OUTLOOK FOR GLOBAL ECONOMIC GROWTH AND TRADE IMPACTING GRAIN MARKETS SALEEM SHAIK, & FRAYNE OLSON, NDSU &????
OUTLINE General Economic Growth & Trade World regions and U.S. Importance of Agriculture Trade to grain markets (corn, soybeans and wheat) World regions, U.S., and ND and MN Importance of Trade to Cash Receipts Role of Farm Policy/Farm Bill for Trade? Research at NDSU
GENERAL ECONOMIC GROWTH WORLD REGIONS AND U.S. HTTP://WWW.WORLDBANK.ORG/EN/COUNTRY Regions (7) Countries (196) East Asia & Pacific 31 Europe & Central Asia 55 Latin America & Caribbean 37 Middle East & North Africa 19 North America 3 South Asia 6 Sub-Saharan Africa 45
GENERAL ECONOMIC GROWTH: TERMS AND DEFINITIONS Gross Domestic Product (GDP) Value of the gross output (good & services) of producers and proxy for ECONOMIC GROWTH & Ability to Pay (ATP). Household Final Consumption Expenditure (% of GDP) Value of all goods and services purchased by households and proxy for Willingness to Spend (WTS). Trade (% of GDP) Trade is sum of exports and imports of goods and services and proxy for OPENNESS. Agriculture Value Added (% of GDP) Net output of a sector after adding up all outputs and subtracting intermediate inputs.
25 20 15 Gross Domestic Product (GDP) in current Trillion US$ (Ability to Pay) GENERAL ECONOMIC GROWTH: 10 5 0 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 East Asia & Pacific Latin America & Caribbean North America Sub-Saharan Africa Europe & Central Asia Middle East & North Africa South Asia GROSS DOMESTIC PRODUCT (GDP) IN TRILLION US$
90 80 70 60 50 40 30 Household final consumption expenditure (% of GDP) Willingness to Spend 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 GENERAL ECONOMIC GROWTH: HOUSEHOLD FINAL CONSUMPTION EXPENDITURE (% OF GDP) East Asia & Pacific Latin America & Caribbean North America Sub-Saharan Africa Europe & Central Asia Middle East & North Africa South Asia
100 Trade includes Exports + Imports (% of GDP) Are Countries Open to Trade 90 80 70 60 50 40 30 20 10 0 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 GENERAL ECONOMIC GROWTH: TRADE (% OF GDP) East Asia & Pacific Latin America & Caribbean North America Sub-Saharan Africa Europe & Central Asia Middle East & North Africa South Asia
50 45 40 35 30 25 20 15 10 5 0 Agriculture Value Added (% of GDP) Role of Agriculture 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 East Asia & Pacific Latin America & Caribbean North America Sub-Saharan Africa Europe & Central Asia Middle East & North Africa South Asia GENERAL ECONOMIC GROWTH: AGRICULTURE VALUE ADDED (% OF GDP)
United States of America GDP, Consumption, Trade and Agriculture 80 70 60 50 40 20.00 18.00 16.00 14.00 12.00 10.00 U.S. GENERAL ECONOMIC GROWTH: 30 20 10 0 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Agriculture, value added (% of GDP) Household final consumption expenditure, etc. (% of GDP) 8.00 6.00 4.00 2.00 0.00 GDP, HOUSEHOLD CONSUMPTION TRADE AND AGRICULTURE Trade (% of GDP) GDP (current Trillion US$)
GENERAL ECONOMIC GROWTH: WHAT HAVE WE LEARNED??? YES, there is ECONOMIC GROWTH & Ability to Pay in the Global Economy Yes, there is Willingness to Spend. Yes, there is OPENNESS to Trade. Yes, Agriculture is relatively small but is it important
IMPORTANCE OF AGRICULTURE TRADE WORLD REGIONS AND U.S. CORN, SOYBEANS & WHEAT
1,600,000,000 1,400,000,000 1,200,000,000 Global and U.S. TOTAL Agricultural Exports and Imports (000 s US $) AGRICULTURE TRADE: 1,000,000,000 800,000,000 600,000,000 400,000,000 200,000,000 0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Global Total Exports Global Total Imports United States Exports United States Imports GLOBAL & US TOTAL AGRICULTURE EXPORTS & IMPORTS
Global and U.S. CORN Agricultural Exports and Imports(000 s US $) 35,000,000 30,000,000 AGRICULTURE TRADE: 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 GLOBAL & US CORN AGRICULTURE EXPORTS & IMPORTS 0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Global Total Exports Global Total Imports United States Exports United States Imports
70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 Global and U.S. SOYBEAN Agricultural Exports and Import (000 s US $) 0 AGRICULTURE TRADE: GLOBAL & US SOYBEANS AGRICULTURE EXPORTS & IMPORTS Global Total Exports Global Total Imports United States Exports United States Imports
60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 Global and U.S. WHEAT Agricultural Exports and Import (000 s US $) AGRICULTURE TRADE: GLOBAL & US WHEAT AGRICULTURE EXPORTS & IMPORTS 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Global Total Exports Global Total Imports United States Exports United States Imports
IMPORTANCE OF GLOBAL AGRICULTURE TRADE : WHAT HAVE WE LEARNED??? YES, there is global trade in agriculture commodities. However, the share of U.S. agriculture trade is less and there is room for growth. Similarly, there is potential for U.S. trade in corn, soybeans and wheat. But, need to identify and target potential markets.
IMPORTANCE OF AGRICULTURE TRADE TO ND & MN
180,000,000 160,000,000 140,000,000 120,000,000 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0 US, ND and MN TOTAL Agriculture Trade (000 s US $) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Agricultural Total United States Agricultural Total Minnesota Agricultural Total North Dakota AGRICULTURE TRADE: US, ND & MN TOTAL AGRICULTURE EXPORTS & IMPORTS
16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 US, ND and MN CORN Agriculture Trade (000 s US $) AGRICULTURE TRADE: US, ND & MN CORN AGRICULTURE EXPORTS & IMPORTS 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Corn United States Corn Minnesota Corn North Dakota
30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 US, ND and MN SOYBEAN Agriculture Trade (000 s US $) AGRICULTURE TRADE: US, ND & MN SOYBEAN AGRICULTURE EXPORTS & IMPORTS 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Soybeans United States Soybeans Minnesota Soybeans North Dakota
12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 US, ND and MN WHEAT Agriculture Trade (000 s US $) AGRICULTURE TRADE: US, ND & MN WHEAT AGRICULTURE EXPORTS & IMPORTS 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Wheat United States Wheat Minnesota Wheat North Dakota
IMPORTANCE OF ND & MN AGRICULTURE TRADE : WHAT HAVE WE LEARNED??? Even within U.S., ND and MN has the potential to identify and target global trade markets in agriculture commodities. Share of ND and MN agriculture trade is less and there is room for growth. But, need to identify and target potential markets.
HOW IMPORTANT IS TRADE RELATIVE TO FARM CASH RECEIPTS?
$10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 FIGURE 2. SOURCES OF NORTH DAKOTA AGRICULTURE CASH RECEIPTS $1,000,000 $0 1924 1927 1930 1933 1936 1939 1942 1945 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 CropLvst Crops Lvst
1,400,000 1,800,000,000 FIGURE 2. HOW IMPORTANT IS FARM POLICY PROGRAMS TO NORTH DAKOTA? 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1924 1927 1930 1933 1936 1939 1942 1945 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 1,600,000,000 1,400,000,000 1,200,000,000 1,000,000,000 800,000,000 600,000,000 400,000,000 200,000,000 0 Farm Program Payments Indemnity
North Dakota Exports (%) relative to Total, Crop and Livestock Cash Receipts, 2000 to 2013 70% 60% 50% 40% 30% 20% 10% 0% 46% 48% 47% 45% 49% 49% 48% 38% 39% 39% 38% 39% 39% 40% 14% 13% 14% 13% 7% 48% 8% 10% 11% 55% 57% 52% 44% 40% 50% 51% 51% 51% 55% 57% 47% 46% 16% 16% 18% 18% 18% 18% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Percent agricultural exports Percent animal products Percent plant products FIGURE 3. HOW IMPORTANT IS AGRICULTURE EXPORTS TO NORTH DAKOTA
North Dakota Exports (%) by Commodity, 2000 to 2013 FIGURE 4. SOURCES OF NORTH DAKOTA AGRICULTURE EXPORTS BY COMMODITY 2013 2012 2011 2010 2009 2008 2007 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Corn Soybean meal Feeds and fodder Soybeans Wheat
ROLE FOR FARM POLICY/FARM BILLS IN TRADE
FARM POLICY/ FARM BILLS TRADE? Farm policy in U.S. started as part of the New Deal legislation by President Franklin D. Roosevelt in 1933. Since 1933, 15 major (omnibus) farm bills were introduced.
FARM POLICY AND 15 FARM BILLS FB 1 (1938 1947) Agricultural Adjustment Act of 1938 (P.L. 75-430) FB 2 (1948-1953) Agricultural Act of 1949 (P.L. 81-439) FB 3 (1954-1955) Agricultural Act of 1954 (P.L. 83-690) FB 4 (1956-1964) Agricultural Act of 1956 (P.L. 84-540) FB 5 (1965-1969) Food and Agricultural Act of 1965 (P.L. 89-321) FB 6 (1970-1972) Agricultural Act of 1970 (P.L. 91-524) FB 7 (1973-1976) Agriculture and Consumer Protection Act of 1973 (P.L. 93-86) FB 8 (1977-1980) Food and Agriculture Act of 1977 (P.L. 95-113) FB 9 (1981-1984) Agriculture and Food Act of 1981 (P.L. 97-98) FB 10 (1985-1989) Food Security Act of 1985 (P.L. 99-198) FB 11 (1990-1995) Federal Agriculture, Conservation, and Trade Act of 1990 (P.L. 101-624) FB 12 (1996-2002) Federal Agriculture Improvement and Reform Act of 1996 (P.L. 104-127) FB 13 (2002-2007) Farm Security and Rural Investment Act of 2002 (P. L. 107-171) FB 14 (2008-2013) Food, Conservation, and Energy Act of 2008 (P. L. 110-234) FB 15 (2014-2018) Agricultural Act of 2014 (P. L. 113 79)
FARM POLICY AND 15 FARM BILLS FB 1 (1938 1947) Agricultural Adjustment Act of 1938 (P.L. 75-430) FB 2 (1948-1953) Agricultural Act of 1949 (P.L. 81-439) FB 3 (1954-1955) Agricultural Act of 1954 (P.L. 83-690) FB 4 (1956-1964) Agricultural Act of 1956 (P.L. 84-540) FB 5 (1965-1969) Food and Agricultural Act of 1965 (P.L. 89-321) FB 6 (1970-1972) Agricultural Act of 1970 (P.L. 91-524) FB 7 (1973-1976) Agriculture and Consumer Protection Act of 1973 (P.L. 93-86) FB 8 (1977-1980) Food and Agriculture Act of 1977 (P.L. 95-113) FB 9 (1981-1984) Agriculture and Food Act of 1981 (P.L. 97-98) FB 10 (1985-1989) Food Security Act of 1985 (P.L. 99-198) FB 11 (1990-1995) Food, Agriculture, Conservation, and Trade Act of 1990 (P.L. 101-624) FB 12 (1996-2002) Federal Agriculture Improvement and Reform Act of 1996 (P.L. 104-127) FB 13 (2002-2007) Farm Security and Rural Investment Act of 2002 (P. L. 107-171) FB 14 (2008-2013) Food, Conservation, and Energy Act of 2008 (P. L. 110-234) FB 15 (2014-2018) Agricultural Act of 2014 (P. L. 113 79)
FARM POLICY AND TITLES OF FARM BILL Title I, Commodity Programs ------ 1933 Title II, Conservation Title III, Trade Title IV, Nutrition Title V, Credit Title VI, Rural Development Title VII, Research, Extension, and Related Matters Title VIII, Forestry Title IX, Energy Title X, Horticulture Title XI, Crop Insurance ------ 1938 Title XII, Miscellaneous
CBO OUTLAYS, 2014 TO 2023 BY FARM BILL TITLES 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Title I - Commodities 6,382 2,540 4,802 5,004 4,828 4,256 4,116 4,224 4,082 4,225 Title II - Conservation 5,430 5,590 5,654 5,677 5,814 5,817 6,098 5,817 5,762 5,941 Title III - Trade 347 360 359 359 359 359 359 359 359 359 Title IV - Nutrition 79,937 78,779 78,670 77,376 75,888 74,618 73,614 72,871 72,417 72,262 Title V - Credit -178-197 -205-211 -220-228 -237-246 -255-263 Title VI - Rural Development 19 57 65 52 25 16 7 0 0 0 Title VII - Research, Extension, and Related Matters 341 103 116 120 120 113 99 84 80 80 Title VIII - Forestry 3 2 1 1 1 1 1 1 1 1 Title IX - Energy 35 103 155 168 164 129 105 92 86 85 Title X - Horticulture 163 167 175 179 191 168 173 176 181 182 Title XI - Crop Insurance 6,382 8,399 8,742 8,834 9,063 9,279 9,552 9,714 9,873 9,988 Title XII - Miscellaneous 711 197 208 213 214 193 163 154 154 154
12,000 10,000 8,000 6,000 4,000 2,000 0-2,000 Title V - Credit Title VIII - Forestry Title VI - Rural Development Title IX - Energy Title VII - Research, Extension, Others 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Title X - Horticulture Title III - Trade Title I - Commodities Title II - Conservation Title XI - Crop Insurance
TRADE FACTORS TO THINK ABOUT IN THE FUTURE GMO risk Trade agreements (NAFTA, CAFTA, TPP, T-TIPS) Import tariffs Exchange rate Sanitary and phytosanitary Transportation cost and distance Export promotion Farm bill vs commodity check-off.
RESEARCH AT NDSU: 1)TPP AND GMO RISK 2) DID PAST AGREEMENTS HELP? 3) DEMAND FOR EXPORTS?
STRINGENT GMO REGULATIONS: TRADE BARRIERS BETWEEN U.S. & TPP COUNTRIES 7 US_Australia 4 US_Canada GMO_index 8 US_Chile 8 US_Japan 6 3 7 7 5 1970 1980 1990 2000 US_Malaysia 2010 2 1970 1980 1990 2000 US_Mexico 2010 6 1970 1980 1990 2000 US_New Zealand 2010 6 1970 1980 1990 2000 US_Peru 2010 8 8 8 11 7 7 7 10 6 1970 1980 1990 2000 US_Singapore 2010 6 1970 1980 1990 2000 US_Vietnam 2010 6 1970 1980 1990 2000 2010 9 1970 1980 1990 2000 2010 4 8 3 7 2 1970 1980 1990 2000 2010 6 1970 1980 1990 2000 2010
STRINGENT GMO REGULATIONS: TRADE BETWEEN U.S. & TPP COUNTRIES Losses due to GMO regulations on Trade Less in Cotton Intermediate in Oilseeds High in Corn
Australia Canada Chile Japan Malaysia Mexico New Zealand Peru Singapore Cotton & products GMO_index_3-404 -56,501-1,497-281,472-12,275-215,889-3,017-36,143-680 GMO_index_6-1,192-166,496-4,411-829,438-36,172-636,179-8,890-106,505-2,005 GMO_index_7-102 -14,313-379 -71,304-3,110-54,690-764 -9,156-172 Corn and products GMO_index_3-2,600,249-443,546,116-71,560,752-5,343,971,202-55,076,168-747,266,156-3,561,918-116,647,706-651,927 GMO_index_6-6,191,231-1,056,089,682-170,387,181-12,724,072,315-131,137,148-1,779,251,468-8,480,978-277,739,867-1,552,246 GMO_index_7-1,417,748-241,837,091-39,017,463-2,913,722,841-30,029,482-407,436,040-1,942,084-63,600,471-355,453 Oilseeds and products GMO_index_3 3,164 51,983 140 316,891 19,066 259,577 129 1,403 1,151 GMO_index_6-34,332-564,000-1,524-3,438,148-206,862-2,816,307-1,397-15,221-12,486 GMO_index_7 4,753 78,090 211 476,038 28,642 389,939 193 2,107 1,729
THERE ARE WINNERS AND LOSERS WITH TRADE
I ENJOY WHAT I DO Thank you for listening and Questions.