Feedgrains, livestock | Economic growth in developing countries will create new markets
NASHVILLE, Tenn. — Global food demand is showing no signs of abating, according to the U.S. Grains Council.
More than 600 million households, primarily in developing countries, will join the middle class by 2020.
“These new markets in terms of sheer size and dollar value will exceed existing middle class markets in the U.S., Europe and Japan within the next decade or two,” council president Thomas Dorr told delegates attending the 2012 Commodity Classic.
“By 2020, middle class households will account for 49 percent of the developing countries’ population, and the impact on food consumption and demand is going to be stunning.”
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One of those emerging markets is Vietnam, a country of 90 million people with growing disposable incomes.
Dorr said Vietnam is about 20 years behind China on the development curve. Per capita domestic product is $3,100 compared to $8,000 in China.
“I would suggest it won’t take the same 20 years to catch up because it is learning from the China example,” he said.
The Food and Agriculture Export Alliance, which comprises five U.S. commodity associations, helped Vietnam develop and implement new animal health and plant regulations that are expected to result in increased coarse grain trade with the U.S.
Feed demand in Vietnam is expected to expand annually, part of which will be met by U.S. corn and soybean products.
Total U.S. agricultural exports to Vietnam reached $1.3 billion in 2010, up from $216 million in 2006.
It has become the eighth biggest market for U.S. feedstuffs and is the fourth largest market for U.S. distillers grain.
“Vietnam provides a huge opportunity for U.S. feed products,” said Dorr.
He knows of one dairy operation in the country that is gearing up to have 130,000 cows.
Roy Bardole, chair of the U.S. Soybean Export Council, said one of the most exciting developments in Vietnam is the emergence of its aquaculture industry.
“Aquaculture is the future. We don’t even begin to understand yet how important aquaculture is going to be to not only the soybean industry but also the feed grains industry,” he said.
Global fish demand is growing at the same time that the wild catch is shrinking, which creates a tremendous opportunity for the farmed fish industry.
“In the next three years, China, because of its growth in population, will want all of the aquaculture production that is currently traded on the world market, so when you get a chance to enjoy that shrimp or tilapia, do it in the next couple of years,” said Bardole.
Vietnam is the third largest aquaculture producer in the world, with 10,400 sq. kilometres devoted to farmed fish production.
“That’s a big pond,” said Bardole.
Annual production rapidly ex-panded to 2.46 million tonnes in 2008 from 160,000 tonnes in 1990, and the government has identified the industry as a key driver of future economic development. The forecast is for 3.6 million tonnes of production by 2015.
Bardole said that presents a tremendous opportunity for the U.S. soybean industry, which has developed soy-based aquaculture rations for 25 years.
He said the main feed source for aquaculture operations might surprise some people: manure runoff from nearby livestock operations supplemented by fishmeal.
The industry will increasingly turn to higher quality feeds as it matures, such as soybean meal. Vietnam’s aquaculture industry consumed 728,000 tonnes of soybean meal in 2010 and that volume is expected to grow exponentially.
Bardole said Vietnam is shifting from being a soybean meal to a soybean seed importer in an effort to develop a value-added industry. Its first two soybean crushing facilities were built in 2011.
The U.S. accounts for a small share of the country’s soymeal imports but 75 percent of its soybean exports, which Bardole said is a positive development.
India is a big exporter of soymeal to Vietnam, but that won’t last much longer because it will soon be using every soybean it produces domestically.
“This will change the face of the soy protein market worldwide,” said Bardole.
