Future trends in feed ingredients availability

Professor Borlaug proved Malthus wrong. From 1965 to 2012 world food production surpassed demographic growth, situation forecasted to continue in the future. 

Food availability does not mean fair distribution of the food in all areas of the world. While the Developed Countries generally have as their main problem with health consequences an excessive food intake, Developing Countries face still situations of inadequate food supply and diseases linked to hunger and malnutrition. 

The human diet evolves with income. Until a person reaches an income of US$ 7,00 capita/day, any enhancement on income is used to improve food intake and that means to replace basic vegetal origin products by animal products, mainly meats. When the income surpasses US$ 75,00 capita/day there is a tendency to reach a saturation level in meats intake, food represents less than 20% of household expenses and people start to eat concepts and be prone to Neo-Luddite ideas.

 

 As income grows, so does meats intake and Planet China illustrates well this change in diet 

 

The fact that the human diet is migrating towards more intake of animal products poses new challenges, since those products required four times more natural resources (arable land + water) than the vegetal products.  Africa & Asia that shall concentrate 89,1% of the world population growth up to the year 2050 have only 36% of world’s freshwater. 

 

Water resources are scarce and ill-distributed around the world and will be a determinant factor to determine which specie shall prevail in meat production, who shall be who in terms of meat production. This water scarcity shall also contribute to a freer trade, more than the will of politicians, thanks to the fact that the import of “virtual water” may compensate the unbalanced distribution of the most precious of the natural resources – water. 

Poultry is the most efficient land specie to produce meat.  According to projections made by ODConsulting poultry meat should surpass pork by 2020 as the prevailing meat. 

 The reasons for the poultry growth is not “price” as normally inferred

 Developing Countries that shall be the drivers of future demand, as indicated in the OECD-FAO projections, with Asia representing 57,98% of the world meat consumption increase. Poultry shall answer for almost half of that increase on worldwide basis.

 

 

This new reality shall of course require much more feed grains to cope with the change of human diet towards more meat intake. The mainstream grains for modern feed production are coarse grains, wheat, oilseeds even if myriads of other vegetal and even animal products can be used.  For quite some time we have been using them for feed, food and since the last decade also for fuels. Presently, some 1,0% of wheat, 10% of coarse grains and 5,5% of vegetable oils are being used for biofuels, percentages that should reach 1,5%, 10,5% and 5,4% respectively.

We may argue that it is unfair to use grains for fuels, but until alternative sources of renewable fuel are found countries shall use what they have to escape oil dependency either by strategic, economic or environmental motivations. Can we then produce enough grains for food, feed, fuel and other uses? The very simple answer is yes, provide we let technology and science prevail over re-editions of the Spanish Inquisition.

Coarse grains[1] are fundamental for feed, since > 40% of its production is used for feed. The main coarse grain, corn, has from > 60% its world production used as feed. 

Interesting to observe that even with USA use of corn for ethanol production, both feed and food uses of corn will absorb increasing percentage of the world production that should grow 22,4%  from the base period to 2022.

 

Eight countries concentrate 83,7% of world corn production,  twelve other answer for 96,4% of world corn imports that are served by five main exporting country with about 75% of international supply. A vital crop for the world is in the hands of a small family. 

 

We have listed China, country that from exporter has become now a net corn importer. Such position may have severe impact on the world market. The changes we forecast in their diet will represent increased production of meats and other animal products, a most needed enhancement in their productivity, a progressive import of meats up to 5% and an impressive growth of their corn imports to cope with their increased needs for feed. 

The last time Planet China became a net importer of a grain, soybeans, the prices have known a new level. The increased imports of corn from China will represent that the levels of world inventories will tend to go down.

Brazilian farmers adopt the system of direct planting or no-tillage, where corn is used as a rotation culture for soybeans, the one where the money is. Farmers make three crops per year and used corn seeds that will give them more leaves coverage than grains. Whenever prices of corn go very much up as they did in the 2011/12 and 2012/13 crops they simply change the seeds for those that shall assure more grains than leaves and are capable of boosting up production on a very short period. China’s voracity along with that of other Asian countries for corn may be cope with by this new level of corn prices that shall stimulate farmers.  If climate changes don’t make of Norway a tropical fruit producer and Brazil self-sufficient in codfish, we can expect a steady supply of corn and other coarse grains, but at new levels of price. 

About 20% of wheat world production is used for feed, ≥ 1% for biofuel and ≥ 10% for other use. Wheat main destination is food with ± 68% of the total and projections do indicate that such shall be kept in the medium term future scenario. 

Seven countries answer for 73,8% of world wheat production, which in 2012 was produced in a total of 97 countries.

Egypt, Indonesia, Brazil, EU-27, Japan, Iraq and Bangladesh are the main world wheat importers and fundamentally use wheat for food.

Exports are led by USA, Russia, EU-27, Australia and Canada, and these countries, with the exception of USA (15%) use from 35% to 50% of their wheat consumption for feed..

Planet China has a comfortable positive balance in its wheat trade. 

 

To finish this brief overview of feed macro ingredients, oilseeds are a must and we shall concentrate in the major one for feed purposes – soybeans.

Although 93 countries register production of soybeans, three of those countries answer for >80% of world production. 

Soybeans trade is also highly concentrated 

About 83% of world production is crushed, resulting in 188,66 MM ton of soybean meal and 44,66 MM ton of soybean oil. 

 

Again for this vital crop, soybeans, and other oilseeds the prospects are of increasing availability to an increasing demand centered mainly in Asia, parts of Latin America and Africa, the “have not”. The future of the food industry does not reside in those that are eating or overeating, but in those that are not eating or not eating enough. In the coming ten years the process of their dietary changes towards more meats shall continue at inexorable small steps of over 5 billion people. 

Even the new world power, Planet China, today world’s second economy, still had in 2010-12 undernourishment affecting 158 million people, 12% of its population, despite the considerable improvement they have had from the 21% of undernourished in 1990-92.

Besides consumption disparities persist in most if not all Developing Countries, and its minimization represents a further potential of demand.

The “have not” will drive future demand and thus the need for feed will increase.

Are we then doomed and Malthus was right? An example bellow of my home country shows what science and technology have done and can do. Prof.Borlaug’s Green Revolution shall continue through an on-going silent new Green Revolution that occurs on a daily basis, EPC 2014 being part of it. 

 

As a firm and expanding demand for feed macro components can be forecasted, we should not expect low prices for grains. Of course they will go down from the atypical levels of 2012, but they shall not revert to levels experimented before 2007. As if we are not going to have lower prices for grains, we cannot have lower prices for meats 

We should not fear the future if we can count with science and technology limited only by ethics and the pursuit of good for mankind. Let’s not forget that “childhood malnutrition is a cause of death for more than 2.5 million children every year”. That figure is equivalent to 6.849 children every single day, or throwing down 68 planes equal to the one that shall take me to Stavanger, all of them packed with children, every single day..