Can agriculturesurvive cheap oil?BRIAN CLANCEYWWW.STATPUB.COM

Agriculture since 1961

World Population Up 108%

Land in Field Crops up 17%

Field Crop Production up 246%

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Land in Field Crops(million hectares)

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World Field Crop Output(million metric tons)

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World Production by Crop Sector

(million metric tons)

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Per Capita Field Crop Output

All crops up 18% since 1961

Oilseeds up 160%

Vegetables up 92%

Cereal grains up 19%www.statpub.com

Uptrend in Productivity(kilograms per human being)

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Why The Uptrend?

Improved varieties and technology

Subsidies in industrial world

Access to credit

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Africa Less Productive(kilograms per person in Africa)

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Americas More Productive(kilograms per person in Americas)

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Steady Gains in Asia(kilograms per person in Asia)

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Europe Losing Edge(kilograms per person in Europe)

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Moisture Issues Plague Oceania

(kilograms per person in Oceania)

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Human Beings Eat Too Much

Average Woman Needs 2000 Calories

Average Man Needs 2700 Calories

Average Human Eats 19% Too Much

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More Food = Fatter People(average daily calories consumed)

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Pulses Lag Population Growth

World Population Up 108%

Pulse Production up 38%

Per Capita Production down 34%

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Slower Rise in Pulse Output(000 metric tons)

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Per Capita Pulse Output Falling

(kilograms per human being)

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Pulling it Together

Field crop output rising faster than population since 1975-85

Markets used price to consume surplus production between

1985 and 2005

Cheap food spurred over-eatingwww.statpub.com

Moderate Price Downtrend

Average prices paid to U.S. farmers trended lower between

1975 and 2005

Corn and soybeans trended lower

Wheat was relatively flatwww.statpub.com

U.S. Farm Prices 1975-2009

(U.S. dollars per bushel)

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Problem Facing Pulses

Pulses compete for land based on potential gross returns to

farmers

Pulses compete for consumer demand based on relative cost

to other foods

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Simplified View of Effect of Price on Production and

Demand

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Higher Prices

Lower Prices

Canada Illustrates Effect

Vast majority of crop is exported

No incentive to growone crop over another

Prices reflect need to compete for land and for attention of

consumerswww.statpub.com

Canada Special Crop Price Index

(2004 weighted average price = 100)

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U.S. Beans Another Story

Not part of Farm Program

Legislated incentive to grow other crops

Early uptrend in prices to retain land

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U.S. Average Bean Price(U.S. dollars per 100 pounds)

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2005 Was Turning Point

U.S. biofuel mandates

Intense competition for acres

Reversal of long term downtrendin prices

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U.S. Biofuel Mandates(billion gallons)

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More Land Better Yields Needed

The world needs another 84 million acres under continuous crop by the year 2016 to meet biofuel

needs.

The world needs gross field crop output needs to rise almost 7%

by 2016.www.statpub.com

World Acreage Outlook(million hectares)

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World Production Outlook(kilograms per human being)

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Current preferred before biofuel around 848 kilograms

What Does it Mean

Field crop prices declined into 2005

Cheap food caused people to over eat

Biofuel policies eliminated surpluses

Food prices rose in response

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What Does it Mean

Cheap oil slows biofuel adoption and lowers prices to world’s farmers

World will always produce enough foodbut people want more than they need

Underlying firmness through 2014-16

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