Making history: Global trade allows historic highs
Laramie – Matt Tripodi of Euro Monitor International looked at the value of agriculture exports, particularly looking at world-to-world exports, and the emergence of a global supermarket at the AgriFuture conference held in Laramie Oct. 16-18.
“What we are seeing right now is a global supermarket,” Tripodi explained. “The volume curve is going up, and it is getting bigger is a fast way.”
“World-to-world merchandise exports aren’t just food – it is everything you can pick up and touch,” explained Tripodi. “If you look at 1980, world-to-world trade was under $2 trillion. By 1990, it was moving it’s way to $4 trillion.”
Moving into the 2000s, Tripodi added that exports increased even further, jumping nearly $16 trillion between 2003 and 2008.
“In 2009, the worse economic collapse we have seen since the Great Depression happened,” he continued, “but in one year, by 2010, exports were nearly back up to 2008 levels.”
By 2011, world-to-world exports topped $18 trillion, with further increases expected moving forward.
“This year, global trade will only grow by 2.5 percent,” Tripodi said, “and we are hearing lots of talk about doom and gloom, but think about 2.5 percent of 18 trillion – these numbers are incredible.”
“From 1990 to 2011, ag products exports quadrupled,” said Tripodi, quoting World Trade Organization numbers. “The food component of this is about $880 billion dollars. This is record-setting stuff. Growth in exports is at an incredible level.”
Records are continually set each year in ag exports, and Tripodi noted that preferential trade agreements facilitated the growth of the export market.
“In 1990, we had about 60 preferential trade agreements in the world,” he said. “By 2012, that number had jumped to about 280. All of a sudden, trade started happening”
Driving these trade agreements, he said, is population growth. As developing countries are seeing the need for increased food production, new doors are being opened in global trade.
“We are freeing up trade with preferential trade agreements,” he explained.
The U.S., he added, is one of the largest exporters in the world, with one out of every three acres of farmed land in the country being dedicated to trade.
“In the next 15 years, we will see a 4.7 percent growth in trade,” he continued, “and prices are exceeding volume growth.”
In just over eight hours, Tripodi said the population will grow a net of about 78,000 people.
“Most of the growth is in Asia Pacific, the Middle East, Africa and Latin America,” he said. “Between now and 2020, 630 million people will be born in that part of the world, with only 50 million people being born in the rest of the world.”
He continued to explain that growth in those developing areas of the world is very significant because populations are also gaining wealth.
“Most of the people in developing markets could eat a lot more,” he said. “In developed markets, we are witnessing flat consumption rates – they aren’t consuming that much more on a volume basis.”
Developing markets are seeing increasing consumption rates, which Tripodi noted has huge implications for agriculture.
“They have a hunger to eat,” he said. “The increase in per capita disposable income is also expected in Asia Pacific by 2020.”
Looking at consumption, Tripodi said that packaged food consumption is increasing on a per capita basis, which results as disposable income continues to grow.
“Asia Pacific is the fastest growing market in the world in actual value terms,” he noted. “From 2007 to 2011, Asia Pacific grew 20.5 percent in packaged food consumption.”
The population of Asia-Pacific hits about 4.4 billion, explained Tripodi, adding that those people will see a predicted increase in disposable income of about $1,339 per capita. Roughly and conservatively estimated, he marked $4 trillion in extra disposable income, with 20 to 30 percent of that likely to be spent on food.
“That represents an additional $1.2 trillion spent on food in Asia-Pacific alone, and that’s a conservative number,” he said.
“The reality of it is that this is the biggest business opportunity in the history of the world,” Tripodi emphasized. “We are a global supermarket with billions of people and hundreds of millions of people that are being born and need food. They need to go some place for food.”
The same region of the world will see an increase in fresh food consumption. Fresh food encompasses everything from fruits and vegetables to fish, meat and eggs.
“In 2011, Asia Pacific consumed 66 percent of all the fresh food in the world,” he cited, “and 80 percent of all growth and consumption of fresh food is going to come from that market.”
Exports looking forward
“The new reality is, it is a rapidly shifting industry that is embracing a global marketplace,” he added, mentioning that large corporations are staying on the forefront of global trade and seizing the opportunities to expand.
“McDonalds sees 66 percent of income from foreign markets,” he mentioned. “The revenues are in foreign markets.”
He encouraged farmers and ranchers to continue to take advantage of opportunities in exporting, including embracing competition.
“Competition comes with their products,” he said. “You should explore exporting.”
With programs in the state of Wyoming and throughout the country for exporting education and continued knowledge building, Tripoli added, “It is not easy to export, but there are opportunities out there.”
“The next three to five years look very compelling,” Tripoli continued. “It is good for producers and ranchers, and it is a good thing for agriculture.”
Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at email@example.com.