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Jason Carver
Economist
Global Policy Analysis Division
Office of Global Analysis
Foreign Agricultural Service
U.S. Department of Agriculture
Global Policy Analysis Division
Office of Global Analysis
Is the run of increasing food prices over?
Will food prices diverge from oil prices?
What does the future hold for global food
demand?
IMF Price Indices
250
Index 2005 = 100
200
150
Crude oil
All Commodities
Food
1980
100
50
0
Source: International Monetary Fund: International Financial Statistics
IMF Price Indices
250
Index 2005 = 100
200
150
Crude oil
All Commodities
Food
1980
100
50
0
Source: International Monetary Fund: International Financial Statistics
IMF Price Indices
250
Index 2005 = 100
200
150
100
Crude oil
50
All Commodities
Food
0
Source: International Monetary Fund: International Financial Statistics and IHS
250
IMF Price Indices
and Global GDP Growth
Global Insight
Forecast
6.0
200
2.0
150
0.0
Crude oil
100
All Commodities
Food
50
-2.0
Real GDP Growth
0
Source: International Monetary Fund: International Financial Statistics and IHS
-4.0
-6.0
-8.0
Real GDP Growth %
Index 2005 = 100
4.0
Source: USDA Baseline
Lower income countries spend much of that additional income on food
100%
Other
90%
Education
80%
70%
Recreation
60%
50%
Transport &
Communication
40%
Health
30%
Furnishings
20%
Housing
10%
Clothing
Source: USDA, Economic Research Service using International Comparison Program 2005 data.
United States
Canada
Australia
Italy
Malta
Israel
Macao
Mexico
Kazakhstan
Bosnia
Brazil
Peru
Jordan
Paraguay
Namibia
Morocco
China
India
Nigeria
Ghana
Zambia
Gambia
Niger
D.Rep. Congo
0%
Food
18
16
Soybeans
14
12
8
6
4
2
0
Source: USDA, Economic Research Service;
$ per bushel
10
Population set to grow about 63 million people per year
(pop. of the United Kingdom)
10
9.5 Billion
9
Billions of People
8
7
6
5
4
3
2
1
0
Source: World Bank Population Projections
7.3 Billion
Most of the increase will be in developing countries
Households w/real PPP incomes greater than $20,000 a year
Millions of Households
1100
900
Middle class in developing countries projected
to increase 92% by 2023 vs. 11% in developed
countries
700
Developing
countries
500
300
100
Source: IHS Global Consumer Markets data as analyzed by OGA
Developed
countries
Households w/ Real PPP incomes greater than $20,000 (millions)
China
India
Brazil
Russia
Mexico
Indonesia
Thailand
Turkey
Philippines
Egypt
S. Korea
Colombia
Malyasia
Vietnam
Taiwan
140
99
13
12
6
5
5
4
2013
3
3
Proj. gains by 2023
2
2
2
1
1
0
50
100
Source: Global Insight’s Global Consumer Markets data as analyzed by OGA
150
200
250
Changes in Grains and Oilseed Meals in Feed Consumption
2003 vs 2013
China
74%
SE Asia
73%
57%
South Asia
S. America
49%
MENA
27%
FSU
14%
Mexico
7%
EU
2%
E. Asia(-China)
USA
Canada
-25%
-2%
-9%
-12%
0%
Source: USDA Production, Supply & Distribution Database
25%
50%
75%
China becomes second largest global importer on growing feed & meat imports
Chinese Meat Consumption
70.0
70%
Beef
Poultry
40.0
30.0
20.0
Pork
China Imports/Global Trade
50.0
60%
50%
40%
30%
20%
10.0
10%
0.0
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Million Metric Tons
60.0
Chinese Soybean Imports/Global
Soybean Trade
66.3%
*Estimate
Source: USDA PS&D; Global Trade Atlas
0%
22.3%
A new downward trend beginning for food prices?
Short-term: Bulk commodity forecast volumes up
Short/Mid-term: Low oil prices, lower input costs
Long-term: Strengthening dollar
Long-term: Offsetting factor - Growing food demand
Will food prices break from the oil price trend held over the
last decade?
Oil price decline driven by U.S. production, strong global supply,
weaker global demand growth, higher global inventories
OPEC November policy decision maintain production levels
Global food demand outlook
Long-term: Strong demand driven by growing middle-class in
developing countries