university of california agriculture and natural resources ... · 1970 1972 1974 1976 1978 1980...
TRANSCRIPT
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
Natural logs of deflated prices for rice and corn
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Rice
Corn
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!
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
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l
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Jan. 1972- Aug. 1977
Jan. 2006 - Aug. 2011
Index of Real Monthly Price of Rice (Jul. 1972 and Jul. 2006=100)
Real Gross Domestic Product (GDP), with projections
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$10
$20
$30
$40
$50
$60
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$90
$10019
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$ tr
illio
ns
World
Developed economies less USA
United States
Developing economies
World map weighted by GDP in 1960
World map weighted by estimated GDP in 2015
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%
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
Index of Real Prices and Acreage of California Almonds,
Winegrapes and Processed Tomatoes
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2010
Almond price
Almond acreage
Winegrape price
Winegrape acreage
Processed tomato price
Processed tomato acreage
Real prices for rice, corn and all milk with USDA
projections through 2020
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125
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32519
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1996
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$ per cwt for all m
ilk$
per m
etri
c to
n fo
r cor
n an
d ri
ce
Rice
Corn
Milk
Real Price of California Alfalfa:
Data, Fitted Values and Projections
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23019
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$ 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
Wine Consumption History and Projections:
U.S. Market is now the World’s Largest
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0
10,000
20,000
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hec
tolit
ers
FranceItalyGermanyUKSpainArgentinaUSA
Projected
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