Minnesota has the Twin Cities (Minneapolis and St. Paul), Washington has the Tri-Cities (Pasco, Kennewick and Richland), and Iowa-Illinois have the Quad Cities (Moline and Rock Island, Ill., and Davenport and Bettendorf, Iowa). To many, this information is probably worth a hill of beans.
Be that as it may, from Sept. 15-18, the U.S. Soybean Export Council and the Midwest Shippers Association held a conference in Davenport — the 2013 U.S. Soy Global Trade Exchange Conference — that amounted to quite a hill of beans: More than 400 attendees from more than 45 countries showed up to talk about … beans.
Let me put this in some perspective: The average annual U.S. soybean crop between 2008 and 2012 was about 3 billion bushels, according to the U.S. Department of Agriculture. At 60 pounds per bushel, that’s 180 billion pounds, or 90 million tons of soybeans About half of U.S. soybean production, some 45 million tons, is exported. At about 22 tons per container, there are enough soybean exports to fill more than 2 million boxes (even at 30 tons it is 1.8 million). Most of those soybeans don’t move in containers, and they don’t all come from or go to the same place, but it’s also just one commodity, whose numbers are growing.
The United States was the world’s largest producer of soybeans until 2002 or so, when South America caught up. It was about even in 2004, but South America, mainly Brazil and Argentina, has roared past the U.S. since. Estimates for the 2013 crop year are approximately 160 million tons in South America and 90 million in the U.S., which may never regain the lead.
Global soybean production is about 280 million tons. China imported about 60 million tons of soybeans in each of the past two years and is expected to increase that to 70 million in the current crop year.
U.S. corn production, meanwhile, is forecast to be about 350 million tons this year. Although U.S. corn exports have declined in recent years, in part because of domestic ethanol production, the country is still expected to export some 30 million tons this year, down from more than 60 million in 2007-08. Brazil and Argentina are expected to export about 35 million tons of corn combined this season. China is expected to import about 7 million tons of corn in 2013.
All of this says nothing about other agricultural commodities or any of the other hundreds of commodities and commodity groups the U.S. exports. Sticking with agricultural exports for a moment, world population has grown about 34 percent, from 5.3 billion in 1990 to about 7.1 billion today. Some forecasters expect the population to grow to 8.3 billion people by 2025 and about 11 billion by 2050. All of these people will need to be fed, but much of the world’s arable land is already under cultivation and there’s a finite supply of water to go around.
The implications of these numbers, all of which were discussed by various presenters at the Davenport conference, are rather startling. Data indicate that global consumption of all food commodities is increasing dramatically, with some of the largest percentage increases coming from protein-based food categories. The theory seems to be that as societies develop and the living standards of populations increase, people tend to move from carbohydrate-rich foods — those based on corn, wheat, rice and the like — to protein-rich foods such as beans (including soy) and meat.
The need to feed animals from which that meat comes also adds significantly to the quantity of the various grains that must be planted, harvested and moved to markets.
The combined effects will continue to apply stress on the global logistics infrastructure and markets. Let’s examine one hypothetical and unlikely example: If half of China’s soy imports next year (about 35 million tons) came from South America (out of their 160 million tons) and would be shipped through today’s Panama Canal in bulk ships (capacity about 50,000 tons), it would require about 700 eastbound ship transits of the canal. Once the new locks are completed and a ship carrying about 120,000 tons can pass through, it still would take almost 300 eastbound transits. That seems like a lot of transits for a single commodity from a single region to a single destination.
No one knows what will happen in the years after 2013, but it seems like a pretty fair bet that the volume of agricultural commodities will increase, and probably dramatically, over the next 25 to 40 years. It’s not clear to me that the system through which all of this trade — agriculture plus everything else — flows will be able to handle it. At least as far as agriculture is concerned, this is going to become one very serious hill of beans.
Barry Horowitz is principal of CMS Consulting Services. Contact him at 503-208-2232 or at email@example.com.