Alexandria, Virginia, USA
August 3, 2012

The only growth market for U.S. agriculture is the presently low income countries and the developing world, said Bob Thompson, University of Illinois professor emeritus, during a talk to the seed industry.

"The high countries of Western Europe and Japan are shrinking markets," he said. "They have shrinking, aging populations. They are affluent and increases in income aren't going to add much to their demand, but there's an immense amount of growth ahead in presently low income countries."

The projected increase in world population during the next 40 years is 2.6 billion. China's current population is 1.3 billion. This means the world's farmers are going to be asked to produce enough food in the next 40 years to feed two more Chinas, Thompson said.

He believes more than 2.5 billion of the 2.6 billion mouths to be fed will be in presently low income countries. Thompson said Sub-Saharan Africa, which now has a little less than 900 million people, is projected to add 1.2 billion additional mouths to be fed in the next 40 years.

"They are a large net food importing country on food aid and concessional terms, but there's no excuse for Sub-Saharan Africa not to be self-sufficient with food supply today," he said.
Following Sub-Saharan Africa is South Central Asia, which includes India, Pakistan, Bangladesh, Shrilanka and Nepal, with an estimated additional 779 million mouths to be fed.
Thompson acknowledged that population alone does not make a market.

"Population only creates need and potential demand," he said. "You have to have purchasing power to translate that need into real market demand."

According to World Bank estimates, there are about 1.4 billion people living on less than $1.25 per day. Of them, 1 billion don't have enough purchasing power to access 1,800 calories a day.

"Now keep in mind that the world's population is 7 billion," Thompson said. "This means that one out of every seven people in the world is in this category."

Thompson said one a person is earning $2 a day, most calorie deficit problems can be solved. Real rapid growth and demand comes when incomes rise from about $2 per day to about $10 per day per capita.

"At this point, for the first time people have the purchasing power not only to buy enough calories, but to eat some meat, fruit, vegetables, edible oils, eggs and dairy products,"

Thompson said. "Once you get to about $10 per day, any increments in income spent on food isn't on raw agricultural products, but rather on packaging, processing services and eating out in restaurants."

Thompson said the take away from this is there must be increases in per capita income to solve the hunger problem in the world.

"To the extent we are successful with broad-based economic growth, we unleash the reign of most rapid economic growth and demand for raw agriculture products," he noted. "With the income growth in low income countries, taken together with the population growth, we're likely to see a 70-80 percent increase in total demand for food in the next 40 years."

For the United States to be able to exploit the potential of these markets, barriers to international agricultural trade, particularly non-tariff barriers, need to be removed, Thompson said.
Agriculture truly is a global industry today.

"The fraction of world agricultural production that moves through trade is rising and it's destined to rise much more, Thompson said. "The fraction of what flows through international markets in value-added form is increasing faster than bulk commodities.

"The most recent trend with the development of global supply chains is more and more international trade is occurring within firms rather than among firms."

The bottom line is there's an extremely bright future for agricultural export opportunities for the United States as long as public policy allows us to take advantage of these opportunities, Thompson said.
 

Website: http://www.betterseed.org/

Published: August 4, 2012