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What has the Global Explosive Demand in Income Done to Food Demand?

Matt Roberts
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Home > Education & Events > December 2017 > What has the Global Explosive Demand in Income Done to Food Demand?

My name is Matt Roberts and I'm an associate professor in the Department of Agricultural Economics at Ohio State, a grain marketing state specialist there, also an independent consultant and speaker on agricultural economic topics.

When we look at the demand for row crops over the past 25 years and the explosive demand in income globally and what's that done to food demand, it's hard to put our minds around a lot of times. The numbers we're talking about, the units. What's a million bushels look like? What's a million metric tons, whether grain, meat? It's hard. The way I'd like to think about it is actually in acres. The reason is, particularly in talking about grains, what matters is acres. If you talk to a farmer, what they grow now, their acreage allocation that they use now compared to 20 years ago, 30 years ago, 40 years ago, it's changed. Prices have changed. Technology has changed. Market demand has changed. It changes, but what hasn't is land.

To put this in context, in 2015, China imported roughly three billion bushels of soybeans. Now, that requires about 65 million acres to produce based on average US and South American yields. If we go back to 2001, they imported only 15 million acres worth of soybeans. There was another 50 million acres of soybeans that needed to be planted to meet China's import needs.

When we look at ethanol, we've heard a lot about ethanol and the role that it's played in the price run up in 2005 to 2010. From 2001 to current, ethanol needed an additional 20 million acres of corn to be planted to meet the US ethanol demand. 20 million acres for ethanol, 50 million acres for soybeans. Now, the reason this is important, first of all, it allows us to compare the relative demand growth of these two crops. Both of them very strong, but soybean demand by China, much stronger. The more important thing, it allows us actually to put it in a unit that's kind of meaningful.

I'm from Ohio. In Ohio, we grow 8.5 million acres of row crops in an average year. 70 million more acres is over eight Ohio’s that we need planted to meet that additional demand. Illinois, 23 million acres, so three times the number of acres that Illinois grows needed to go into production to meet that demand. That's huge numbers. That's only the number one and number two sources of demand. There's all these other sources of demand. Chinese feed grain demand. Brazilian demand, Mexican, South Korea and India that add on there. The demand growth is huge, and that's why I like thinking about it in acres because it makes it easier to see exactly how big that growth is.

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