IFIF/FAO Business Meeting - Rome 2006IFIF/FAO Business Meeting - Rome 2006

Agriculture Agriculture and the and the

Animal Feed IndustryAnimal Feed Industry

IntroductionIntroduction

World population and GDP growth driving meat consumption, more World population and GDP growth driving meat consumption, more meat means more grain … feed demand and animal feed meat means more grain … feed demand and animal feed supplements are rising supplements are rising

Global customers have greater buying power and feed grain raw Global customers have greater buying power and feed grain raw material prices have been favorable … but changes are in store for material prices have been favorable … but changes are in store for the global poultry and livestock industry … the result of the boom in the global poultry and livestock industry … the result of the boom in ethanol and biodiesel production. ethanol and biodiesel production.

Health and Food Safety concerns are putting pressure on better Health and Food Safety concerns are putting pressure on better quality feed ingredients quality feed ingredients

There is growing concern with environmental issues in animal There is growing concern with environmental issues in animal agriculture agriculture

Source: United Nations, FAOSource: United Nations, FAO

Million TonnesMillion Tonnes

0

1

2

3

4

5

6

7

8

9

10

11

12

1965 1970 1975 1980 1985 1990 1995 2000 2005

0

25

50

75

100

125

150

175

200

225

250

275

300

World Population

World Meat Consumption

World Population Growth and Meat ConsumptionWorld Population Growth and Meat Consumption

Billion People Billion People

Source: United Nations Source: United Nations

World Population World Population

Actual

Forecast

Billion PeopleBillion People

Source: IMF September 2006Source: IMF September 2006

World Economic Growth 2005World Economic Growth 2005

0

1

2

3

4

5

6

7

8

9

10

11

China India Indonesia Malaysia World Thailand Brazil

Percent Annual GDP GrowthPercent Annual GDP Growth

Source: FAOSource: FAO

World Per Capita Meat ConsumptionWorld Per Capita Meat Consumption

20

25

30

35

40

45

1980 1985 1990 1995 2000 2005

Kg/Person/YearKg/Person/Year

Source: FAO Source: FAO

Kg/Person/YearKg/Person/Year

World Per Capita Meat Consumption by RegionWorld Per Capita Meat Consumption by Region

0 10 20 30 40 50 60 70 80 90 100 110 120 130

North America

Developed World

Latin America

World

Developing World

Asia

Africa

Source: FAOSource: FAO

0

50

100

150

200

250

300

350

400

1995 2015 2030

Developed Developing

World Meat Consumption 1995 - 2030World Meat Consumption 1995 - 2030

Million Tonnes

Source: Brilliant Pioneer ConsultantSource: Brilliant Pioneer Consultant

China’s Meat Consumption 2005 - 2030China’s Meat Consumption 2005 - 2030

0

10

20

30

40

50

60

70

80

90

100

110

120

2005201020202030 2005201020202030 2005201020202030 2005201020202030 2005201020202030

Million TonnesMillion Tonnes

BeefBeef PoultryPoultry

PorkPork

DairyDairy

EggsEggs

Source: Feed International January 2006Source: Feed International January 2006

290

370

440

537

590 597 605

575586 591 597 604 612 614

626

200

300

400

500

600

700

1975 1985 1995 1997 1999 2001 2003 2005

World Compound Feed ProductionWorld Compound Feed ProductionMillion TonnesMillion Tonnes

Source: USDA Source: USDA

US Meat Production and ExportsUS Meat Production and Exports

0

6

12

18

24

30

36

1982 1985 1988 1991 1994 1997 2000 2003 2006E

Beef Production Pork ProductionBroiler Production Beef Exports

Pork Exports Broiler Exports

Billion lbsBillion lbs

Source: USDA Source: USDA

China’s Meat Production and ExportsChina’s Meat Production and Exports

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

55000

1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006E

Beef Production Pork Production

Broiler Production Beef Exports

Pork Exports Broiler Exports

000 Tonnes CWE000 Tonnes CWE

Source: USDA Source: USDA

Brazil’s Meat Production and ExportsBrazil’s Meat Production and Exports

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006E

Beef Production Pork Production

Broiler Production Beef ExportsPork Exports Broiler Exports

000 Tonnes CWE000 Tonnes CWE

Source: Earth Policy Institute, Renewable Fuels AssociationSource: Earth Policy Institute, Renewable Fuels Association

World Ethanol and Biodiesel Production World Ethanol and Biodiesel Production

Billion GallonsBillion Gallons

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

World Ethanol World Biodiesel

Source: USDA, PotashCorpSource: USDA, PotashCorp

US Corn Used for EthanolUS Corn Used for Ethanol

Billion BushelsBillion Bushels

-0.2

0.2

0.6

1.0

1.4

1.8

2.2

2.6

3.0

3.4

88/89 91/92 94/95 97/98 00/01 03/04 06/07F 11/12F

18% 18%

6% 6%

% of total US % of total US corn usecorn use

25-30%25-30%

Source: FAOSource: FAO

World Grain ConsumptionWorld Grain Consumption

60%45%

Billion TonnesBillion Tonnes

Source: USDA September 2006Source: USDA September 2006

World Grain Production and ConsumptionWorld Grain Production and Consumption

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1982/83 1985/86 1988/89 1991/92 1994/95 1997/98 2000/01 2003/04 2006/07F

Production

Consumption

Billion Tonnes

US, China and India produce over 40% of the world’s wheat and coarse grains.

Near Perfect Weather Year

Production Gap

Wheat & Coarse GrainsWheat & Coarse Grains

Source: USDA September 2006Source: USDA September 2006

World Grain StocksWorld Grain Stocks

0

100

200

300

400

500

600

1974/75 1978/79 1982/83 1986/87 1990/91 1994/95 1998/99 2002/03 2006/07F10

15

20

25

30

35

40Year-End Grain Stocks

Stocks-to-Use Ratio

Million Tonnes Percent

USDA’s estimated grain ending stocks-to-use ratio of 15.5% for 2006/07 will be the lowest in over 30 years.

Wheat & Coarse GrainsWheat & Coarse Grains

Source: USDA September 2006Source: USDA September 2006

China’s Corn Supply and Demand China’s Corn Supply and Demand

-20

0

20

40

60

80

100

120

140

86/87 88/89 90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05 06/07F

Production

Exports

Consumption

Stocks

Million Tonnes

Stocks Continue to Fall

Production Gap

ExportsDeclining

Favorable Production Years

Thank YouThank You