FEED Business Worldwide - May, 2012
The rebirth of North American agribusiness: New consumption habits and a broadening export profile feed the world
by Eric J. BROOKS
In a sense, North America's two major countries have come full circle: Canada and the United States started life as exporters of grain and red meat to Europe. Later, grain exports were relegated to a minor economic role. Despite bountiful supplies of land and water, North America actually became a red meat importer of note â€“and stayed that way for the better part of half a century.
From grain to feed grains & oilseeds
But in the 21st century's transformed economic landscape, we see North America returning to its economic roots. And this can be clearly seen in real estate price trends: While the subprime economic crisis devastated urban real estate values, America's farmland continued to appreciate in price.
With Europe and Asia running out of arable land, the Old World has come to depend on New World feed and livestock. Much like in the late 19th century, wheat, corn, barley and oats are becoming major, export-oriented cash crops - except now, instead of Europe, they are mostly going to Asia, and increasingly, the Middle East and North Africa.
However, unlike the early 20th century, when most of that grain was used to feed European people, US and Canadian feed grain is now used to grow a rising proportion of Asia's broilers, layers, hogs and commercially farmed seafood. Only South America supplies feed grain and oilseeds in volumes that rival North America's contribution to world meat production. But so long as United States supplies most of the world's corn imports, North America's contribution will matter more.
Indeed, with South America failing to significantly raise the volume of its corn exports and American ethanol production topping out, a surprising trend might soon take place: Future increases in US corn output will not be eaten up by biofuel ouptut (see next article). This means that by 2020, America could again be supplying over 60% of world corn exports, not the 40% many analysts have projected.
Moreover, during North American feed and livestock's early 20th century heyday, there was no such thing as soy exports - and canola would not be invented for another 70 years. Now, oilseeds and the protein meals they make are vital to international agribusiness, and North America supplies approximately 42% of this year's soy exports and 69% of its rapeseed exports respectively.
Moreover, despite inventing the cowboy myth, it is only in the last 20 years that America went from red meat importer to the world's leading exporter of both beef and pork. And it is closely trailed by Canada, which is the world's second largest pork exporter and fifth largest beef exporter.
All these trends have made North American agribusiness far more balanced than before. Now, both countries are now exporting as much in the way of oilseeds as they are feed grains, which also was not true until quite recently. And they are net exporters of all major red and white meat lines, not just one.
Indeed, North America could not help but become more export oriented: Canadian and American per capita beef, chicken and pork consumption has topped around 75kg and 90kg respectively. Productivity rises in meat and livestock production are outstripping North America's nominal population growth, forcing it to become increasingly export-oriented.
This is particularly true of red meat, which has fallen out of fashion in North America but is increasingly popular in developing Asian countries. Indeed, this ongoing change in North American meat preferences is a story in itself. But while the world has come to depend on North America, Canadian and American agribusiness has experienced serious transformations of its own.
These changes encompass everything from North America's meat eating habits to its feed crop export profile. All this requires a re-examination of what feed crops American and Canadian farms are growing, what meats their consumers are demanding, and what it all means for the rest of the world. We seek to examine the issues which answer these questions in the pages to come.
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