Speaking on July 26 at this year’s Australian Grains Industry Conference in Melbourne, Australia, keynote speaker from the United States Department of Agriculture (USDA), Mike Dwyer, told delegates that a combination of strong growth in global food, feed, biofuel and fiber demand and a weaker U.S. dollar will keep agricultural commodity prices high over the next 10 years.
Dwyer is the director of the Global Policy Analysis Division Office with the USDA Foreign Agricultural Service. He said there are a number of key factors that will drive global agricultural markets to 2020. Dwyer told the conference the central megatrend over the next decade will be strong demand growth, especially from emerging markets, boosting global prices and profitability.
He said as the global economy has emerged from the worst recession in decades, the effects have been uneven with developing countries holding up better than the developed world.
Dwyer predicted logarithmic growth of consumer incomes through to 2020, especially in large emerging markets where much of the growth in global import demand for agricultural products is concentrated.
In a break from the past where global recessions usually hammer commodity prices, he said this time prices were down slightly from 2008 but still high by historical standards.
He said the price volatility grain producers had been experiencing had been exacerbated by errors in government policy, where shrinking supplies and food security concerns have led some countries to restrict exports. This has had the effect of distorting markets and increasing world prices.
He said for the last 20 years, although acreage for global grain production actually fell 1%, the growth in global production of those commodities was in yields, with grain yields increasing by 28%.
However, he said demand for commodities such as grain was now growing significantly faster than the historical rate of yield growth, and future price increases for Australian farmers would only be tempered by more land coming into production or through the rapid introduction of greater use of biotechnology.
The conference was hosted by Grain Trade Australia (GTA), the Australian Oilseeds Federation (AOF) and Pulse Australia. Visit www.ausgrainsconf.com for further details.