Focus on the U.S.

by Chris Lyddon
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The United States (U.S.) is by far the world’s biggest grain producer and exporter. Its crops dwarf those of other countries, and it plays a vital role in feeding the world. It has been a leader in using its maize (corn) crop to produce fuel for vehicles and led the world in the establishment of risk management techniques for agriculture, with the opening of the Chicago Board of Trade in 1848.

According to the International Grains Council (IGC), the U.S. will produce 427.3 million tonnes of grain in total in 2013-14, compared with 347.8 million in 2012-13. The next biggest producer on the IGC’s list is China, coming in at 340.8 million tonnes.

It’s the massive U.S. maize crop which gives the country its lead. The IGC puts the 2013-14 crop at 355 million tonnes, compared with 273.8 million the year before.

The U.S. also produces barley, with a crop put at an unchanged 4.8 million tonnes in 2013-14, sorghum at 10 million tonnes, up from 6.3 million, and oats, put at 1.1 million tonnes this year, down from 900,000 the year before.

The U.S. is also the world’s biggest grain exporter by far. The IGC predicts total U.S. grain exports in 2013-14 at 63.8 million tonnes, up from 52 million, more than double the exports of the next biggest supplier, Argentina at 30.9 million this year. U.S. wheat exports are put at 28.5 million tonnes, up from 28.1 million the year before, while U.S. maize exports in 2013-14 are put at 32 million tonnes, up from 21.5 million tonnes last year.

The U.S. is a major rice producer, with a crop slated to reach 6.4 million tonnes in 2013-14, up from 5.9 million. Its exports in 2013-14 are projected at 3.4 million tonnes.

In soybeans, the U.S. is predicted to barely hold on to its role as the world’s biggest producer. The IGC puts its 2012-13 crop at 82.1 million tonnes, down from 84.2 million the year before and narrowly beating a predicted Brazilian crop of 81.5 million tonnes. The U.S. is also predicted to lead soybean exports, with 36.7 million tonnes going out of the country in 2013-14, down from 38.4 million the year before, but still up on Brazil’s predicted 36.4-million-tonne export total.

Although the U.S. production and export figures remain impressive, the U.S. lead is being eroded by growth in other parts of the world. As the U.S. Grains Council, the body which exists to develop export markets for U.S. barley, maize and grain sorghum among other crops, says it on its website: “The U.S. has enjoyed a strong market share in world corn imports until the last four years when U.S. share dropped to about 50%.

“Global competition has grown rapidly over the last decade, led by South America (Argentina and Brazil) as the largest competitor,” it says. “Climate and converted pasture land allows a vast potential, while infrastructure and policy are its only constraint.”

“The Black Sea region (Ukraine, Russia and Kazakhstan) is vast in land mass and resource base,” the U.S Grains Council points out. “The only constraints here are inconsistent climate conditions and policy. The rest of the world has limited potential. It is steady yet price sensitive with the biggest constraint of limited arable land.”

MILLING INDUSTRY

According to Sosland Publishing’s Grain and Milling Annual (GMA), there are 165 flour mills in the U.S. with a total capacity of 1.473 million cwts or just under 67,000 tonnes.

Of those mills, 68 have a daily capacity of 10,000 cwts (454 tonnes) or more. The largest flour mill listed in the U.S. is that of the North Dakota Mill & Elevator Association at Grand Forks, North Dakota, U.S., which has a daily capacity of 33,000 cwts. (1,362 tonnes). The biggest milling company by daily capacity is Horizon Milling LLC with a daily capacity of 270,500 cwts of wheat flour (12,270 tonnes).

Horizon Milling, which is a combination of Cargill and CHS’s milling assets, and ConAgra Foods milling division, third on the GMA’s list of U.S. flour milling companies, announced a plan earlier this year to combine operations into a new entity. If the transaction closes, Ardent Mills network of facilities in the U.S., Canada and Puerto Rico, would include 44 flour mill locations, three bakery mix facilities and one specialty bakery. Total daily wheat and durum flour capacity for Ardent Mills will be 576,100 cwts.

ETHANOL

The U.S. has taken advantage of its huge productive capacity to build a large ethanol production industry. Originally motivated by a desire to reduce U.S. dependence on imported energy, as well as by a desire to find a market for maize, the industry has slowed, with the economy, while the availability of shale oil-based energy has taken the spotlight off biofuels. According to the IGC, 123.2 million tonnes of U.S. maize will be used to produce ethanol in 2013-14, compared with 116.8 million tonnes in 2012-13. However, the figure for 2011-12 was 127.3 million tonnes.

“Lower ethanol production profitability in the U.S. has been exacerbated by slowing consumer demand for transportation fuels amid continued difficult economic conditions and better fuel efficiency of newer vehicles,” the IGC commented in a recent Grain Market Report. “Temporary plant closures, estimated at about 20, have largely been the least efficient producers and some are reported to have embarked on technical upgrades to improve resilience to high raw material costs in the future. While industry returns have improved recently and ethanol output has risen, weekly production is still around 5% lower y/y.”

With most cars in the U.S. powered by gasoline, biodiesel has received much less attention, but according to the U.S. Energy Information Administration, in 2012 just over 1.82 million tonnes of soybeans were used to produce diesel fuel.

The growth of the biofuels industry has prompted criticism that road vehicle fuel is competing for agricultural land and driving up food prices. The U.S. National Farmers Union (NFU) therefore welcomed a recent study that found no direct correlation between federal biofuels mandate and increasing food prices. The study was released by ABF Economics, an agriculture and biofuels consulting firm.

“ABF Economics’ report is an example of yet another study that confirms what we have known for some time – biofuels are not the main driver of food prices,” said NFU President Roger Johnson. “Expanding global demand, speculation in commodity markets, and particularly high oil prices are the primary drivers of increased food costs.”

According to the study, food price inflation has increased at a slower rate since 2007, the year the renewable fuel standard was last revised. The study also notes that raw commodities represent a small percentage of the final price of food, with energy, food processing and other outside costs steering food price increases.

“The commodities that our farmers produce receive a very small share of the retail food dollar,” Johnson noted. “Renewable fuels have in fact increased demand for corn, leading to rural economic development and more money in the pockets of farmers.”

BIOTECHNOLOGY

Producers in the U.S. have been enthusiastic adopters of crops varieties developed using biotechnology, most notably in soybeans, with 93% of all the soybeans planted in the U.S. in 2012 being of varieties genetically modified to be herbicide resistant, according to the USDA’s National Agricultural Statistics Service. About 88% of maize was of biotech varieties, with 15% insect resistant only, 21% herbicide resistant only and 52% containing stacked gene traits.

There are no genetically modified wheat varieties approved for sale or in commercial production in the U.S., or elsewhere. However, genetically modified wheat was found in samples from an Oregon farm recently, bringing international controversy over biotech products back into the spotlight.

Key Facts

Capital: Washington, D.C.

Population: 316,668,567 (July 2013 est.)

Religions: Protestant 51.3%, Roman Catholic 23.9%, Mormon 1.7%, other Christian 1.6%, Jewish 1.7%, Buddhist 0.7%, Muslim 0.6%, other or unspecified 2.5%, unaffiliated 12.1%, none 4% (2007 est.).

Location: North America, bordering both the North Atlantic Ocean and the North Pacific Ocean, between Canada and Mexico.

Government: Constitution-based federal republic; strong democratic tradition. Chief of state and head of government: Barack Obama (since Jan. 20, 2009).

Economy: The U.S. has the largest and most technologically powerful economy in the world, with a per capita GDP of $49,800. In this market-oriented economy, private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace. U.S. business firms enjoy greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to layoff surplus workers, and to develop new products. At the same time, they face higher barriers to enter their rivals’ home markets than foreign firms face entering U.S. markets. U.S. firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment; their advantage has narrowed since the end of World War II. The onrush of technology largely explains the gradual development of a “two-tier labor market” in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households.

GDP per capita: $50,700 (2012 est.); inflation: 2% (2012 est.); unemployment: 8.2% (2012 est.).

Currency: U.S. dollar.

Exports: $1.612 trillion (2012 est.): agricultural products (soybeans, fruit, corn) 9.2%, industrial supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) 49%, consumer goods (automobiles, medicines) 15%.

Imports: $2.357 trillion (2012 est.): agricultural products 4.9%, industrial supplies 32.9% (crude oil 8.2%), capital goods 30.4% (computers, telecommunications equipment, motor vehicle parts, office machines, electric power machinery), consumer goods 31.8% (automobiles, clothing, medicines, furniture, toys).

Major crops/agricultural products: Wheat, corn, other grains, fruits, vegetables, cotton; beef, pork, poultry, dairy products, fish; forest products.

Agriculture: 1.2% of GDP and 0.7% of the labor force.

Internet: Code: .us; 505 million (2012) hosts (note - the US Internet total host count includes the following top level domain host addresses: .us, .com, .edu, .gov, .mil, .net, and .org) and 245 million users.

Source: CIA World Factbook

Chris Lyddon is World Grain’s European editor. He may be contacted at: chris.lyddon@ntlworld.com.




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