![Page 1: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/1.jpg)
Daniel A. Sumner
University of California Agricultural Issues Center and UC Davis, Agricultural and Resource Economics
Global Demand and California
Agriculture
University of California
Agriculture and Natural Resources
Davis, October 11, 2011
![Page 2: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/2.jpg)
Natural logs of deflated prices for rice and corn
0.6
1.1
1.6
2.1
2.6
3.1
3.6
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Rice
Corn
![Page 3: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/3.jpg)
Global markets for farm commodities have exhibited strong long-term trends and have several drivers
• Demand for farm commodities has been growing strongly for centuries because of populations and per capita income growth.
– Income growth has meant more food from animals and more demand for animal feed.
– Also more demand for fruits, tree nuts and vegetables
• Uses that substitute for nonfarm commodities (energy) expand demand and may place a (variable) floor under farm prices as that demand expands more than food demand.
• Strong future demand growth is a “good news” story. It means that incomes of the world’s poor will continue to expand at rapid rates!
![Page 4: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/4.jpg)
Global markets for farm commodities have exhibited strong long-term trends and have several drivers
• Supply growth derives mainly from:
– New land for crop and livestock production,
– Additions to availability of irrigation water
(These are limited, but opportunities exist in some regions)
– More availability of inputs such as improved seed, fertilizer, pesticides and equipment
– Improvements in management on farms, as weaker managers leave and better farmers manage larger farms
– Improved handling and reduced losses off the farm
– New and newly adapted and adopted technology and practices
• All of these continue to contribute, but, as usual, concerns arise about how much more can be expected
![Page 5: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/5.jpg)
50
100
150
200
250
300
Jan
Apr Ju
l
Oct Jan
Apr Ju
l
Oct Jan
Apr Ju
l
Oct Jan
Apr Ju
l
Oct Jan
Apr Ju
l
Oct Jan
Apr Ju
l
Jan. 1972- Aug. 1977
Jan. 2006 - Aug. 2011
Index of Real Monthly Price of Rice (Jul. 1972 and Jul. 2006=100)
![Page 6: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/6.jpg)
Real Gross Domestic Product (GDP), with projections
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$10019
80
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
$ tr
illio
ns
World
Developed economies less USA
United States
Developing economies
![Page 7: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/7.jpg)
World map weighted by GDP in 1960
![Page 8: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/8.jpg)
World map weighted by estimated GDP in 2015
![Page 9: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/9.jpg)
Hay and forage crops
19%
Fruits 16%
Tree nuts 11%
Vegetables and melons
12%
Nursery/ greenhouse
0.004%
Grains and cotton
38%
California 2009 cash receipts and acreage, by commodity grouping
By cash receipts By crop acreage
Dairy 13%
Other livestock
10%
Fruits 25%
Tree nuts 11%
Vegetables and melons
22%
Nursery/ greenhouse
10%
Grains and cotton
9%
![Page 10: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/10.jpg)
California, U.S. and world production shares
by commodity
Commodity California share
of U.S. value
Share of U.S. in world
production
Share of California in
world production
Dairy products 19.4 15.3 3.0
Almonds 100.0 83.1 83.1
Proc. Tomatoes 72.3 NA NA
Walnuts 100.0 32.1 32.1
Grapes, all 88.0 5.8 5.1
Wine 89.0 8.8 7.8
![Page 11: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/11.jpg)
Index of Real Prices and Acreage of California Almonds,
Winegrapes and Processed Tomatoes
30
50
70
90
110
130
150
170
190
210
230
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Almond price
Almond acreage
Winegrape price
Winegrape acreage
Processed tomato price
Processed tomato acreage
![Page 12: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/12.jpg)
Real prices for rice, corn and all milk with USDA
projections through 2020
10
11
12
13
14
15
16
17
18
75
125
175
225
275
32519
95
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
$ per cwt for all m
ilk$
per m
etri
c to
n fo
r cor
n an
d ri
ce
Rice
Corn
Milk
![Page 13: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/13.jpg)
Real Price of California Alfalfa:
Data, Fitted Values and Projections
90
110
130
150
170
190
210
23019
70
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
$ pe
r ton
PA= a+bPC+dPM+et+ft2 , R2=0.81
PA= a+bPC+dPM+et, R2= 0.80
Projection with linear trend
data points
Projection with quadratic trend
![Page 14: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/14.jpg)
Wine Consumption History and Projections:
U.S. Market is now the World’s Largest
14
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
1000
hec
tolit
ers
FranceItalyGermanyUKSpainArgentinaUSA
Projected
![Page 15: University of California Agriculture and Natural Resources ... · 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014](https://reader033.vdocument.in/reader033/viewer/2022060421/5f1833398b1882439e217ecd/html5/thumbnails/15.jpg)
Thank you. www.aic.ucdavis.edu
Remember innovation is key.
Bring wine transportation into the digital age with
“USB wine.” Search, find the wine website that suits
you then click and pour.