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Extension and Outreach/Department of Economics
Agriculture’s Realignment
“Structural Transitions in Global Agriculture”2014 Agricultural Symposium
Kansas City, MissouriJuly 16, 2014
Chad HartAssociate Professor/Crop Markets Specialist
Extension and Outreach/Department of EconomicsSource: USDA-NASS
Iowa Crop Shifts
Extension and Outreach/Department of Economics
Producer AdjustmentsNet farm income projected to decline
significantlyBut remain above 10-year average
Crop returns had led the charge as livestock struggledNow livestock prices are leading the industry
Extension and Outreach/Department of Economics
Agribusiness AdjustmentsAgribusinesses have been caught in a
margin squeezeHigh crop prices don’t necessarily translate to
high agribusiness returns
Managing margins by controlling supply chains, tailoring products and messages to customers, boosting supplies, and focusing on international markets
Extension and Outreach/Department of Economics
Rural Community AdjustmentsMacke: “Rural communities either innovate
or decline.”
More reliance on non-ag enterprises
Push back against trends: brain and wealth drain, homogenization, and competitiveness
Extension and Outreach/Department of Economics
Ag Lending AdjustmentsMore cautious approach
Stronger combination of financial and risk management strategies
Broader perspective on:Risks – policy, logistics, tax, trade, etc.Opportunities – international, expansion, etc.
Extension and Outreach/Department of Economics
Population growth 2014 to 2050
Source: U.S. Census Bureau, International Data Base
Extension and Outreach/Department of Economics
GDP Growth
Source: USDA-ERS
Extension and Outreach/Department of Economics
Liquid Fuel Usage2007 2015 2020 2025 2030 2035
(Million Barrels Oil Equivalent per
Day) (Percent of 2007 Value)
United States 20.6 98% 100% 102% 104% 107%
Canada 2.3 96% 96% 96% 100% 104%
Mexico 2.1 105% 110% 114% 129% 138%
Europe 15.3 92% 88% 88% 89% 90%
Japan 5.0 84% 86% 86% 84% 82%
China 7.6 132% 153% 178% 201% 222%
India 2.8 114% 129% 139% 154% 168%
Africa 3.1 113% 116% 126% 135% 148%
Central and South America 6.0 110% 112% 117% 125% 133%
World 86.1 103% 107% 113% 121% 128%
Source: DOE-EIA
Extension and Outreach/Department of Economics
Chinese economic growth: 1990
Extension and Outreach/Department of Economics
Dongguan, Dec. 10, 2005: McDonald’s opens first drive-thru in China; half of the 100 restaurants plan to open each year will have drive-thrus
Chinese economic growth: 2005
AP photomcchronicles.blogspot.com photo
Extension and Outreach/Department of Economics
1000 more cars added to the streets of Beijing every day
Chinese economic growth: 2008
Extension and Outreach/Department of Economics
Open 24 hours Delivery 24 hoursMore than 1,800 McDonald’s in China, with 200 more on the way
Chinese economic growth: 2011
Extension and Outreach/Department of Economics
US agricultural trade with CanadaNAFTA
Two-way trade up 376% since NAFTA
Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations
Extension and Outreach/Department of Economics
US agricultural trade with MexicoNAFTA
Two-way trade up 472% since NAFTA
Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations
Extension and Outreach/Department of Economics
Land Values and Income
Source: Mike Duffy, ISU
Extension and Outreach/Department of Economics
Land Values and Income
Source: Mike Duffy, ISU
Extension and Outreach/Department of Economics
Arable Land
Extension and Outreach/Department of Economics
Thank you for your time!
Any questions?
My web site:http://www.econ.iastate.edu/~chart/
Iowa Farm Outlook:http://www.econ.iastate.edu/ifo/
Ag Decision Maker:http://www.extension.iastate.edu/agdm/
