Poll: China To Drive Agricultural Commodity Demand For Next Decade

China’s continued influence on agricultural commodity demand and global economic growth, along with increasing weather extremes, stand out as key issues for North American food, beverage and agribusiness in 2013, a recent poll of Rabobank clients shows.

The poll of more than 350 executives from leading companies in the North American food, beverage and agribusiness industry was conducted at Rabobank’s recent Markets Forum held in New York City. Rabobank is a bank to the global food and agribusiness industry and premier financial institution to the North American food, beverage and agriculture sector.

China Will Continue To Drive Demand for Agricultural Commodities

Asked to name the country or region which they believe will have the greatest impact on global agricultural commodity demand over the next 10 years, 61% of respondents at the Rabobank Forum chose China. That view of China’s continued dominance far exceeded views of India (14%), Africa (10%), Latin America (9%), and Southeast Asia (6%).

Views Mixed On China’s Long-Term Economic Dominance

Despite recent signs of slowing economic growth in China, the large majority of executives polled by Rabobank see China continuing to be the most important driver of long term global economic growth. Forty one percent of respondents said China would drive the global economy for between five and 10 more years, while 40% said China will remain the primary driver of global economic growth for the next 50 years.  

Bill Cordingley, Head of Food & Agribusiness Research and Advisory for Rabobank in the Americas, said, “These results are not surprising and reflect the significant impact that China has had on the food and agribusiness industry over the past 10 years, globally as well as in North America. China today has the second largest middle class in the world at 157 million, which will surpass the U.S.’s middle class in the next ten years, so China’s demand for agricultural commodities is going to continue to grow. Our North American clients in the food, beverage and agriculture sectors see opportunities to play a role in the Chinese market, not only as exporters but also as investors in the country’s domestic growth by bringing technology, know-how and capital to support development of a more modern, safe food system in China.” 

In addition to their views on China, Rabobank Forum attendees provided opinions on a range of topics that they believe will be significant issues for the global and North American food and agriculture/agribusiness industry in the coming years, including production levels, risk management, genetically modified organisms (GMO), social media, and U.S. and European macroeconomics.

Continued Weather Extremes Will Be Dominant Factor For North American Food & Agribusiness

Notably, 68% of attendees named weather extremes/volatility as the single biggest factor affecting North American food and agribusiness in 2013. That concern far outweighed the next two closest factors – consumer demand (13%) and policy/regulation (10%). Geopolitical events, trade/tariffs/exchange rates, and policy/regulation all received votes in the single digits.

“Given that the North American industry, particularly the U.S., is in the middle of the worst drought in over 50 years,” said Cordingley, “these views are quite understandable and represent a significant issue that is top of mind for most food industry players as we enter 2013.”

Agribusiness Increasing Risk Management In Response To Volatility

Reflecting the concern over continued weather volatility, 59% of respondents said that 2012 drought has changed their views about risk management in their business. Executives at the Rabobank Forum cited an increased focus on financial liquidity (25%), increased investment in risk management and insurance (21%), and greater diversification (13%) as their three leading solutions to hedge against continued volatility in weather patterns and commodity markets. 

66% Expect U.S. Corn Yield To Exceed 200 Bushels/Acre By 2025

“Corn is a critical input to the North American food industry, and strong and consistent yield growth has underpinned the industry in the U.S. for the past ten years. Despite the enormous gains already made due to precision farming, GMOs, and other technologies, attendees at the Forum were very bullish in terms of their outlook for this trend to continue longer term,” said Cordingley.

Over ninety percent of executives at the Rabobank Forum said that they expect U.S. corn yields to exceed 170 bushels per acre by 2025: notably, over a quarter (26%) forecast yields of over 250 Bu/a, while forty percent forecast yields of between 200 Bu/a and 250 Bu/a. Those expectations compare to U.S. trend line yields of between 150-160 Bu/a in recent years, prior to this year’s drought-driven decline to 120 Bu/a.

Impact Of Social Media On Food & Agribusiness Sector

Social media played a significant role in the news earlier this year about the use of lean finely textured beef (LFTB) in U.S. beef processing. Rabobank asked its Forum attendees if the rise of social media is causing them to adopt a different approach in their business. More than half of executives (51%) said that the growing influence of social media is changing the way they handle brand and reputation management and business communications. Nine percent said it is driving changes in the way they handle vendor/customer/supply chain management. However, 37% said they are not making business changes in response to the increasing prominence of social media. 

“Social media has introduced a new and widely accessible communications platform to the media mix, and this has created both opportunities and risks for companies in the food industry. For some parts of the industry, ‘business as usual’ may not work any longer as social media exercises its potential to be a catalyst for change. However, the social media phenomenon also offers the industry an opportunity to engage in direct discussions with consumers and other stakeholders, to address concerns, to educate, and to clarify fact from rumor or misinformation. One thing is certain, social media is changing the food business in North America.”

What Factor Will Most Influence Acceptance Of GMOs?

While well-established in the U.S. market, GMOs in agriculture remain controversial in many parts of the world and have not had anywhere near the rates of option outside the U.S. Polled on the factors that would most encourage increased global uptake of GMO technology in agriculture over the next decade, 56% of respondents cited sustained high commodity prices. Others said that greater consumer acceptance (34%) will be key to higher adoption, but 7% said they believe GMO uptake will slow. Three percent said that improved intellectual property rights in developing markets will be the solution to make GMOs more acceptable among consumers and the food industry.

Leave a Reply

Management Stories

ManagementWashington Visit and Bayer/Monsanto Deal Update
May 26, 2016
Editors Paul Schrimpf and Eric Sfiligoj discusses a recent trip to DC and the latest news on the proposed pairing Read More
Crop InputsLand O’Lakes Announces Minnesota Water Quality Partnership
May 25, 2016
Governor Mark Dayton and Land O’Lakes, Inc. President and CEO Chris Policinski today announced a new public-private partnership to protect Read More
ManagementAgriculture 3.5: A Bumpy Road Ahead
May 24, 2016
You may have read my article a few years ago on Agriculture 3.0, which is a term I coined to Read More
Southern States Cooperative
Trending Articles
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Eyeing Monsanto For Possible Mega-Merger
May 16, 2016
Bayer AG is exploring a potential bid for U.S. competitor Monsanto Co. in a deal that would create the world’s Read More
Aerial Drone
Precision AgA Deeper Dive Into The Future Of Precision Ag
May 9, 2016
For about two decades now, through the good and the bad times, the ups and the downs inherent in agriculture, Read More
Palmer amaranth in soybean stubble
HerbicidesWSSA: Billions In Potential Economic Losses From Uncontrolled Weeds
May 4, 2016
What losses would corn and soybean growers experience if they were forced to eliminate herbicides and other control techniques from Read More
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
Latest News
ManagementWashington Visit and Bayer/Monsanto Deal Update
May 26, 2016
Editors Paul Schrimpf and Eric Sfiligoj discusses a recent trip to DC and the latest news on the proposed pairing Read More
Fertilizer closeup in hand
Industry NewsVerdesian: Striking A Balance Between Yield & ROI
May 26, 2016
Finely tuned nutrient management plans are helping farmers throughout the U.S. improve nutrient use efficiency, increase return on investment (ROI) Read More
Crop InputsLand O’Lakes Announces Minnesota Water Quality Pa…
May 25, 2016
Governor Mark Dayton and Land O’Lakes, Inc. President and CEO Chris Policinski today announced a new public-private partnership to protect Read More
Soybean Plant closeup
Industry NewsMonsanto Rejects Bayer Bid; Open To More Talks
May 25, 2016
Monsanto Co, the world’s largest seed company, turned down Bayer AG’s $62 billion acquisition bid as “incomplete and financially inadequate” Read More
Corn close up
Crop InputsArysta LifeScience Establishes Global Headquarters In R…
May 25, 2016
Arysta LifeScience has announced plans to relocate its global headquarters from West Palm Beach, FL, to Cary, NC, over the Read More
fertilizer blending and storage, Top 100
BlendersCHS Dakota Expansion Features AGCO’s GSI InterSys…
May 25, 2016
The continued growth of precision agriculture has increased farmer use of customized fertilizer blends best-suited for their soil conditions. Several Read More
ManagementAgriculture 3.5: A Bumpy Road Ahead
May 24, 2016
You may have read my article a few years ago on Agriculture 3.0, which is a term I coined to Read More
Topcon’s X30 display with CropSpec sensors
EquipmentGPS Autosteer Systems: Product Updates From Precision A…
May 24, 2016
Throughout 2015 GPS Steering solutions continued to evolve from what was once an after-market add on, to today’s cab where Read More
Trimble TMX-2050 In-Cab Display
Eric SfiligojThe Precision Ag Revolution Continues
May 24, 2016
It’s funny how much “the first time” tends to mean to someone as they get older. I sometimes can’t recall Read More
Eric Wintemute, AMVAC
Precision AgAMVAC Ups The Ante With New Precision Ag Technology
May 24, 2016
A potentially industry-changing at-plant soil treatment system from American Vanguard Corp., or AMVAC, is coming soon to large growers in Read More
Dry and Liquid Plant
CropLife 100CropLife 100 Map
May 24, 2016
The new CropLife 100 map shows the locations of each of the headquarters of the 2015 CropLife 100 retailers. The interactive Read More
Southern States Cooperative
Corn Field
Industry NewsTiger-Sul Names Veteran Account Manager To Lead Central…
May 23, 2016
With the continuing growth of the sulphur bentonite and precision crop nutrient industry, global agriculture firm H.J. Baker has announced that Read More
Bayer sign
Industry NewsReuters: Bayer Defies Critics With $62 Billion Monsanto…
May 23, 2016
German drugs and crop chemicals group Bayer has offered to buy U.S. seeds company Monsanto for $62 billion in cash, Read More
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Industry NewsCompass Minerals Hires Industry Veteran To Lead Plant N…
May 19, 2016
Compass Minerals has hired plant nutrition industry veteran Vatren Jurin to steer the company’s portfolio expansion into specialty liquid micronutrient Read More
ASMARK Retailers LIVE! Tour 2016 Group shot The Andersons
CropLife 100The Andersons Rejects Unsolicited Proposal From HC2
May 19, 2016
The Andersons, Inc. has announced that its Board of Directors has rejected two non-binding, highly conditional, unsolicited proposals from HC2 Read More
glyphosate
Crop InputsWHO: Glyphosate ‘Unlikely’ To Cause Cancer
May 16, 2016
Via Reuters.com reporter Kate Kelland: The weed-killing pesticide glyphosate, made by Monsanto and widely used in agriculture and by gardeners, Read More