Better than tea leaves

A SNAPSHOT OF WORLD AGRICULTURE’S FUTURE

if you ever wished you could read tea leaves to know where fertilizer demand is headed, how long-term soybean prices will trend or how much corn China could be importing by 2020, you might enjoy spending a rainy afternoon with the FAPRI-ISU 2011 World Agricultural Outlook report.

FAPRI is the Food and Agricultural Policy Research Institute, established by the US Congress in 1984 to analyze complex economic interrelationships in the food and agriculture industry and produce an annual baseline projection of major agricultural trends.

Projections from the report
For anyone who likes to dig into the numbers to see where agriculture is headed, the World Agricultural Outlook from the Food and Agricultural Policy Research Institute (FAPRI) is a must-see.
 
Each year, FAPRI’s Outlook plugs economic assumptions, agricultural policies, technological change, and weather predictions into a model to develop projections about agricultural supply and demand that reach more than a decade into the future.
 
The 2011 Outlook, on line at http://www.fapri.iastate.edu/, offers more than 300 pages of data and a searchable database for all kinds of information from the world’s nations. Examples of projections from the grain and oilseed tables include:
·         The world wheat price is projected to increase to $270.44 (U.S.) in 2011/12 and $260.37 by 2025/26.
·         Asian net wheat imports will increase 1.19 million metric tons over the next 15 years, and African imports will grow 13.46 mmt.
·         World corn prices will drop to $183.17 per ton in 2011/12, then increase to $197.26 in 2012/13 and continue climbing through most of the projection period.
·         The stocks-to-use ratio for corn will continue declining, reaching 13.74% in 2025/26.
·         By 2025/26, China will consume 31% of global soybean production, accounting for 70% of world imports.

the best snapshot available
FAPRI begins with assumptions about the general economy, agricultural policies, the weather and technological change and uses a modeling system to establish a preliminary baseline. That baseline is then reviewed by experts from the US Department of Agriculture, international organizations, universities and industry to produce a final outlook projection:  the World Agricultural Outlook.

Like all tea leaves, the FAPRI Outlook has its limitations. It depends on the best assumptions researchers can make at a given moment in time. As such, it represents a snapshot of the best thinking available, but as circumstances evolve, its projections can be overtaken by events.

Nor can it factor in sudden, unpredictable developments that jolt the world agricultural scene – events like the 1990 Gulf War or the 2003 outbreak of avian influenza in Asia.

Its strength lies in its focus on big, long-term trends that will continue to operate despite short term bumps up and down.

what’s it say?
If you like numbers and detail, it can be fascinating. The 300-plus pages in this year’s report include lots of data.

Extensive charts by commodity with projections out to 2025/26. For example, the wheat data includes net volume of imports and exports for major world markets, projected wheat prices (Canadian Wheat Board and FOB US
Gulf) and per capita wheat consumption by country.

The wheat supply/utilization charts cover harvested area, yield, production, stocks, feed use, food use, other uses and trade for some 20 markets: Algeria, Argentina, Australia, Brazil, Canada, China, Egypt, the European Union, India, Iran, Japan, Mexico, Morocco, Pakistan, Russia, South Korea, Taiwan, Tunisia, Ukraine, and other countries grouped by region.

Similar data is available for barley, corn, sorghum, soy (beans, meal and oil), canola/rapeseed, sunflowers, palm, peanuts, sugar, beef/veal, pork, broiler meat, butter, cheese, non-fat dry milk, and whole milk powder.

new calculations
In addition, this year FAPRI added a fertilizer model, a cellulosic ethanol model and an improved model for accounting for greenhouse gas (GHG) emissions.

As a result, the 2011 Outlook includes projections for world fertilizer use by nutrient, by country, by commodity, and by year. It suggests world fertilizer use will reach 179 million metric tons (mmt), composed of 104 mmt of nitrogen, 42 mmt of phosphorus and 33 mmt of potassium in 2011/12, increasing to 185 mmt by 2025.

For some countries, fertilizer use is further broken down by agricultural regions – for example, US projections are provided for the country as a whole and for nine regions (corn belt, central plains, delta states, far west, lake states, north east, northern plains, south east and southern plains).

Incidentally, the Outlook suggests that Canada’s total fertilizer use will increase from just over two mmt in 2010/11 to more than 2.25 mmt by 2025.
 
The Outlook’s improved GHG emissions model indicates emissions from global agriculture will increase by 13.6 percent over the projection period, primarily due to an increase in crop area and associated emissions from soil management. It also projects an increase from livestock due to expanded per capita meat demand but at levels lower than emissions from cropland.

GHG emissions are projected by source, by country and by year. The model also estimates GHG emission efficiency, factoring productivity improvements and market outcomes into a single measurement: aggregate value of agricultural production per ton of GHG emitted.

Finally, the FAPRI Outlook website includes a searchable database for those who want to display, download, or graph data from the report – for example, you could call up the ACRE participation rate for the US corn industry, Canada’s beginning wheat stocks or the area of world soybean plantings.

For data hounds and number crunchers, the best aspect of the FAPRI Outlook may be that it’s available for free on the internet.

Next rainy day, forget the tea leaves and check out http://www.fapri.iastate.edu/. •