Why Iowa farmers
need export markets
Microsoft photo
Original 9/12/08 Joel Severinghaus
Modified 1/10/11 Chad Hart
Why do Iowa farmers
need export markets?
• That’s where the customers are
• That’s where the economic growth is
• That’s where the consumption growth is
• We produce surpluses
• We only eat high on the hog
• Exports are crucial to Iowa farm income
• That’s where the customers are
Wal-Mart photo
In China since 1996, over 200 stores
True or false?
1. Two-thirds of the people on
this planet are Asian.
True.
95% of the world’s population
lives outside the US
China
19%
Rest of the
World
59%
India
17%
U.S.
5%
Source: CIA World Factbook
True or false?
2. China, India, and Indonesia have
the three largest populations.
False.
The US is # 3.
Top 10 populations
Japan
Russia
Nigeria
Bangladesh
Pakistan
Brazil
Indonesia
United States
India
China
0
200
400
600
800
Million people
1000
1200
1400
Source: CIA World Factbook
True or false?
3. Over the next 40 years, the
highest population growth
rate will be in India.
False.
In Africa.
Population growth 2007 to 2050
Africa
+ 107%
Oceania
+ 44%
World
+ 38%
Latin America
+ 34%
Asia
+ 31%
North America
+ 31%
Europe
- 9%
Source: UN “World Population Prospects: The 2006 Revision, Highlights” (medium variant)
• That’s where the economic growth is
Hong Kong
True or false?
4. Nigeria’s economy is
growing faster than the
US economy.
True.
Economic growth rates
Russia
Mexico
Japan
United States
Canada
Brazil
Pakistan
Indonesia
Nigeria
India
China
-10
-5
0
% Growth
5
10
Source: CIA World Factbook
Sources of US petroleum imports, 2009
Rest of World
24%
Brazil
3%
Iraq
4%
Angola
4%
Algeria
Canada
21%
Mexico
10%
Venezuela
9%
4%
Russia
5% NigeriaSaudi Arabia
9%
7%
Source: U.S. Energy Information Administration
Size of economy
Nigeria
Pakistan
Indonesia
Canada
Mexico
Brazil
Russia
India
Japan
China
U.S.
EU
0
2
4
6
8
$ Trillion
10
12
14
16
Source: CIA World Factbook
Chinese economic growth: 1990
Beijing
Chinese economic growth: 2005
mcchronicles.blogspot.com photo
AP photo
Dongguan, Dec. 10, 2005: McDonald’s opens first drive-thru in China;
half of the 100 restaurants plan to open each year will have drive-thrus
Chinese economic growth: 2008
1000 more cars added to the streets of Beijing every day
Chinese economic growth: 2008
Open 24 hours
Delivery 24 hours
More than 700 McDonald’s in China
10 largest economies (GDP rank)
2020
2030
2040
2050
US/Canada
US/Canada
US/Canada
China
China
China
China
US/Canada
Japan
Japan
India
India
Germany
India
Japan
Japan
UK
Russia
Russia
Brazil
India
UK
Brazil
Russia
France
Germany
UK
UK
Russia
France
Germany
Germany
Italy
Brazil
France
France
Brazil
Italy
Italy
Italy
Source: TranSystems 2007, from Global Insight 2005
True or false?
5. There are more middle-class
consumers in India than in
the US.
True.
“Middle class” population growth in
developing countries 2004 to 2020
China
157.5
India
111.9
17.2
Russia
Mexico
11.2
Brazil
11.2
Thailand
India’s middle class
already out-numbers
total US population
9.3
Indonesia
8.6
Nigeria
8.4
Philippines
7.4
Turkey
7.3
millions of additional households with income greater than $20,000
Source: USDA Foreign Agricultural Service
11 countries over 100 million population
2.5%
Nigeria
population growth 2005-2010
2.0%
bubble size:
population 2007
Pakistan
Bangladesh
1.5%
India
Brazil
1.0%
US
Mexico
Indonesia
China
0.5%
0.0%
Japan
-0.5%
Russia
-1.0%
0%
2%
4%
6%
8%
10%
12%
14%
GDP growth 2007
Sources: CIA “World Factbook” 2008, UN Population Division 2006
• That’s where the consumption growth is
Hong Kong
Trend in US protein consumption
100
90
80
60
50
40
30
20
10
Beef
Pork
Eggs
7
5
20
0
20
0
3
1
20
0
20
0
9
7
19
9
5
Chicken
19
9
3
19
9
1
19
9
19
9
9
7
19
8
19
8
5
3
19
8
1
19
8
19
8
9
7
19
7
19
7
5
0
19
7
Pounds
70
Fish
Source: USDA Economic Research Service “Food Availability” data sets
True or false?
6. The highest pork consumption
growth is in Mexico.
False.
Pork consumption growth
160%
140%
120%
100%
80%
60%
40%
20%
Brazil
China
South Korea
Mexico
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0%
United States
Source: USDA Foreign Agriculture Service PSD Online 1/10/11
Chicken consumption growth
1400%
1200%
1000%
800%
600%
400%
200%
0%
Brazil
China
India
South Korea
Mexico
08
20
06
20
04
20
02
20
00
20
98
19
96
19
94
19
92
19
19
90
-200%
United States
Source: USDA Foreign Agriculture Service PSD Online 1/10/11
True or false?
7. Beef consumption in India
has doubled in the past
decade or so.
True.
Beef consumption growth
200%
150%
100%
50%
0%
Brazil
China
India
South Korea
Mexico
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
19
96
-50%
United States
Source: USDA Foreign Agriculture Service PSD Online 1/10/11
Religion in India
They eat beef in India?
The Hindus don’t, but
some of the Muslims do.
Other 1.9%
Hindu
80.5%
Sikh 1.9%
Christian 2.3%
Muslim
13.4%
About 150 million people -third largest Muslim population
after Indonesia and Pakistan
source: 2001 census, in CIA “World Factbook” 2007
True or false?
8. Milk consumption in India is
growing faster than in China.
False.
But it
depends on
the time
frame.
Fluid cow milk consumption growth
700%
600%
500%
400%
300%
200%
100%
0%
Brazil
China
India
South Korea
Mexico
08
20
06
20
04
20
02
20
00
20
98
19
96
19
94
19
92
19
19
90
-100%
United States
Source: USDA Foreign Agriculture Service PSD Online 1/10/11
As of 2008, 351 Pizza Hut restaurants,
53 Pizza Hut “Home Service” units
73 Subways
more than 300 Starbucks
True or false?
9. China consumes more
soybean meal than the
US.
True.
Soybean meal consumption
40
30
25
20
15
10
5
Brazil
China
India
South Korea
Mexico
08
20
06
20
04
20
02
20
00
20
98
19
96
19
94
19
92
19
90
0
19
Million metric tons
35
United States
Source: USDA Foreign Agriculture Service PSD Online 1/10/11
Corn consumption
300
200
150
100
50
Brazil
China
India
South Korea
Mexico
8
20
0
6
20
0
4
20
0
2
20
0
0
20
0
8
19
9
6
19
9
4
19
9
2
19
9
0
0
19
9
Million metric tons
250
United States
Source: USDA Foreign Agriculture Service PSD Online 1/10/11
• We produce surpluses
Heart of Iowa Co-op, Nevada
True or false?
10. We export about a fifth
of the US corn crop.
False.
But we
previously
did.
US corn use
70%
60%
50%
40%
30%
20%
10%
Feed
Ethanol
Food, Seed, & Other
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0%
Exports
Source: USDA WASDE reports
True or false?
11. We export about a tenth of
US dairy production.
False.
Now about 20%.
25%
Export share of US production, 2010
20%
15%
10%
5%
0%
Beef
Pork
Dairy
Chicken
Turkey
Source: USDA ERS “Livestock, Dairy & Poultry Outlook” 12/10
True or false?
12. Japan is our # 1
ag export market.
False.
Used to be,
before NAFTA.
Top ten US ag export markets, 2009
Turkey
Canada & Mexico buy
40% of US ag exports
Indonesia
Hong Kong
Taiwan
South Korea
European Union-27
Japan
Mexico
China
Canada
0
5
10
$ Billion
15
20
Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations
US agricultural trade with Canada
20
NAFTA
18
Two-way trade up 280%
since NAFTA
16
12
10
8
6
4
2
Exports
09
20
07
20
05
20
03
20
01
20
99
19
97
19
95
19
93
19
91
19
89
0
19
$ Billion
14
Imports
Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations
18
US agricultural trade with Mexico
NAFTA
16
Two-way trade up
325% since NAFTA
14
10
8
6
4
2
Exports
09
20
07
20
05
20
03
20
01
20
99
19
97
19
95
19
93
19
91
19
89
0
19
$ Billion
12
Imports
Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations
Exports are crucial to
Iowa farm income
Microsoft photo
True or false?
13. Iowa ranks # 3 in
state ag exports.
False.
# 2.
14
Top 10 ag exporting states, 2009
12
$ Billion
10
8
7% of $97 billion total US ag exports
6
4
2
0
CA
IA
IL
NE
TX
KS
MN
ND
IN
WA
Source: USDA Economic Research Service, “State Export Data”
True or false?
14. Exports equal about
15% of Iowa farm cash
receipts.
False.
More like 30%.
9
Iowa agricultural exports
8
7
$ Billion
6
5
4
3
2
1
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: USDA Economic Research Service, “State Export Data”
True or false?
15. Iowa exports more
than $2 billion
worth of corn and
soybeans.
True.
Iowa’s state export rankings, 2009
# 1 Feed grains
$2.0 billion
# 1 Soybeans
2.6 billion
# 1 Meat & livestock
1.5 billion
# 5 Animal fats
# 7 Feeds & fodders
36 million
179 million
# 9 Hides & skins
47 million
#10 Dairy
37 million
Source: USDA Economic Research Service, “State Export Data”
Iowa’s top 10 manufactured exports, 2007
1. Tractors
2. Aluminum alloy sheets
3. Front-end shovel loaders
4. Trenching machines
5. Herbicides
6. Refrigerators
7. Rolled steel plates
8. Aircraft radios
9. Truck gear boxes
10. Washers & dryers
$842 million
231
147
146
126
125
113
100
100
91
Source: www.worldtradestatistics.com/state
1 in 3 John Deere Waterloo Works
tractors is exported
131 tractors on 49 railcars, crossing Nebraska, bound for China, 5/08
Significance of Iowa’s
manufactured exports
• 98,400 Iowa manufacturing jobs depend
on exports
• those 98,400 jobs represent 7.4% of total
private-sector employment, and 16% (1/6)
of total manufacturing employment
• 2,248 Iowa companies export
• 81% of Iowa exporters are small &
medium-sized enterprises (less than 500
employees)
• Iowa companies export to 186 of the
world’s 195 countries
Source: USDOC ITA “Iowa: Exports, Jobs, and Foreign Investment” 7/08
Top 3 US soybean export markets
10
9
8
6
5
4
3
2
1
China
Mexico
9
20
0
8
20
0
7
20
0
6
20
0
5
20
0
4
20
0
3
20
0
2
20
0
1
20
0
0
20
0
9
19
9
8
19
9
7
19
9
6
19
9
5
0
19
9
$ Billion
7
Japan
Source: US Census Bureau, Foreign Trade Statistics
So why do Iowa farmers
need export markets?
• That’s where the customers are
• That’s where the economic growth is
• That’s where the consumption growth is
• We produce surpluses
• We only eat high on the hog
• Exports are crucial to Iowa farm income
Corn production & trade, 2007-08
15 exports
22 production
Argentina
Brazil
11
0.5
China
5
Egypt
EU-27
Japan
Korea
Mexico
Taiwan
US
53
145
imports
China is shifting from
corn exporter to corn
importer
11
47
16
9
10
23
The US is the world’s
largest corn producer
and exporter
4
62
332
millions of metric tons
Source: March estimates, USDA “Grain: World Markets and Trade” 3/08
Soy production & trade, 2007-08
12 exports
Argentina
Brazil
34
47
production
28
61
imports
China
14
15
EU-27
India
Japan
Mexico
9
4
4
Paraguay
Taiwan
US
China is the world’s
largest soy importer
5
7
2
The US is the world’s
largest soy producer
28
70
millions of metric tons
Source: March estimates, USDA “Oilseeds: World Markets and Trade” 3/08
Estimated soymeal feed surplus/deficit
for pigs and poultry
deficit
surplus
deficit
surplus
Source: UN FAO “Livestock’s Long Shadow: Environmental Issues and Options” 2006
Population vs. arable land
share of global
population
share of global
arable land
China
19%
5%
India
17%
10%
5%
13%
US