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WORLD AGRICULTURE FUTURE UNCLEAR
World agriculture is divided into several distinct regions. In some regions, such as Africa, there is rapid population growth with only modest gains in productivity. The result is a widening gap between food production and food needs. Other areas have strong economic growth, but limited potential to boost production. Therefore, improving diets fuel food demand growth, while population growth slows. Other areas have surplus production with only limited potential to boost consumption. This diversity makes the long-term future for world agriculture difficult to pin down.

FAR EAST

One of the key growth areas for world food demand over the last twenty years has been East Asia. This region has seen dramatic economic growth as the blossoming export industries in these countries have been integrated into the world economy. Solid per capita income gains have allowed consumers in this region to diversify their diets, moving from diets consisting mostly of rice to more balanced diets including meat, poultry and dairy products. The growing affluence has caused slowing in population growth but an acceleration in food demand. This economic model is one many people point to when suggesting substantial growth in food demand in the future.

The economies in East Asia suffered a serious economic setback in the late 1990s as currencies weakened, plunging several countries into recession. But the economic slowdown was relatively short-lived and most countries’ economies have bounced back, despite nagging underlying problems. The possibility of recession in the U.S. and other developed countries raises concerns about the near-term outlook. Slow growth in the U.S., Europe and Japan means poor exports, and exports are fuel for the economic engine in essentially all of the countries of East Asia.

China is emerging as a major economic power. For most of the last 20 years, China’s economy has expanded by about 10 percent each year. But even China’s economic growth has slowed, and even more modest growth is possible in the future. China is expected to gain admittance to the World Trade Organization, perhaps as early as next year. The result of this in the near-term will put even more pressure on China’s economy. Many, if not most, of China’s core industries will face increased competition from imports once China reduces trade barriers as a condition for entering the WTO. This will contribute to generally slower economic growth throughout the region.

SOUTH AMERICA

South America cannot be appropriately aggregated into one region. Some countries in the regions are important crop exporters, while others are very dependent on imports. Coarse grain imports by Latin American countries - excluding Brazil and Argentina - have exploded in recent years, and further growth is likely. At the same time, Brazil and Argentina continue to boost crop area - especially for soybeans - recording record production and exports in the last few years. Reports from the region indicate that both countries have the potential to continue increasing crop area substantially.

EUROPEAN UNION

There are few reasons to expect a significant increase in food demand in Western Europe. Population growth is near zero and per capita consumption levels are already among the highest in the world. European consumers are increasingly health conscious, and health concerns have triggered a decline in beef consumption - especially in Great Britian.

Due in large part to farm policy, Western Europe has moved from a huge importer of agricultural products to one of the world’s largest exporters. Europe defends their farm programs because they perpetuate the rural lifestyle. In the next round of World Trade Organization talks, the European Union will argue that their high level of expenditures on agriculture and their significant barriers to imports are justified because they do more than support farmers. This argument faces stiff opposition from most other exporting countries.

The agricultural industries in Eastern Europe are vastly different from those in the west. Crop area, production and consumption all plunged during the 1990s and are only now beginning to recover. Production potential in the region is formidable and there is a good chance that several of these countries will become net exporters in the coming decade. Economic incentives will improve for those countries that join the European Union, even though the provisions of the EU farm policy will probably have to be modified as the community expands. Domestic food demand in these countries will probably also rise once the economies begin to grow significantly. AM


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