April 3rd, 2019

As the USDA Looks Forward to 2028, Emerging Economies Drive Agricultural Consumption

Ten years ago, the United States Department of Agriculture (USDA) cast its gaze forward, projecting what the US and global agricultural markets would look like in the futuristic year 2019. 2019 has arrived, and it’s time to repeat the exercise. The USDA just released their latest report, which reveals emerging economies are expected to drive growth in global agricultural trade. The USDA expects global demand for agricultural products to continue rising over the next decade. This is largely linked to population growth, which is highest in emerging and developing economies.

As the USDA Looks Forward to 2028, Emerging Economies Drive Agricultural Consumption

To support these growing populations, the demand for increased food and feed in these regions is expected to be a major factor in the growth (and consumption) of agricultural production over the next ten years. The report, USDA Agricultural Projections to 2028, notes that developing countries account for over 80% of the anticipated increase “in global demand for meat, grains, and oilseeds and most of the growth in cotton consumption.” Because of this, “Income growth is projected to remain strong, especially in many emerging and developing economies, giving strong impetus for sustained growth in demand and trade for agricultural products.”

We have already seen the impact rising incomes in developing regions can have on global produce markets. IndexBox recently attributed the surge in demand for fresh fruits and vegetables, particularly pineapple, to a rise in urban living standards and healthy eating campaigns in Asia and Latin America. China’s market is becoming the world’s largest for natural and healthy eating—poised to reach billion by next year, according to Forbes’ Marianna Cerini. The increase in incomes correlates with a willingness to spend more on fresh produce (Chinese consumers scored 12 points higher than the global average when asked if they were willing to pay more for healthier products, leading the Boston Consulting Group to label them “the world’s most health conscious.”).

The USDA suggests we may expect to see a similar trend play out in other regions of the world markets:

“Although developing country growth rates are expected to decline on average relative to the historic highs of 2000-10, incomes are expected to continue to rise. With growing incomes, diets become more diversified and meat, dairy, and processed foods consumption increases. This shifts developing country import demand towards feed grains for increased livestock production and high-valued food products.”

Of course, this doesn’t mean traditionally strong markets will lack importance. Expected growth in developed countries is expected to be “robust,” particularly in the near future. The USDA suggests above-trend growth in the short term, which may taper down to about 1.5% at the decade’s conclusion. Slower long-term growth in developed countries is attributed to aging populations, which may temper the speed of labor force growth and productivity growth rates.

Time will tell if projections match realities, but growers and distributors would be wise to keep an eye on emerging economies as their increased incomes fuel a desire for diversified diets.

 

 

 


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