Global trends suggest opportunities for growth and profitability in U.S. agriculture over the next 10 years, according to new long-term projections the USDA released this week. For beef specifically, the report projects high prices and improved forage supplies will provide incentives for herd expansion in the United States over the next few years.
The projections suggest strong growth in exports for U.S. meat and other agricultural products based on global economic growth, diversification of diets in developing countries and favorable exchange rates as the U.S. dollar remains weak relative to other currencies.
Other key points in the report include:
- Growth in global population is projected to average about 1.0 percent per year, down from an average annual rate of 1.2 percent in the last decade.
- Much of the world’s population growth is occurring in developing nations, which by 2022 will account for 82 percent of the total population, up from 80 percent in 2010.
- Populations in developing countries, in contrast to those in more-developed countries, tend to be both younger and undergoing more rapid urbanization, factors that generally lead to the expansion and diversification of food consumption.
- By 2022, the report projects refineries will pay over $120 per barrel of imported crude oil, compared with an average of $93.20 projected for 2013. Increases in crude oil prices raise production costs in the agricultural sector.
- The United States will continue to produce large volumes of corn-based ethanol, but the rate of growth in ethanol production will grow, using about 35 percent of total corn production.
- Global meat consumption will grow by about 1.8 percent annually, with Africa and the Middle East accounting for more than 40 percent of the increase in global meat imports. Poultry will account for more of the gains than pork or beef.
- Crop prices likely will decline in the short term as global production responds to the current high prices. In the longer term, however, demand will keep prices for major crops above the levels seen before the increase that began in 2007.
- Lower feed costs, improved forage supplies and stronger meat demand will spur growth in U.S. beef herds through 2015. Once that growth reflects in higher beef production around 2016, cattle prices could turn downward.
- U.S. farm income will reach a record high nominal level in 2013 due to high commodity prices and large crop insurance indemnities. Lower commodity prices in the coming years will bring farm incomes down from that record, but they will remain historically high through the projection period.
- U.S. retail food prices will rise faster than the overall rate of inflation in 2013, but the increases than should drop below the overall inflation rate through 2022. Improvements in the domestic economy and consumer demand will cause food expenditures for meals away from home to rise faster than expenditures for food at home and restaurant meals will account for a growing share of total food spending.
Read the full report from USDA.