As World Food Demand Grows, Where and How Much Food Can be Produced?
(DTN) What will farmers around the world plant -- and how many acres -- in five or 10 years?
The demand side (rising world population, more people eating better food, increased use of biofuels) is well known, but what will the world's farmers need to do to produce enough food to meet that demand? Will yield improvements be sufficient? Will more acres need to come into production? Will agronomic practices need to be changed? How will any of these shifts affect the American farmer?
The current ample stocks-to-use ratios for wheat, corn and soybeans make this question seem less urgent than it was in 2008, when food prices spiked and some countries took steps to limit exports. But over the longer term, worldwide demand growth is exceeding productivity growth by 1 percent to 4 percent per year, according to studies by William Wilson, ag economist and distinguished professor at North Dakota State University.
Rising demand is driven by countries like China that are raising their standard of living, resulting in "irreversible changes in diets," Wilson told DTN.
Wilson said he calculates annual productivity growth rates have been about 0.8 percent for wheat, 1.4 percent for corn and 1 percent for soybeans -- numbers that imply a need for more crop acreage or more technological improvements.
"Prices have to stay high enough to bring in new technology, more land," Wilson said. "Biotech companies are talking of doubling production by 2030. ... That translates to a 3.0 to 3.2 percent increase in productivity. If achieved, that would be adequate to serve the increased demands of the world."
That's a big "if," however: There are a lot of variables to consider when making predictions about changes in world planted acres.
Wilson pointed to the big loss of acres in the Black Sea countries (Russia, Ukraine and Kazakhstan) in the past 15 years. He said those acres could return to production in the next decade.
At USDA, economists who prepare the annual 10-year baseline projections are projecting a slower pace in average yield growth, as more land in several regions of the world comes into annual crop production, according to Ronald Trostle, who coordinates baseline projections for USDA's Economic Research Service.
POTENTIAL TO EXPAND EXISTS
"Our projections assume that the potential to expand area that does exist in South America, Africa and the FSU (Former Soviet Union) does take place during the next decade. But, one can question whether this more rapid rate of area expansion can continue into the future," Trostle said.
There's also uncertainty about how much added production will result from these expanded acres. Some land has low yield potential, because of climate, soil or rainfall.
"Some land is fairly good quality with good production potential, like the FSU," Trostle said, "but for high yields, it would require additional investment and infrastructure. There's also good-quality land in southern Sudan, but it's so remote -- there's no transportation linkage. It would need irrigation and an end to civil strife."
He said there's also additional land in Argentina and Paraguay and Bolivia.
"If prices were higher, it could bring in more acres, but is it sustainable? Soil erosion, soil quality are issues in some of those areas. And areas like Brazil have challenges to sustainability," said Trostle. "It's at least a three-year process bringing land into production; if it's forested, it takes five years or more. Some FSU areas could come in fairly easily, but there are climate problems there, more variability in potential."
The annual revision of baseline projections generates heated discussions among USDA economists, Trostle said, juggling potential for genetic improvements of the crops against the sustainability of expanded acres. There are other developments that could affect acreage.
For example, Saudi Arabia just repeated its intention to stop growing wheat as a way to save water. The country typically consumes about 110 million bushels of wheat -- at 44 bushels per acre, it would take 2.5 million acres needed to meet that demand. This is just one crop in one country, but it may be representative of the kinds of shifts that could be coming as countries wrestle with water shortages.
CODE OF CONDUCT FOR INVESTORS
Meanwhile, the Organization for Economic Cooperation and Development (OECD) is working on a code of conduct for foreign investors in agriculture, as both private investors and individual nations invest in farmland abroad. How will those streams of capital change acreage?
Then there is a recent EU study that criticized the bloc's limited investment in agricultural productivity as "virtual land-grabbing" from poor countries. If that study gains political momentum, could it stem the EU's rising appetite for food imports?
How may these potential changes affect U.S. acreage? USDA is not forecasting any big shifts. Its baseline projections through 2019 hold planted area of the eight major crops within a narrow range, just below the nearly 249 million acres seeded in 2009.
But NDSU's Wilson isn't so sure. Think of what's happened in North Dakota, which this year planted 4 million acres of soybeans, up from fewer than 400,000 acres in 1982, Wilson said.
That was the year Bob Sinner and a few others started the North Dakota Soybean Growers Association. The shift in acreage came about as soybean profitability outdistanced the traditional wheat crops, Sinner said. While he said expected soybeans to become a more popular crop, he never thought it would expand as much as it has.
Biotechnology will be the game changer in productivity growth rates and the geography of production, Wilson predicts. Ongoing world demand should support prices, and "this allows farmers to make money," Wilson said. "They may shift crops they are growing."
http://www.dtnprogressivefarmer.com
The demand side (rising world population, more people eating better food, increased use of biofuels) is well known, but what will the world's farmers need to do to produce enough food to meet that demand? Will yield improvements be sufficient? Will more acres need to come into production? Will agronomic practices need to be changed? How will any of these shifts affect the American farmer?
The current ample stocks-to-use ratios for wheat, corn and soybeans make this question seem less urgent than it was in 2008, when food prices spiked and some countries took steps to limit exports. But over the longer term, worldwide demand growth is exceeding productivity growth by 1 percent to 4 percent per year, according to studies by William Wilson, ag economist and distinguished professor at North Dakota State University.
Rising demand is driven by countries like China that are raising their standard of living, resulting in "irreversible changes in diets," Wilson told DTN.
Wilson said he calculates annual productivity growth rates have been about 0.8 percent for wheat, 1.4 percent for corn and 1 percent for soybeans -- numbers that imply a need for more crop acreage or more technological improvements.
"Prices have to stay high enough to bring in new technology, more land," Wilson said. "Biotech companies are talking of doubling production by 2030. ... That translates to a 3.0 to 3.2 percent increase in productivity. If achieved, that would be adequate to serve the increased demands of the world."
That's a big "if," however: There are a lot of variables to consider when making predictions about changes in world planted acres.
Wilson pointed to the big loss of acres in the Black Sea countries (Russia, Ukraine and Kazakhstan) in the past 15 years. He said those acres could return to production in the next decade.
At USDA, economists who prepare the annual 10-year baseline projections are projecting a slower pace in average yield growth, as more land in several regions of the world comes into annual crop production, according to Ronald Trostle, who coordinates baseline projections for USDA's Economic Research Service.
POTENTIAL TO EXPAND EXISTS
"Our projections assume that the potential to expand area that does exist in South America, Africa and the FSU (Former Soviet Union) does take place during the next decade. But, one can question whether this more rapid rate of area expansion can continue into the future," Trostle said.
There's also uncertainty about how much added production will result from these expanded acres. Some land has low yield potential, because of climate, soil or rainfall.
"Some land is fairly good quality with good production potential, like the FSU," Trostle said, "but for high yields, it would require additional investment and infrastructure. There's also good-quality land in southern Sudan, but it's so remote -- there's no transportation linkage. It would need irrigation and an end to civil strife."
He said there's also additional land in Argentina and Paraguay and Bolivia.
"If prices were higher, it could bring in more acres, but is it sustainable? Soil erosion, soil quality are issues in some of those areas. And areas like Brazil have challenges to sustainability," said Trostle. "It's at least a three-year process bringing land into production; if it's forested, it takes five years or more. Some FSU areas could come in fairly easily, but there are climate problems there, more variability in potential."
The annual revision of baseline projections generates heated discussions among USDA economists, Trostle said, juggling potential for genetic improvements of the crops against the sustainability of expanded acres. There are other developments that could affect acreage.
For example, Saudi Arabia just repeated its intention to stop growing wheat as a way to save water. The country typically consumes about 110 million bushels of wheat -- at 44 bushels per acre, it would take 2.5 million acres needed to meet that demand. This is just one crop in one country, but it may be representative of the kinds of shifts that could be coming as countries wrestle with water shortages.
CODE OF CONDUCT FOR INVESTORS
Meanwhile, the Organization for Economic Cooperation and Development (OECD) is working on a code of conduct for foreign investors in agriculture, as both private investors and individual nations invest in farmland abroad. How will those streams of capital change acreage?
Then there is a recent EU study that criticized the bloc's limited investment in agricultural productivity as "virtual land-grabbing" from poor countries. If that study gains political momentum, could it stem the EU's rising appetite for food imports?
How may these potential changes affect U.S. acreage? USDA is not forecasting any big shifts. Its baseline projections through 2019 hold planted area of the eight major crops within a narrow range, just below the nearly 249 million acres seeded in 2009.
But NDSU's Wilson isn't so sure. Think of what's happened in North Dakota, which this year planted 4 million acres of soybeans, up from fewer than 400,000 acres in 1982, Wilson said.
That was the year Bob Sinner and a few others started the North Dakota Soybean Growers Association. The shift in acreage came about as soybean profitability outdistanced the traditional wheat crops, Sinner said. While he said expected soybeans to become a more popular crop, he never thought it would expand as much as it has.
Biotechnology will be the game changer in productivity growth rates and the geography of production, Wilson predicts. Ongoing world demand should support prices, and "this allows farmers to make money," Wilson said. "They may shift crops they are growing."
http://www.dtnprogressivefarmer.com

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