower Rise in Pulse Output(000 metric tons)
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Per Capita Pulse Output Falling
(kilograms per human being)
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Pulling it Together
Field crop output rising faster than population since 1975-85
Markets used price to consume surplus production between
1985 and 2005
Cheap food spurred over-eatingwww.statpub.com
Moderate Price Downtrend
Average prices paid to U.S. farmers trended lower between
1975 and 2005
Corn and soybeans trended lower
Wheat was relatively flatwww.statpub.com
U.S. Farm Prices 1975-2009
(U.S. dollars per bushel)
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Problem Facing Pulses
Pulses compete for land based on potential gross returns to
farmers
Pulses compete for consumer demand based on relative cost
to other foods
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Simplified View of Effect of Price on Production and
Demand
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Higher Prices
Lower Prices
Canada Illustrates Effect
Vast majority of crop is exported
No incentive to growone crop over another
Prices reflect need to compete for land and for attention of
consumerswww.statpub.com
Canada Special Crop Price Index
(2004 weighted average price = 100)
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U.S. Beans Another Story
Not part of Farm Program
Legislated incentive to grow other crops
Early uptrend in prices to retain land
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U.S. Average Bean Price(U.S. dollars per 100 pounds)
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2005 Was Turning Point
U.S. biofuel mandates
Intense competition for acres
Reversal of long term downtrendin prices
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U.S. Biofuel Mandates(billion gallons)
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More Land Better Yields Needed
The world needs another 84 million acres under continuous crop by the year 2016 to meet biofuel
needs.
The world needs gross field crop output needs to rise almost 7%
by 2016.www.statpub.com
World Acreage Outlook(million hectares)
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World Production Outlook(kilograms per human being)
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Current preferred before biofuel around 848 kilograms
What Does it Mean
Field crop prices declined into 2005
Cheap food caused people to over eat
Biofuel policies eliminated surpluses
Food prices rose in response
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What Does it Mean
Cheap oil slows biofuel adoption and lowers prices to world’s farmers
World will always produce enough foodbut people want more than they need
Underlying firmness through 2014-16
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