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

ManagementOABA Annual Conference Wraps Up In Columbus
February 5, 2016
More than 300 Ohio AgriBusiness Association (OABA) members and industry professionals were on hand to engage in collaborative learning and Read More
Chesapeake Bay
StewardshipKeeping A Watch On Water Issues
February 2, 2016
During a down cycle in the market, it’s difficult to think about investing for the long term. For retail businesses, Read More
FertilizerFort Wayne 4R Farming Event Set For February 12
January 29, 2016
The Nutrient Stewardship Council will host a complimentary “4R Farming 4 Sustainability” educational workshop Feb. 12 in Fort Wayne, IN, Read More
Legvold Farm, Northfield, MN
LegislationASA Notes Progress, Urges EU To Improve Biotech Approval Process
January 29, 2016
The American Soybean Association (ASA) urged the European Commission today to continue its work in addressing delays in the approvals Read More
Top 100 Articles
Elburn Cooperative
CropLife 100Elburn Cooperative Members Vote To Join CHS
December 28, 2015
With 81% of eligible producers voting, 94% cast an affirmative ballot for Elburn Cooperative, a diversified agricultural retailer based out Read More
West Central Cooperative, Jefferson, IA
CropLife 100Farmers Cooperative-West Central Merger Approved
December 21, 2015
The members of Farmers Cooperative Co. (FC), Ames, IA, and West Central Cooperative, Ralston, IA, have both approved the merger Read More
Wheat Growers Innovation Center, Bath, SD
CropLife 100Wheat Growers Opens Innovation Center
December 21, 2015
Wheat Growers’ commitment in providing its farmer-owners with the latest in technological advancements now has a one-of-a-kind focal point, as Read More
CropLife 100ARA Selects The Andersons As 2015 Retailer Of The Year
December 9, 2015
The Agricultural Retailers Association today named Maumee, OH-based The Andersons as its Retailer of the Year for 2015. The award Read More
CPS Washington Court House John Deere Sprayer
CropLife 100Application Equipment Report: It Is Easy Being Green For Top 100 Ag Retailers
December 5, 2015
On The Muppets television show, Kermit the Frog is famous for singing a song about the troubles he encounters in Read More
Fertilizer Bin
CropLife 100Fertilizer Sales: Another Down Year For Top 100 Ag Retailers
December 4, 2015
In pure number terms, the fertilizer category still dominates all crop inputs/services among CropLife 100 ag retailers. In 2015, for Read More
Latest News
Crop InputsBayer Contests EPA’s Decision On Valuable Insecticide F…
February 5, 2016
Crop Science, a division of Bayer, has announced it has refused a request by the Environmental Protection Agency (EPA) to Read More
Wheat Field North Dakota
Seed/BiotechSyngenta Wins Seed Fraud Suit Against South Dakota Grow…
February 5, 2016
Syngenta has obtained a $25,000 settlement from Paul and John Mayclin, Mayclin Farms, Plankinton, SD, in response to their Plant Read More
ManagementOABA Annual Conference Wraps Up In Columbus
February 5, 2016
More than 300 Ohio AgriBusiness Association (OABA) members and industry professionals were on hand to engage in collaborative learning and Read More
Crop InputsBayer To Contest EPA Flubendiamide Decision
February 5, 2016
Crop Science, a division of Bayer, announced today it has refused a request by EPA to voluntarily cancel the uses Read More
Syngenta
Seed/BiotechNot So Fast: ChemChina Syngenta Takeover Could Draw Nat…
February 5, 2016
State-owned China National Chemical Corp. (ChemChina), which plans to buy Swiss seeds and pesticide maker Syngenta, will promptly start preparations Read More
Rendering of Syngenta Seedcare Institute expansion
Seed/BiotechExpansion Of Syngenta’s North America Seedcare In…
February 4, 2016
As demand for seed treatment knowledge and products grows among farmers, retailers and others in the seed industry, Syngenta is Read More
Soybean Field
Industry NewsArysta LifeScience Strengthens Sales Team
February 4, 2016
Arysta LifeScience North America recently announced three new personnel additions: Jake Cook and Peter White are Territory Sales Managers for Read More
Davor Pisk Syngenta COO
Crop InputsSyngenta COO: Why ChemChina Offer Beat Monsanto’s
February 4, 2016
Syngenta Chief Operating Officer Davor Pisk says he is confident the proposed acquisition by ChemChina will ultimately help preserve choice Read More
Young corn plants in soil
Crop InputsKoch Biological Solutions Invests In Pathway Biologic
February 4, 2016
An affiliate of Koch Biological Solutions, LLC has acquired a minority equity position in, and entered into collaboration with, Pathway Read More
Crop InputsABG: China Signs Off On Monsanto’s Roundup Ready …
February 3, 2016
Monsanto Co. on Wednesday announced it plans to launch its Roundup Ready 2 Xtend soybeans in time for the 2016 Read More
Syngenta headquarters in Basel, Switzerland
Crop Inputs6 Things To Know About The ChemChina-Syngenta Deal
February 3, 2016
After months of rumors and speculation, Syngenta has announced that ChemChina has offered to acquire the Swiss-based company. “In making Read More
FertilizerPhosphorus: Is Band Or Broadcast Application The Better…
February 3, 2016
Is band or broadcast application the better method when it comes to phosphorus? The answer to this question depends mostly Read More
Syngenta Sign
Crop InputsChemChina Nearing Deal To Buy Syngenta For Record $43 B…
February 3, 2016
China National Chemical Corp. is nearing an agreement to buy Swiss pesticide-and-seeds-maker Syngenta AG for about 43.7 billion francs ($42.8 Read More
Herbicides2015 ASA Trials Demonstrate Valent Fierce XLT Herbicide…
February 2, 2016
Valent U.S.A. today announced that new Fierce XLT Soybean Herbicide ranks in the top tier among growers for length of Read More
Crop Protection Products in storage
Paul SchrimpfCrop Input Selling: Return Of The Price List
February 2, 2016
It was a good 15 years ago, shortly after I first started writing for this esteemed publication, that it all Read More
Potash storage at Growmark
FertilizerThe Phosphate And Potash Outlook For 2016
February 2, 2016
Like other commodities, prices of the leading plant nutrient products dropped sharply in 2015. At this writing, the price of Read More
Chesapeake Bay
StewardshipKeeping A Watch On Water Issues
February 2, 2016
During a down cycle in the market, it’s difficult to think about investing for the long term. For retail businesses, Read More
Young Corn Plants
FertilizerNutrient Considerations For Low Corn Prices
February 2, 2016
Corn prices are low and many producers are asking tough questions about their nutrient management programs. Here are some suggestions Read More