China’s agricultural output has begun to be outpaced by demand, according to the National Corn Growers Association and the U.S. Grains Council. Such a general statement suggests more than a one-year need for grain but a long-term trend. Could world population growth be outpacing food supply quicker than projected?

Last week, the Agriculture Department announced the export sale of 115,000 metric tons (4.5 million bushels) of U.S. corn to China, and the USGC is confident that an additional 250,000 to 300,000 metric tons or 9.8 to 11.8 million bushels may be headed to the country soon.

“As China’s demand continues to increase, along with its economic growth and urbanization, China is likely to rely more heavily on imports as a way to maintain critical supply and demand balances,” said Mike Callahan, USGC senior director for international operations.

U.S. farmers through their associations and councils have been guaranteeing Congress, and all the world, that they can feed the world while also raising all the biofuels crops that will be used for U.S. energy consumption. I’m starting to wonder if those guarantees are actually a little optimistic if countries like China are ready to solidify long-term agricultural imports with the U.S. at higher volumes than previously projected. Those Chinese are a shrewd bunch.

I’m no grain trader, but it would seem that expecting any major drop in grain prices from the up and down levels we have seen for the past 12 months would not be in the cards. Demand is going to exist and only increase in the next five, 10 and 25 years. Therefore, livestock feed prices are not going to drop, and all livestock producers have to be prepared for this scenario.

As has been pointed out continuously the last couple years, world food demand is being driven by two things – population growth and gains in per capita consumption.

If the U.S. Census Bureau numbers are right, which show how world population growth will be approximately 7 billion in the next five years, or an annual increase of about 74 million per year, will there be enough food, or how much of the world population will be able to afford purchasing food?

If there were no change in per capita consumption, the increased population will boost grain demand by at least 5.4 percent, according to calculations by Doane Advisory Services. “Gains in trend yields will more than offset the increase in population” based on per capita consumption remaining steady. Yet the economists have said, “This suggests that changes in per capita consumption will be at the heart of the supply and demand balance over the next few years.”

As corn imports to China are already increasing, the Doane economists are questioning how much per capita grain consumption will increase in the two huge countries with anticipated major population increases – China and India.

The conservative point of view is that “actual change in per capita grain consumption will be surprisingly small.” But I’m betting on a larger per capita grain consumption keeping food supply a major international issue in the short term and long term.

Source: Richard Keller, AgProfessional editor