run fast... run smart... run lean 1 agricultural trends and trade policies introduction global...
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AGRICULTURAL TRENDS AND TRADE POLICIES
Introduction
Global trends in agriculture
Trade policies and economic development
WTO Public Forum Geneva, September 26th, 2006
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INTRODUCTION – A global CompanyDeere & Company in brief:
Founded in 1837 in Illinois by John Deere, a blacksmith. Long history of integrity and commitment to its customers.
Main activities: Agricultural Equipment (world leader), Construction Equipment, Commercial and Consumer equipment, Engines, Financial services.
56 factories worldwide. Manufacturing operations on 4 continents.
Distribution network: 160+ countries.Net sales and Revenues: 21,931 USD millions in FY 2005 AG equipment: 10,567 USD millions (“We feed the world”) R&D: 677 USD millions Employees: 47,423 on 31 Oct 2005
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Deere facilities in the world
Mannheim, Germany
Richards Bay, South Africa
Nigel, South Africa
Pune, India
Jiamusi, China
Stadtlohn, GermanyGummersbach, Germany
Horst, NetherlandsEnschede, Netherlands
Bruchsal, Germany
Zweibruecken, Germany
Arc-les-Gray, France
Saran, France
Madrid, SpainSantiago, Chile
Catalao, Brazil
Horizontina, Brazil
Rosario, Argentina
Saltillo, MexicoMonterrey, Mexico
Torreon, Mexico
Valley City, NDFargo, ND
Minneapolis, MN
Dubuque, IAHoricon, WI
Waterloo, IA
Moline, IL
East Moline, IL
Welland, Ontario
Edmonton, Alberta
Davenport, IA
Des Moines, IA
Langley, British Columbia
Ottumwa, IA
Springfield, MO
Coffeyville, KS
Thibodaux, LA
Fuquay-Varina, NC
Greeneville, TN
Augusta, GA
Kernersville, NC
Joensuu, FinlandWoodstock, Ontario
Rock Valley, IAKlemme, IA
Tokoroa, New Zealand
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Tianjin, China
Poznan, Poland
Orenburg, Russia
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Growing World Population
Source: FAO
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
1970
1980
1990
2000
2010
2020
2030
Po
pu
lati
on
('0
00's
)
Developing Urban Developing Rural
Industrialized Countries
Transition Countries
Population
Urban population growth fuels the demand for food in the future.
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Increased meat and dairy consumption
Total Meat Consumption
Developed
Developing
0
50
100
150
200
250
300
350
1983 1993 2020Source: FAO
Income growth in developing nations is expected to shift diets from grains to meat and
dairy.
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Increased grain productionFeed Grain Consumption
0
1
2
3
4
5
6
7
8
Poultry Pork BeefSource: Doane
Kilograms of grain to produce 1 kilogram of meat
Increase in feed grain consumed more than offsets the reduction in direct consumption from
shifting diets.
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Crops used for renewable energy
0
10
20
30
40
50
60
70
80L
iter
s (B
illi
on
s)
Brazil Ethanol US Ethanol EU Ethanol Other Ethanol EU Biodiesel
Bio-Fuel
Rising fuel costs and governmental policies are driving increases in crops used for renewable
energy.
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Cropland Availability
Africa & Mid EastAfrica & Mid East
South America
South America
U.S. & CanadaU.S. &
CanadaRussia & CIS
Russia & CIS
EuropeEurope AustraliaAustralia MexicoMexicoChinaChinaIndiaIndia Rest of Asia
Rest of Asia
Land in use, 1997-99 (1.4B ha)
Available land with suitable moisture & soil chemistry (4.1B ha)
Source: FAO and IIASA
Brazil has the highest potential for near-term expansion. In Africa political instability and
high cost of replacing nutrients limit crop area expansion.
Asia faces significant land and water constraints.
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Exports
Trade - Key Commodities (metric tons)
20152004
Wheat, Corn, Soybeans, Beef, Pork, Poultry
EU25+
AR/BR
AU/NZ
US & Canada
Russia & CIS
90% of the world’s exports come from these five regions. The total amount of exports is
expected to increase by 35% by 2015.
Source: USDA
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Trade policies and AG economic development
World trade agenda in the AG sector
Feed the world:
• AG commodities should be accessible and price-affordable to consumers.
• Helping the poor to become wealthier.
• Integration of developing countries in the global economy.
Means for achieving that goal:
- More market orientation.- Less trade-distorting support measures.- More transparent public supports for taxpayers and consumers.
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Trade policies and AG economic development
- Lower costs of production in the developed and developing countries
Appropriate AG techniques, AG tools and equipment, private investments.
Access to the markets is one key issue to be tackled
- While we don’t oppose regional agreements we still need a multilateral agreement (Doha) for:
A) Locking the reforming of AG policies in the developed countries.
B) Reducing tarriffs in the advanced economies but also between developing countries.
Remark: Preferential access is certainly an issue for many of the poorest countries, but it’s not a sustainable system if it hampers their competitiveness.
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Tracks for reaching a multilateral agreement
We don’t have the solution but we have some suggestions:
- Better evaluation of a non-agreement.- New systemic approach.- Better sequencing between the EU and US.- The industry’s expectation is a balanced and ambitious DDA outcome, preferable to unilateral reforms
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Concerns for the future – WTO potential new roles
Non-tarriff barriers to be closely monitored:
•Pesticides •Seeds•GMOs (Panel against is a current example)•Health standards•VeterinaryOur proposal: call for more science-based approach in dispute resolution. Forsdtering International standards : plants (IPPC), animals (OIE), Processed Food (Codex Alimentarius). Need for cpaicity building in developing countries.
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Perspectives for the future
BIOFUELS & BIOMASS
•Demand and public policies could trigger the demand for AG commodities.
•More arable land (South America, Africa) will be put in use.
•New division of AG production.
•One question to be addressed: How to qualify public support for producing bioenergy? Green box? This kind of support should be allowed for
developing this sector but also disciplined.
•One related issue: indigenous plants. Example of myscantus.
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Conclusion
•AG development faces many challenges but there’s room for hope. Solutions will be found, through R&D, free trade, free flows of investments.
•Sanitary, phytosantiray regulations will be the next major barrier to expanded trade as economic barriers become reduced in relative importance.
•In the future WTO will require more scientists and technical experts (and not only lawyers and economists) for settling dispute cases.