The future of feed: Feed grains forecast

by Emily Wilson
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It's simple. A growing global population combined with rising incomes as a result of better economic conditions around the world adds up to a bright future for the feed grains sector in the first decade of the 21st century.

That was the bottom line of a feed grains forecast issued recently by the U.S. Grains Council, Washington, D.C. More people with more money tends to change food consumption patterns toward higher-value foods like meat and dairy products. As livestock, swine and poultry use increases, so will the demand for feed grains.

"The congruence between population and income growth is expected to continue to be a key trend reshaping the world food demand structure," according to the "World Feed Grains Demand Forecast," published in February by the U.S. Grains Council.

"Middle- and upper-income consumers behave very differently than those that merely subsist," the report said. "Once the size of a nation's middle class becomes significant, national food consumption patterns tend to shift away from food grains and toward higher-value products, such as meat and dairy products.

"As income growth persists, the bulk of the increase in per capita food consumption is by groups emerging from subsistence, consumers who (perhaps for the first time) have the resources to provide education for their children, some level of health services and adequate caloric levels of a wider variety of foods."

Although the world population, currently at about 6 billion, is growing at a slower rate, there should be nearly 6.7 billion people on the planet by the end of this decade. Most of the population — and population growth — will continue to be in developing countries, the forecasts say. And while developing regions accounted for little of the world's economic growth before the 1980s, the report said, they now account for a larger share of the world's income growth as many of their economies move from central planning to more open markets.

World inflation is at its lowest level in 40 years, world financial markets are more integrated and interdependent, and exchange rates are more flexible, the U.S. Grains Council report said.

"Growth in world markets for feed grains is the net result of complex and interrelated economic, social and political factors that vary widely from country to country," the report said. "In particular, these patterns depend critically on the production and consumption of livestock products, and on income growth around the world. The current positive, longer-term world economic outlook augers well for the feed grain industry."

FEED FORECAST. World feed grains use could exceed 1 billion tons by 2008-09, up from 874 million tons in 1999-00 and an estimated 892 million tons in 2000-01, according to the U.S. Grains Council's report (see table above). Total trade in 2009 could near 120 million tons, compared with 95 million tons in 1999.

"The outlook continues to be driven by steady market growth, as well as strong competition from oilseeds for planted area," the report said. "However, the abundant supplies and highly competitive prices likely will stimulate greater use for livestock feed, food and industrial uses, and boost trade throughout the coming decade."

The forecast also implies only slight growth in harvested area, meaning that demand growth will be satisfied primarily by increasing yields. Advances in genetics, nutrient use and the growing use of seeds improved through biotechnology will continue to boost yields, reduce production costs and improve crop quality, the report said.

Stronger world demand and a declining stocks-to-use ratio is expected to boost world prices modestly during the forecast period. Corn prices (F.O.B. Gulf) could increase from U.S. $87 per ton in 1999-00 to U.S.$124 per ton by 2008-09, the report indicated.

Key changes were seen in the export market for coarse grains. China, Thailand, Saudi Arabia, South Korea, Taiwan, the European Union, Mexico, Brazil and other Latin American countries were projected to increase imports.

China's wide shifts in net coarse grain trade makes it the "wild card" in world markets, the report said. An exporter of nearly 12 million tons of coarse grains in 1992-93, China is projected to import nearly 9 million tons annually by the end of the decade. "It is expected that the government of China will increase both its grain and oilseed imports in the future to produce the food it needs for its growing, increasingly urban population and to constrain food-price inflation," the report said.

Japan, the world's largest coarse grains importer, will likely keep imports at the 1999 level throughout the decade (20.5 million tons in 1999) as Japanese consumers turn to high-value imports of finished products. "Environmental constraints on livestock production and better market access negotiated under the Uruguay Round have increased the availability of high-value imports and diminished feed grain use slightly," the U.S. Grains Council report said.

Russia and Eastern Europe also are forecast to need less imports, the report said — Russia because of continuing economic problems and Eastern Europe because of an increase in grain production in that region.

Leading exporting nations over the next decade should include the United States, Argentina, Australia, Canada, the European Union and South Africa.

Factors like the weather, regional hostilities and the world economic situation have the potential to change the forecast trends, the report added.

"Since the outlook depends so heavily on growing export markets for meats and grains, an extended economic recovery (or unrest) in Asia, or a new crisis elsewhere in the world could diminish economic growth and, consequently, demand for grains," the report said. "Also, any slowing of the trend toward freer trade in agricultural products could seriously cloud the export outlook."


World coarse grain outlook, 1998-2008





Harvested area (mil. ha)





Yield (mt/ha)





Beginning stocks (mmt)





Production (mmt)





Total supply (mmt)





Total use (mmt)





Trade, Oct/Sep (mmt)





Ending stocks (mmt)





Stocks/use ratio (%)





Source: U.S. Grains Council