World Grain Marketing: Why the location of population & economic growth is crucial for long-term planning

Transcription

1 World Grain Marketing: Why the location of population & economic growth is crucial for long-term planning 20 th Annual Fields on Wheels Conference Chris Ferris Senior Grains Analyst, Canada December 2, 2015

2 About Informa Economics Informa Economics, Inc. (formerly known as Sparks Companies, Inc.) is a world leader in broad-based domestic and international agricultural and commodity/product market research, analysis, evaluation and consulting. We analyze most major value chains in the crops, livestock sectors, along with transportation. The company was founded in It was acquired by Informa plc ("Informa") in Informa Economics, Inc. serves hundreds of firms, institutions and trade organizations worldwide.

3 Summary 1) Demand Pull A. Population Growth B. Economic Growth 2) Supply Implications 3) Some Logistics Implications 4) Implications 3

4 DEMAND PULL 4

5 Demand Pull Factors: Population Urbanization GDP per person Income Distribution Consumption per person Many more 5

6 (1) World Population Growth 6

7 9 Billion People by !? , , , World Population (Billions) , This projection is too vague for those of you making large, longlived infrastructure investments; UNLESS, WORLD World Median Forecast 9 Billion Source: UNPD Slide 7

8 We Understand the Location of This Growth! So where will the population growth be?

9 (2) World Population Projection to 2035; by Region and by Key Countries 9

10 World Population Projection (Millions) to 2035; Asia Dominates, Africa Growing Quickly (1) 10,000 World Population Projection (Millions) 9,000 8,000 7,000 Population (Millions) 6,000 5,000 4,000 3,000 2,000 1, ASIA AFRICA LATIN AMERICA AND THE CARIBBEAN EUROPE NORTHERN AMERICA OCEANIA Source: UNPD 10

11 World Population Projection (Millions) to 2035; Asia Dominates, Africa Growing Quickly (2) 6,000 5,000 4,393 4,598 4,775 4,923 5,045 4,000 Population (Millions) 3,000 2,000 1,186 1,340 1,504 1,679 1,866 1, ASIA AFRICA LATIN AMERICA AND THE CARIBBEAN EUROPE NORTHERN AMERICA OCEANIA Source: UNPD 11

12 World Population Projection (Millions) to 2035; Top 10 countries: India, China still dominate Population (thousands) India China United States of America Indonesia Nigeria Pakistan Brazil Bangladesh Mexico Ethiopia Source: UNPD 12

13 (3) World Population Projection to

14 World Population Projection (Millions) to 2100, Africa is the Projected Growth Story (1) 12,000 World Population Projection (Millions) 10,000 8,000 Population (Millions) 6,000 4,000 2, ASIA AFRICA LATIN AMERICA AND THE CARIBBEAN EUROPE NORTHERN AMERICA OCEANIA Source: UNPD 14

15 World Population Projection (Millions) to 2100, Africa is the Projected Growth Story (2) 6,000 5,000 4,000 Population (Millions) 3,000 2,000 1, ASIA AFRICA LATIN AMERICA AND THE CARIBBEAN EUROPE NORTHERN AMERICA OCEANIA Source: UNPD 15

16 World Population Projection (Millions) to 2100; Top 10 Countries, highlighting fast growth African countries forecast to have strong population growth and population count to 2100: 2100 Rank: (3) Nigeria (5) D.R. of the Congo (8) Tanzania (10) Niger Population (thousands) India China Nigeria United States of America Democratic Republic of the Congo Pakistan Indonesia United Republic of Tanzania Ethiopia Niger Source: UNPD 16

17 World Population Projection (Millions) to 2100; Top 3 Countries: China, India & Nigeria 2,000,000 1,800,000 India 1,659,786 1,600,000 1,400,000 China Population (thousands) 1,200,000 1,000, ,000 Nigeria 1,004, , , , , India China Nigeria United States of America Democratic Republic of the Congo Pakistan Indonesia United Republic of Tanzania Ethiopia Niger Source: UNPD 17

18 (4) World Population: Forecast Changes to Fertility Rates 18

19 Fertility Rate: 2015 Africa has the highest fertility rates Source: UNPD Slide 19

20 Fertility Rate: forecast for 2035 Africa has the highest fertility rates, but expect it to slow Source: UNPD Slide 20

21 Fertility Rate: forecast for 2050 Africa has the highest fertility rates, but expect it to slow more Source: UNPD Slide 21

22 Fertility Rate: forecast for 2100 Africa has the highest fertility rates, but expect it to slow to around the replace ment rate Source: UNPD Slide 22

23 (5) Urbanization 23

24 Urbanization & Large Cities: 1970s Source: UNPD Slide 24

25 Urbanization & Large Cities: 1990 Source: UNPD Slide 25

26 Urbanization & Large Cities: 2014 Source: UNPD Slide 26

27 Urbanization & Large Cities: 2030 F Source: UNPD Slide 27

28 Share Urban: 2014 by Income Categories 90.0 Share Urban Source: UNPD Slide 28

29 Urbanization Rates vs 54% World Average Source: UNPD Slide 29

30 (6) Some Challenges for GDP/Person Growth 30

31 Key Challenges Need to grow GDP/person: This requires the building of infrastructure the improvement of education (although literacy has improved markedly in many countries Faster and easier business formation, with strong respect for private property (ILD) Improved freedoms of various types (Heritage Foundation): In some cases, the world has made fairly good progress. In others, there is substantial room for improvement Source: qqq 31

32 2015 Economic Freedom Index - Overall Note: The following indexes were created by the Heritage Foundation and represent their methods & judgements. They are being used as illustrations only. Source: Heritage Foundation, in Partnership with the Wall Street Journal 32

33 2015 Economic Freedom Index - Business Freedom Source: Heritage Foundation, in Partnership with the Wall Street Journal 33

34 2015 Economic Freedom Index - Trade Freedom Source: Heritage Foundation, in Partnership with the Wall Street Journal 34

35 2015 Economic Freedom Index - Fiscal Freedom Source: Heritage Foundation, in Partnership with the Wall Street Journal 35

36 2015 Economic Freedom Index - Government Spending Source: Heritage Foundation, in Partnership with the Wall Street Journal 36

37 2015 Economic Freedom Index - Monetary Freedom Source: Heritage Foundation, in Partnership with the Wall Street Journal 37

38 2015 Economic Freedom Index - Investment Freedom There is room for improve ment Source: Heritage Foundation, in Partnership with the Wall Street Journal 38

39 2015 Economic Freedom Index - Financial Freedom There is room for improve ment Source: Heritage Foundation, in Partnership with the Wall Street Journal 39

40 2015 Economic Freedom Index - Property Rights According to this Index, there is substantial room for improvement Source: Heritage Foundation, in Partnership with the Wall Street Journal 40

41 2015 Economic Freedom Index - Freedom From Corruption According to this Index, there is substantial room for improvement Source: Heritage Foundation, in Partnership with the Wall Street Journal 41

42 2015 Economic Freedom Index - Labor Freedom According to this Index, there is room for improvement Source: Heritage Foundation, in Partnership with the Wall Street Journal 42

43 Why is Economic Freedom Important? With rapid population growth, rapid economic growth is needed to prevent food insecurity, food riots and things like the Arab Spring. Crises like this can degenerate into failed states, terrorism, civil war and/or mass starvation. Corruption, slow processes, unclear property rights all these things slow down economic growth. While not everyone would agree with how the Indexes above are defined, they illustrate several problems. A lack of economic freedom, freedom to rapidly form businesses, a lack of recognition of property rights, and unclear operating environments make it harder for entrepreneurs to build their small businesses up from small grey economy /1 business into bigger ones than generate jobs for others. Some of the businesses can then grow into medium and large businesses. 1/ Grey Economy - Hernando de Soto, of the Institute of Liberty & Democracy, Peru 43

44 (7) Example: Nigeria Wheat + Rice 44

45 Nigeria, Wheat Consumption: Actual & Forecast Wheat: Food Use Slide 45

46 The Most Recent Commodities Super-cycle: Oil, Grains, Oilseeds 46

47 Monthly World Crude Surplus/Deficit vs OPEC Price 47

48 Growth in Canadian Crude Oil Production Canada s monthly Crude Oil Total Net Withdrawals (roughly equivalent to production) rose sharply from 2010 onwards. With strong oil prices, & the application of frakking, we saw rising supplies. 48

49 Growth in Canadian Crude Oil Exports Much of the growth was exported to the USA, with a portion of it being delivered by rail, given the lack of pipeline capacity to carry the new supplies. 49

50 Fuel Oils and Crude Petroleum by Rail On a Crop Year basis, you can see crude by rail dipped slightly in , after surging 300% from Expanded Oil-by-Rail Expect to flat to lower. Source: Statistics Canada 50

51 Production & Use 1,050 1, World Corn Production, Use and Ending Stocks Production Use Ending Stocks Ending Stocks Ex. China Million Tonnes 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/ Ending Stocks

52 US Ethanol Production and RFS Ethanol Production Implied Domestic Disappearance Renewable Fuel Standard Billion Gallons

53 5,000 4,500 4,000 3,500 US Corn Ending Stocks and Prices Ending Stocks Farm Price ,000 2,500 2,000 1,500 1, /76 77/78 79/80 81/82 83/84 85/86 87/88 89/90 91/92 93/94 95/96 97/98 99/00 01/02 03/04 05/06 07/08 09/10 11/12 13/14 15/16 Million Bushels Dollars/Bushel

54 World Soybean Supply and Demand (Million Tonnes) World Production and Use World Production World Use US Ending Stocks /81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 US Ending Stocks 54

55 US Soybean Ending Stocks and Prices Ending Stocks Farm Price /81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Million Bushels Dollars/Bushel

56 /91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Million Tonnes Sep/Aug Soybean Exports by Major Exporters Ukraine Canada Paraguay Argentina Brazil US

57 MIllion Tonnes FSU W. Hemis Europe Africa China India Other Asia 0 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 Vegetable Oil Import Demand

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59 North American Grain Logistics 59

60 Agricultural Supply Chain 60

61 Comparing the Modes: One 15-Barge Tow Equals 216 Rail Cars or 1,050 Trucks One 15-Barge Tow 1,050 Large Semi Tractor-Trailers 216 Rail Cars + 6 Locomotives 61

62 Comparing the Modes: Ton-miles Traveled per Gallon of Fuel Super-B trucks improve the relative economics somewhat more that this. 62

63 Multi-Client Study North American Commodity Constraints North America s Commodity Constraints The Modal Requirements Transporting North America s Commodities in a Highly Utilized Modal Environment A Three Segment Multi-Client Study Effort: Grains, Oilseeds & Products Fertilizer (N, P & K) Coal Key Issues to be Addressed in the Study Through a combination of higher commodity flow patterns, insufficient equipment, inadequate infrastructure investment, weather and congestion, the North American transport logistics enterprise has been strained. Yet, the outlook for commodities is very strong in context of an expanding global population and higher consumption levels. However, those higher demand volumes will further strain an already congested transport system. An understanding of the scope, scale and requirements of moving expected higher volumes of North American commodities and products is needed. A premier team has launched this important study. Be sure to sign up today by visiting Presented by a Premier Industry Intelligence Team : Prepared and Organized by: informa economics, inc. Enroll Today 63

64 Freight Movements Running Strong Freight Movements at all Time Highs Freight a Leading Indicator on the Economy Multi-Modal Economy 64

65 Commodity Composition Skewed to Agriculture and Energy Coal Consumption Dominates Flow Patterns Grain Prominent in Canada Fertilizer Relatively Small but Important in Reach North American Commodity Consumption Share by Country and Total Grains and Oilseeds Fertilizer Coal Total 33% U.S. 32% Total 65% Canada 53% U.S. 66% Canada 43% Canada 4% U.S. 2% Total 2% 65

66 Abundant Supplies Abundant Supplies of Commodities to be Moved Crop Production as an Example Challenges on Horizon Demand still Strength Crop Production (million metric tons) Canada United States U.S. and Canada Crop Production Crop Year 66

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68 Questions and Answers, and Discussion 68

69 World Grain Marketing: Long term planning implications of the location of population & economic growth 20 th Annual Fields on Wheels Conference Chris Ferris Senior Grains Analyst, Canada December 2, 2015