The worldwide commodities boom seems to have left farmers behind, but the head of one of the world’s largest agricultural multinationals thinks farmers will eventually be producers of some of the world’s most valuable raw materials.
“There are a number of very, very important possibilities for agriculture,” said G. Allen Andreas of Archer Daniels Midland in a speech to Agricore United’s annual meeting on Feb. 8.
“Agriculture has not been a very profitable or engaging livelihood across the world for many years, but I think there’s a shift coming.”
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Andreas, whose company is a major bulk commodity shipper and processor of soybeans, corn, wheat and cocoa, said non-food uses of agricultural products will raise their value well above today’s depressed prices.
Sugar prices, for instance, have been rapidly rising in the past year, pushed by Brazil’s huge consumption of sugar for ethanol production.
As North American ethanol and biodiesel production expands, corn and canola should become more valuable as well, he said. Right now 95 ethanol plants are in production and 43 more are under construction. In 10 years, ethanol production could go from today’s 4.3 billion gallons per year to 15 billion gallons, “just because the market is there.”
Biodiesel production is also consuming oilseeds to produce fuel. Andreas said ADM wants to build a plant in Canada, but more generous subsidies in the United States and other countries make that unlikely for now.
“All across the world, countries are stepping up and taking responsibility and seeing to it that renewable resources are being used for their energy supplies,” Andreas said. “In Canada, we just don’t have an incentive.”
ADM is building a plant in North Dakota that will probably use Canadian canola.
However, Andreas said new demands for crops will go well beyond ethanol and biodiesel. His company has already developed vegetable oil-based paints, and biodegradable plastic from crops is also promising.
Agriculture has the potential to exploit the high price of petroleum products by offering more affordable, less polluting and renewable alternatives.
“There are better than 200 products, one after the next after the next, that can be derived from carbohydrate sources as opposed to hydrocarbon sources, all of which are environmentally friendly,” Andreas said.
Exactly when crops will become valuable the way oil and gold have become is impossible to know, Andreas said. But at some point, after new products have begun to consume significant amounts of crops, the marketplace will begin to see their true value.
“It’s coming,” Andreas said in an interview. “As we move away from agricultural commodities only being used for food and feed and into more uses which are connected to industrial applications, I think there’s no question the world’s looking at increases in agricultural prices as well.”
