FarmPolicy

May 24, 2018

Farm Policy: Issues & Themes

Categories: Ethanol /Farm Bill /Food Aid

Scott Kilman reported in Friday’s Wall Street Journal that, “Rising prices and surging demand for the crops that supply half of the world’s calories are producing the biggest changes in global food markets in 30 years, altering the economic landscape for everyone from consumers and farmers to corporate giants and the world’s poor.”

(Graph from The Wall Street Journal Online). The Journal article explained that, “What’s changed is that powerful new sources of demand are emerging. In addition to U.S. government incentives that encourage businesses to turn corn and soybeans into motor fuel, the growing economies of Asia and Latin America are enabling hundreds of millions of people to spend more on food. A growing middle class in these regions is eating more meat and milk, which in turn is increasing demand for grain to feed livestock. In the U.S., a beef cow has to eat roughly six pounds of grain to put on a pound of weight, and a hog about four pounds.”

(Graph from The New York Times Online.) Recall that the September 2007 issue of Amber Waves, a publication from USDA’s Economic Research Service (ERS), indicated that, “Developing regions such as China, Southeast Asia, Mexico, Central America, and India will likely continue to increase their share of global GDP in the coming decades. They will also account for 95 percent of the expected increase of 1 billion persons to the global population by the year 2020. Despite generally higher agricultural commodity prices brought on by the expansion of ethanol production in the U.S., enhanced spending power abroad is projected to substantially raise the value of U.S. agricultural exports over the next decade—from $69 billion in 2006 to $95 billion by 2016, according to USDA projections.” (From: “U.S. Trade Growth: A New Beginning or a Repeat of the Past?,” by Erik Dohlman and Mark Gehlhar).

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