OXFORD JUNCTION, Iowa — The growth of the world’s middle
class equals big opportunities for the U.S. agricultural industry.
In 2011, the U.S. had 23 percent of the world gross domestic
product, while India had 7 percent and China was at 17 percent. By 2030, the
forecast is for the U.S. to fall to 18 percent, while China increases to 28
percent and India goes to 11 percent.
“The rise of China and India indicates the golden era of
U.S. agriculture will continue because of demand and less arable land in these
countries,” said Jim Wiesemeyer, farm and trade policy senior vice president for
Informa Economics Inc. “This means a growing market for exports of protein
Today, 500 million Asians have middle-class living
standards, said Wiesemeyer, who spoke during the Corn Strategies event hosted by
Wyffels Hybrids Inc. “By 2020, that explodes to 1.75 billion people.”
For centuries, less than 1 percent of world’s population had
income to spend beyond basic needs.
“By 1990, those earning more than $10 per day were 1 billion
out of the 5 billion world population,” the expert reported. “By 2010, that
number increased to 2.4 billion, and by 2025, over 4 billion of the 7.9 billion
world population will be at that level. That’s why we need the technology and
hybrid seeds to meet this demand and stay competitive.”
Wiesemeyer highlighted several examples of the current
dysfunction that exists in the nation’s capitol.
“The last two presidents have been presidents of the
political party,” the farm and trade policy specialist noted. “Eventually, we
will find a Reagan again who was a president for the whole country.”
Earlier this month, he said, the White House announced the
delay of the healthcare reform by one year, which puts it after the 2014
“The intelligence snafu gives a sense that the U.S. is
losing its clout around the world,” he said. “History shows if countries think
you’re weak, they’ll test you.”
The specialist said that he has never seen a president use
executive orders as much as the current president.
“This is a very aggressive president when it comes to
regulatory policy,” he said. “These orders will be thrown into the courts, and I
think he will lose a couple.”
For foreign policy issues, Israel and Iran are wildcards,
“You can have the biggest bull market in corn and soybeans,”
he said, “and something significant happens in one of these countries and we
could have multiple limit-down days.”
According to the expert, tax reform is more important than a
new farm bill.
“The last time we had tax reform was in 1986 with President
Reagan,” he said. “But there won’t be tax reform while President Obama is in
Immigration reform also is very important to the U.S. ag
industry. Although the Senate has passed an immigration reform bill, Wiesemeyer
said it is a different situation for the House of Representatives.
“The Latino vote is increasing 2 percentage points a year,”
“In the House, only 38 districts of the 234 or 16 percent of
the representatives are from districts with 20 percent or more Hispanic
population, so they don’t feel the thrust to pass a bill,” the specialist
“I think the House will do immigration reform piece meal,”
he predicted. “They will start with border control, then next year they will get
into Visas and increase seasonal workers, so it will take longer.”
In discussing the U.S. economy, Wiesemeyer does not expect
interest rates to increase anytime soon.
“We will be into 2015 with the current interest rate
policy,” he said.
The specialist identified several signs to watch for that
may indicate the Fed will change its policy.
“Signs included three consecutive months of robust job
gains, unemployment rate is headed down, steady to increasing utilization of
industrial capacity and an uptick in real disposal personal income because about
70 percent of the U.S. economy is consumer spending,” he said.
Mega-changes are underway in the energy sector, Wiesemeyer
“There will be more output, greater fuel efficiency and
alternative energy,” he said. “By 2016, gas prices could fall 20 to 30 percent,
oil will be at $65 to $75 a barrel, which is now a little over $100 per barrel,
and regular gas may be down to $3 a gallon.”
The U.S. is playing a pivotal role in the changing energy
“Domestic oil use is down 11 percent from the peak in 2005,
and the output is up 30 percent since 2008,” the expert reported. “The impact of
that is equal to 4 million barrels of new oil supplies a day.”
In addition, foreign demand for oil is easing in China, and
this country is starting to develop new environmental regulations, Wiesemeyer
“Europe and Japan have rising urbanization and weak
economies,” he said.
As demand is falling, world output is increasing, Wiesemeyer
“Africa and South America have tremendous offshore deposits,
and oil production is booming again in Iraq and Russia,” he said.
Therefore, he predicted that biofuels will become less
competitive than gas.
“And natural gas usage is going to surge because there are
abundant supplies,” he said. “Plastic makers will switch from oil to gas as the
In the area of trade policy, Wiesemeyer said, there is going
to be a new U.S. Department of Agriculture undersecretary for trade when a new
farm bill is passed.
“I think we need one because the last time ag trade was
reorganized was in 1978, when our exports totaled $29 billion,” he said. “Now
our exports are from $135 to $140 billion.”
In addition, in 1978, 60 percent of the exports were bulk,
and today U.S. exports are primarily value added.
“Most of our issues in the past were tariff issues, and now
they are non-tariff trade barriers,” Wiesemeyer noted.