jason carver economist global policy analysis division ...global policy analysis division office of...
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Global Policy Analysis Division
Office of Global Analysis
Jason Carver Economist Global Policy Analysis Division Office of Global Analysis Foreign Agricultural Service U.S. Department of Agriculture
Is the run of increasing food prices over?
Will food prices diverge from oil prices?
What does the future hold for global food demand?
Source: International Monetary Fund: International Financial Statistics
0
50
100
150
200
250
Ind
ex 2
00
5 =
10
0
IMF Price Indices
Crude oil
All Commodities
Food
1980
Source: International Monetary Fund: International Financial Statistics
0
50
100
150
200
250
Ind
ex 2
00
5 =
10
0
IMF Price Indices
Crude oil
All Commodities
Food
1980
Source: International Monetary Fund: International Financial Statistics and IHS
0
50
100
150
200
250
Ind
ex 2
00
5 =
10
0
IMF Price Indices
Crude oil
All Commodities
Food
Source: International Monetary Fund: International Financial Statistics and IHS
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
0
50
100
150
200
250
Re
al G
DP
Gro
wth
%
Ind
ex 2
00
5 =
10
0
IMF Price Indices
Crude oil
All Commodities
Food
Real GDP Growth
and Global GDP Growth Global Insight
Forecast
Source: USDA Baseline
Lower income countries spend much of that additional income on food
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
D.R
ep. C
on
go
Nig
er
Gam
bia
Zam
bia
Gh
ana
Nig
eria
Ind
ia
Ch
ina
Mo
rocc
o
Nam
ibia
Par
agu
ay
Jord
an
Per
u
Bra
zil
Bo
snia
Kaz
akh
stan
Mex
ico
Mac
ao
Isra
el
Mal
ta
Ital
y
Au
stra
lia
Can
ada
Un
ited
Sta
tes
Other
Education
Recreation
Transport &Communication
Health
Furnishings
Housing
Clothing
Food
Source: USDA, Economic Research Service using International Comparison Program 2005 data.
Source: USDA, Economic Research Service;
0
2
4
6
8
10
12
14
16
18
Soybeans
$ p
er b
ush
el
Population set to grow about 63 million people per year (pop. of the United Kingdom)
0
1
2
3
4
5
6
7
8
9
10
Bill
ion
s o
f P
eo
ple
Source: World Bank Population Projections
7.3 Billion
9.5 Billion
Most of the increase will be in developing countries
100
300
500
700
900
1100
Mill
ion
s o
f H
ou
seh
old
s
Households w/real PPP incomes greater than $20,000 a year
Middle class in developing countries projected to increase 92% by 2023 vs. 11% in developed countries
Developing countries
Developed countries
Source: IHS Global Consumer Markets data as analyzed by OGA
1 1
2 2
2 3
3
4 5
5
6 12
13
99 140
0 50 100 150 200 250
Taiwan
Vietnam
Malyasia
Colombia
S. Korea
Egypt
Philippines
Turkey
Thailand
Indonesia
Mexico
Russia
Brazil
India
China
Households w/ Real PPP incomes greater than $20,000 (millions)
2013
Proj. gains by 2023
Source: Global Insight’s Global Consumer Markets data as analyzed by OGA
-25% 0% 25% 50% 75%
Canada
USA
E. Asia(-China)
EU
Mexico
FSU
MENA
S. America
South Asia
SE Asia
China
-12%
-9%
-2%
2%
7%
14%
27%
49%
57%
73%
74%
Changes in Grains and Oilseed Meals in Feed Consumption 2003 vs 2013
Source: USDA Production, Supply & Distribution Database
*Estimate
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13
Pork
Poultry
Beef
Mill
ion
Met
ric
Ton
s
Chinese Meat Consumption
22.3%
66.3%
0%
10%
20%
30%
40%
50%
60%
70%
Ch
ina
Imp
ort
s/G
lob
al T
rad
e
Chinese Soybean Imports/Global Soybean Trade
China becomes second largest global importer on growing feed & meat imports
Source: USDA PS&D; Global Trade Atlas
A new downward trend beginning for food prices? Short-term: Bulk commodity forecast volumes up
Short/Mid-term: Low oil prices, lower input costs
Long-term: Strengthening dollar
Long-term: Offsetting factor - Growing food demand
Will food prices break from the oil price trend held over the last decade?
Oil price decline driven by U.S. production, strong global supply, weaker global demand growth, higher global inventories
OPEC November policy decision maintain production levels
Global food demand outlook Long-term: Strong demand driven by growing middle-class in developing countries
