Farmers need more land to grow crops to meet mounting demand for food and renewable fuel at a time of slowing growth in yields, consultancy AgResource told the Grain-Com conference in Geneva.
A push for more renewable fuel is set to trigger a boom in soy oil use, reinforcing a worldwide picture of rising consumption of staple crops driven by China, according to Dan Basse, President of Consultancy AgResource Co. At the same time, combined global yields of major grain crops appear to have leveled out in the past five years. "We need more acres," Basse said.
However, U.S. planted acreage may have reached a ceiling, adding further cropland growth would need to occur primarily in South America, Africa and the Black Sea region.
Basse says for renewable diesel, U.S. production capacity is set to double in the coming year as over 1 billion gallons in capacity comes onstream.
With U.S. states barring companies from using imported feedstocks for such fuel, that could, in theory, create the need for an additional 40 million acres of soybean plantings in the United States, based on estimates from AgResource. "I don't think there is any way America can shift 40 million acres to soybeans from other crops, but you're going to see some sort of shift," says Basse.
In China, demand for livestock feed, partly due to a rebuilding of the country's pig herd after a disease epidemic, has supported record grain imports. AgResource estimates Chinese imports of feed grains reached nearly 54 million tons in 2020 - or about one in every four tons of feed grain traded worldwide - and will rise to a new record of almost 57 million tons in 2021.
EDITOR’S TAKE:
The AgResource assessment confirms agriculture should continue operating at a sustained high level for the foreseeable future. In addition, efforts are continuously underway to identify new varieties and genetic enhancements that will improve crop yields. Those improvements, when combined with modern technology that allows producers to maximize fertilizer and water efficiency, have led to significant yield improvements in the past decade alone. Even with all those efforts, AgResource is very likely on target by stating that mounting demand will push science and producers in the U.S., as well as globally, to do even better going forward. The bottom line is that sustained demand, when combined with solid commodity prices, equals continuing prosperity for farmers/ranchers in the U.S. The major headwind might be rising input costs, but I’ll bet on farmers/ranchers any day to find ways to manage those expenses and come out on top - continuing to be your best customer prospects well into the future. It’s time to “Look Beyond Your Lot”!
