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Global agriculture economy has good long-term outlook

By Jennifer Bremer

GLOBAL AG--Westchester Group CEO Murray Wise discussed the global ag economy during the Ag Issues Froum sponsored by Bayer during the Commodity Classic in Grapevine, Texas, recently. (Journal photo by Holly Martin.)

Agriculture continues to be a bright spot in the world economy, but Westchester Group CEO Murray Wise said the next 18 months will be the toughest for producers in the U.S.

Wise spoke to a group during the Ag Issues Forum sponsored by Bayer during the Commodity Classic in Grapevine, Texas, recently.

"U.S. agriculture continues to be a bright spot and, after we get past the next two years, I'm very optimistic about the next three to 10 years," he said.

Over the past 200 years, the number of people involved has declined greatly. In the 1800s, nearly 80 percent of the population was involved in agriculture; by the 1900s that had decreased to 35 percent and, in 2000, the percent was 1.5. Yet, these people are responsible for providing for the world.

Grain and livestock markets

"Ethanol is not a new concept either, but it has helped the grain producers," he said. "Henry Ford developed the first Model T Ford car to run on ethanol, thinking that each person could produce enough of their own ethanol to fuel their car."

The amount of grain needed to provide for all industries continues to grow. Wise said the current driver for the grain markets is what is needed for meat production in China.

"These growing markets mean year-ending grain stocks are not near as high as they used to be," he added.

With a push for more soybean acres, he is concerned that it will lead to an excess of soybeans and a shortage of corn. Wise advises farmers to be cautious when planning out their acres for this year.

Not only is grain being sent to China, but meat is also being exported to China. Currently, 4 percent of U.S. pork is exported to China. They have also had a dramatic increase in beef and veal consumption.

"China has 25 percent of the world's population and they eat 50 percent of the world's pork. Those people will give up a lot of things before they give up eating pork," said Wise. "Plus, they have about eight times the amount of pigs on feed as we do in the U.S."

Moving forward

Wise said as the world moves forward, several factors will be important in the agriculture industry. Water will be the main issue and has especially become a problem on the west coast.

"Farmers near the Sacramento River have had to deal with environmentalists wanting the fish to get all the water and farmers are lacking water for irrigation of their crops," he said. "It's a very serious issue."

California farmers need to have two sources of water to be able to survive and harvest crops. Without well water and delivered water, Wise said production is nearly impossible.

Coal is another important factor for agriculture. In China, 78 percent of electricity is generated from coal, yet they are closing small coal mines. Wise said this could become a problem because they will still need the coal supply.

Currency is another factor and challenge in exporting and importing agricultural goods.

"The challenges continue to be out there for those of us involved in agriculture. If we can survive the short-term challenges, the long term looks bright and agriculture will continue to provide for the world," he concluded.

Jennifer Bremer can be reached by phone at 515-833-2120 or by e-mail at jbremer@hpj.com

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