What is in this article?:
- Nine factors that could impact commodity markets this decade
- Additional crop land
• The growth of China's middle class will put more pressure than ever on global agriculture's need to produce.
• Over the next decade, new land is expected to open up for agriculture in countries like Ukraine and Kasakhstan.
• The U.S. government's willingness to deal with its debt will also be a factor in the future, as will politics and policy.
Additional crop land
Additional crop land in Brazil, Ukraine and Africa.
“The future breadbasket of Europe is Ukraine, Kazakhstan and Russia. Investment plus good soil plus freedom equals production. You could see some investment come into Ukraine.”
“These last two things can make you look stupid. One is weather. Are we going to have another drought this year? We are down to pipeline stocks right now. We have the lowest cattle inventory since 1953. Our U.S. producers have not stopped their expansion, but they will if we have another drought. You could have demand destruction that will take years to bring back. That’s how significant this coming crop season is.”
Politics and policy.
“If Washington doesn’t deal with debt and spending, and really deal with it, or if Europe’s economy goes into severe recession, it’s going to get ugly. I don’t think that will happen.”
On the other hand, Wiesemeyer hasn’t seen this much discord on the Hill since he’s been there.
“When I got to Washington in the mid-1970s, both parties talked to each other. They were civil. We had a president who was president of all of the people, not just a party. There was a line of demarcation.”
Wiesemeyer said that crop insurance is also a likely focus of farm bill discussions. “We already have record crop insurance payouts for the 2012 U.S. crop of 12.4 billion. Total premiums were a little over 11 billion dollars. For the first time since 2002, the government and the crop insurance industry are going to pay out more than it took in.”
The biggest payouts went to corn producing states, Illinois, $1.6 billion, and Iowa, $1.3 billion.
“In the farm bill baseline over the next 10 years, government analysts project that crop insurance will spend $90 billion, second only to the nutrition program in the farm policy,” Wiesemeyer said. “So the naysayers of farm policy, the Environmental Working Group, etc., are going to target crop insurance in the years ahead.”