Emotion will be a factor in driving global economy
By Jennifer Carrico
Many emotions and behaviors have a part in the success of global agricultural economics, according to David Kohl, professor emeritus of agricultural economics at Virginia Tech.
“We must be sure to get more efficient before getting bigger. That, along with anxiety, greed, complacency, optimism, fear and stubbornness, are very important things to look at in our global ag economy,” he said.
While the grain industry is slowing down coming off a high, the livestock industry is just getting rebuilt and just getting started moving up, according to Kohl.
“It’s important to be careful how greedy we become. The grain industry has been growing and we have to be careful how much more we want,” he said. “There will be more opportunity in the next 10 years to succeed than there has been in the last 30 years, but there will also be more chance to fail as well.”
Grain farmers have done a good job of providing the demand for food, fiber and fuel along with the world growth. By 2050, nearly 70 percent of the population will be urban and will continue to demand more food, but commodity prices will slow down with a moderating economy around the world.
Kohl said he believes the U.S. economy is coming back slowly as the Federal Reserve has let it happen to keep interest rates low and exports up.
“In agricultural the inflation rate has increased 5 to 10 percent over the past five years. Now we are more about margin management and we must keep an eye on unemployment,” he said.
Kohl described the importance of watching the world growth in emerging nations as part of the supersized super cycle. Nations in South America and Asia have continually grown in agricultural production.
The U.S. agricultural production will be affected by how the production is in the southern hemisphere and how Mother Nature affects production both there and in the U.S.
China continues to be the No. 1 customer for both European and U.S. products. With China’s new leadership and population shift to urban, the new leader’s biggest concern is feeding his people and therefore is continuing to import the products they need.
Kohl said the U.S. agricultural producers need to continue to raise their products in the most effective way possible and not rely on China to hold the prices up.
“China will become better negotiators as they see that the world is depending on them to purchase their products,” he said.
He said by 2050, farmers would need to produce 70 percent more food but use only 70 percent of the resources. However, they must understand more about their history and world history to continue to be successful.
“The world will need more money to get the food and fiber since 40 percent of the world’s population lives off of less than $2 per day. This will continue to be our challenge,” he said.
Jennifer Carrico can be reached by phone at 515-833-2120 or by email at email@example.com.