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American Agriculture in a world economy

Your Farm Business

April 1, 2011
From Wayne Schoper and Rich Baumann , South Central College

We truly live in a world economy. American agriculture leads the way in international agriculture and is a major exporter to many countries around the world. Recently, we have seen the emergence of the so called "BRIC" (Brazil, Russia, India and China) countries as co-competitors on the world agriculture market. China has been in the news a lot in recent years as a major consumer of American commodities such as corn and soybeans. In fact, USDA recently announced that 1.25 million tons of corn had been sold to unknown purchasers. The suspicion is that this mystery purchaser was China. There has been concern around agricultural circles that China may be attempting to control world food sources. One recent report stated that China now owns over half of the exportable soybeans in the world. When you consider that China will exceed 1.5 billion in population this year it is easy to understand why they are a big purchaser of world food stocks. They are also a broker for many other countries in that part of the world including Vietnam, Cambodia, and Indonesia. In April, the world population will officially exceed 7 billion people world-wide. Of this, almost half will live in that part of the world. One country that rivals China in population is India. China has the largest population, but India is scheduled to surpass China's population in 15 years. Add to this that India will shortly become the largest purchaser of U.S. corn and you can see why there is a lot of interest in what happens with population growth. Economic growth is boosting and diversifying India's food demand. It's a leading world importer of vegetable oils and pulse crops (chick peas, dried peas etc.) Consumption of grains is rising but India only grows 20 million tons of corn. A billion people cannot survive on 20 million tons of corn hence the move by India into the world corn market. The U.S. produces over 335 million tons of corn with a population a quarter of the size of India. Their population of 1.1 billion people lives on a land mass equal to the U.S. east of the Mississippi. While national GDP is rising, 410 million people in India live on less than $1.25 or less per day. India's general population, 75% of whom live in rural areas, needs more buying power. India is investing in roads, dams and other infrastructure needed to emerge as a major player in the world economy. This domestic work program is also part of a government program guaranteeing employment for 180 days a year for heads of households. This program puts more money into India's households. As incomes rise, the first thing that people buy is chicken or other meat to put in their rice dish. It takes grain to raise this meat. Four-fifths of India's population is Hindu, a vegetarian religion, for lack of a better way to describe it. But current studies show that 75% to 85% of the population is not religious. Thus Hinduism is less of a factor than it used to be in raising livestock. More Indians are farmers than any other occupation. Most farmers operate 2 acres or less and land gets fragmented every 30-40 years as estates get settled. This means that India has a growing population with a shrinking agriculture land base to raise crops. India is a market that will open further and the question is when and not if. What does this mean for American agriculture? Continued strong exports and continued world leadership in world food supplies.



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