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South Dakota needs to increase corn production to meet growing global demands

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news Mitchell, 57301

Mitchell South Dakota 120 South Lawler 57301

BROOKINGS -- By 2022, the U.S. share of world corn exports is expected to grow to almost 46 percent, which would mean South Dakota's farmers need to increase production by 40 million bushels to meet projected demand increases said Kim Dillivan, a crops business management field specialist at South Dakota State University Extension.

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Globally demand for agricultural commodities continues to grow due to population and income growth.

"According to the USDA, population growth and rising incomes will likely result in an increase in world food demand during the next decade, particularly in developing economies. For many of these countries, increases in demand will outpace domestic production and will require an increase in imports," Dillivan said. "Specifically, larger populations, rising incomes, and an expanding middle class in developing countries will result in added consumption of protein-rich foods as consumers substitute higher quality foods for staples. Increased consumption of livestock products in developing countries will result in increased demand, not only of livestock and livestock products, but in the commodities used as feed."

Dillivan added that along with improving economies worldwide, world population growth also impacts increased demand.

"Population growth is projected to average about 1 percent per year over the next decade; lower than the average annual rate of 1.2 percent from the last decade. Much of this growth will be in developing countries. As a result, by 2022, 82 percent of the world will live in developing countries, up from 80 percent in 2010. In 2012, 37 percent of the world's population lived in China and India," he said.

In developing countries, average annual economic growth is projected at 5.6 percent from 2012 to 2022, including China at 7.8 and India at 7.5. Dillivan said both of these countries are projected to realize a doubling of real per capita income during the next decade. In developing countries, larger populations and higher incomes will result in increased consumption of beef, pork, dairy and poultry as low- and middle-income consumers increasingly find protein-rich food items more affordable.

"Future increases in food imports will come mainly from developing economies," he said. "These countries are expected to be responsible for 92 percent of the increase in world meat, grain and oilseed imports."

Dillivan added that Africa and the Middle East will be responsible for about 50 percent of the world's increase in poultry and beef imports, 20 percent of grain, and 25 percent of soybean oil.

As Mexico continues to develop, he said, so should demand for poultry and red meat.

"Increased consumption of poultry and red meat should continue to fuel an expansion of Mexico's livestock industry and result in import growth of livestock products," Dillivan said. "Mexico is projected to increase imports of beef, pork, and poultry by 67, 32, and 50 percent respectively by 2022. During the next decade, Mexico will account for approximately 25 percent of the world's growth of pork and poultry imports."

World coarse grain trade is expected to increase 27 percent during the decade, with most of this increase accounted for by corn which he said is projected to be 80 percent of coarse grain trade in 2022.

"Feed-deficit counties in North Africa, the Middle East, and Asia with expanding livestock industries will be largely responsible. China's imports are projected to account for about 40 percent of the growth of world corn trade. The U.S. will continue to realize an increase in tons of corn exported and its share of the total world export market is projected to increase," Dillivan said.

40 million bushels

The U.S. plays a big role in corn exports, said Dillivan.

"In 2013/14 the U.S. is projected to export 43.2 million metric tons (MMT) of corn -- a little more than 40 percent of total world exports. By 2022/23 the U.S. share of world corn exports is expected to grow to almost 46 percent (63.5 MMT of corn). In 2012, South Dakota growers produced almost 5 percent of the nation's corn, and in 2011 they produced slightly over 5 percent," he said.

Assuming corn growers in other states continue to produce the same share of our nation's corn, and the U.S. exports 20.3 more MMT in 2022/23 than today, South Dakota will need to increase production by almost 40 million bushels -- 7.5 percent of 2012 production -- just to meet the increase in export demand. This increase does not account for any change in corn demand because of expanded livestock exports.

Since 2011, global trade of soybeans and soybean products has been larger than trade in wheat or coarse grains.

"Although global trade in all these commodities is projected to increase annually during the decade, combined trade of soybeans, soybean meal, and soybean oil will continue to surpass both wheat and coarse grains trade. Particularly strong demand for meal and oil from Asia is expected. For example, in the coming decade, China is expected to account for 90 percent of the increase in global soybean imports," he said.

By 2022/23, the U.S. is projected to increase soybean exports to 43.8 MMT, up from 41.2 MMT in 2013/14. However, Dillivan said the U.S. share of total world soybean exports will fall to just over 30 percent -- down from 39.2 percent today.

"South Dakota produces almost 4.7 percent of our nation's soybeans. Assuming soybean growers in other states continue to produce the same share of our nation's soybeans, and the U.S. exports 2.6 MMT more soybeans in 2022/23 than today, South Dakota will need to increase production by 4.5 million bushels -- a little more than 3 percent of 2012 production," Dillivan said.

Demand for South Dakota soybean production will likely be somewhat higher than this projection as the U.S. exports 10.0 MMT of soybean meal in 2022/23 and 1.2 MMT of soybean oil, up from 8.8 and 0.5 MMT respectively in 2013/14. Like corn, this increase is in addition to any demand increase resulting from increased livestock exports.

South Dakota has dramatically increased its production of corn and soybeans; particularly since 1980.

"An expansion of row-crop production has been one result of favorable corn and soybean prices resulting from expanded biofuel production and increases in export demand," he said. "In 2012 South Dakota ranked sixth nationally in corn production and ninth in soybean production. While some wheat acres have shifted into corn and soybean production, total South Dakota wheat production has remained fairly constant during the past three decades."

To learn more visit, iGrow.org.

-- Source: SDSU Extension

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