ANALYSIS – The 2012 Doane Outlook conference focused on global trends, policy and production agriculture, writes Sarah Mikesell, TheCropSite senior editor, live from the conference in St. Louis, Missouri, USA.
“It’s all about China” – that was the key message of Rich Pottorff, Doane chief economist. He said without a doubt, demand from China is driving and supporting the global grain market.
Pottorff said demand for corn from China is rising at nearly 5 per cent per year while yields are rising at about 1.5 per cent per year. Corn area in China increased 4.8 million hectares over the last 5 years. Pottorff questions whether China can add another almost 4 million hectares in the next five years to meet their growing demand for livestock feed? He said if the area holds steady, China will have a 30 million metric tonne deficit by 2017-2018.
Dr. Patrick Westhoff, Director of the Food and Agricultural Policy Research Institute (FAPRI) at University of Missouri, spoke about the US Farm Bill proposal, including some mandatory costs and major differences between the House and Senate versions.
Westhoff said the “mandatory” spending in the Congressional Budget Office baseline on the following selected USDA programs includes $60 billion on commodity programs, $90 billion on crop insurance, $64 billion on conservation programs, $772 billion on Supplemental Nutrition Assistance Program (food stamp program) and $236 billion on child nutrition programs.
He said the Bills passed by the Senate and House Ag Committee would eliminate direct and coutercyclical payments and the Average Crop Revenue Election (ACRE) program and create new risk management programs, but neither would have large average impacts on crop prices because payments are now only a small part of farm income.
New programs would, on average, spend less than existing programs but would be more tied to actual production. He said both bills would hold more land in production if markets weaken which could result in lower prices.
Dwight Koops, crop consultant and vice president of Crop Quest, said water is the biggest issue facing his growers in Texas, Oklahoma, Kansas and Colorado. He noted that with regulations and more restrictions coming in the future, he anticipates cropping changes, meaning less irrigated corn and other high water-use crops or drastic changes in management practices which could include a shorter growing season and lowering plant population. He said it could also mean more irrigated wheat, sorghum and cotton.
The major issues his producers are facing include weed and inset resistance, seed traits and cost, government regulation, less subsidies, crop insurance and adoption of new technology.
Doane will be hosting another conference this year targeting investment professionals with an interest in the agriculture sector. Doane Invest – Agriculture Symposium will be held in New York City on December 11-12, 2012. Click here for more information.