What is in this article?:
- Commodity prices expected to remain high for next decade
- Middle class growth
- Trade increasing
- Policy errors
• Commodity prices should remain at historically high levels for the next decade.
• If realized, 2012 will be another record setting year for all measures of farm income.
• “We have not seen as positive an outlook for 30 years.”
Middle class growth
Expansion of the middle class, primarily in developing countries, is a catalyst for growth, he notes. “In the United States, Europe and Japan, when people get a raise they don’t spend it on food. That’s not so in China.”
Increased income goes to improved diets.
Most of the new middle class will arise in the developing world, “with a significant number in China. The impact on food consumption will be huge; someone has to produce the food and it probably will not be China.”
India also will see a rise in the middle class, but food imports may not be as robust because of limited access to markets.
Increased meat consumption will be a key. In the last 10 years, meat consumption in the United States declined by 2 percent. In Sub-Saharan Africa, the trend is up 102 percent. It’s up more than 60 percent in China.
“The growth is in the developing world,” Dwyer said.
A continued decline in the value of the U.S. dollar also will spur exports and “exert further upward pressure on commodity prices.”
The biofuel industry is also growing. “Last year the United States was the world’s largest exporter of biofuels. Production continues to grow, boosting feedstock demand. If the economics of biofuels continue to improve, the industry will grow. We have strong domestic demand and booming ethanol exports.”
Rise of a cellulosic ethanol industry could be disruptive to the corn-based ethanol industry. “Currently, cost of production is a barrier (to cellulosic ethanol). A breakthrough could take a lot of corn out of the process. We don’t see that happening.”