In Search of Emerging Markets for Agricultural Trade Gopinath Munisamy and John Dyck Economic Research Service U.S. Department of Agriculture The views expressed are those of the authors and should not be attributed to the Economic Research Service or USDA
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In Search of Emerging Markets for Agricultural Trade
Gopinath Munisamy and John Dyck
Economic Research Service
U.S. Department of Agriculture
The views expressed are those of the authors and should not be attributed to the Economic Research Service or USDA
Overview• How do we define emerging markets for agricultural trade?
• GDP, population, proximity and shipping routes, growth and change, preferences and dietary change
• BRIIC countries and other potential emerging markets
• Gravity factors, growth and change
• What role for policies in global agricultural trade growth?
• Bilateral and multilateral trade policy reform, other factors affecting trade costs
• Recent U.S. experience in agricultural trade
• Searching for emerging markets?
• Takeaways for Japan and other major economies
What do we mean by emerging markets?
• Large populations or economies that currently are under-represented in agricultural trade
• Regions with fast economic growth and social change, where demand for imported foods and fibers may be strong
• Consumer types, such as the urban middle class, that span the globe and have similar desires and needs for food
• Commodity segments that are becoming increasingly popular
• And more…
Where would we expect large agricultural imports?
• Large economies
• Large populations
• Relatively fast and low-cost access
The biggest GDPs
The biggest GDPs, next 15
The biggest populations, top 10
The biggest populations, next 15
Consider proximity
Consider major sea routes, offering frequent, fast, low-cost transport
North Pacific
links
• U.S.
• Canada
• Mexicoto
• Japan
• Korea
• China
• Taiwan
• Hong Kong
North Atlantic
links
• U.S.
• Canada
• Mexico
to
• Europe
Major Shipping Routes
• Size and ease of access characterize the countries with the largest agricultural trade
• Gravity models in economics use these factors to characterize trade flows
Countries among the top 10 either in terms of population or output, with global rank as agricultural importer and exporter [M, X]:
• OECD members– EU [1, 2]
– USA [3, 1]
– Japan [4, 35]
– Canada [6, 5]
– Australia [20, 7]
– Korea [8, 32]
• Non-OECD– China [2, 4]
– Brazil [23, 3]
– Russia [5, 16]
– India [10, 6]
– Indonesia [12, 9]
– Pakistan [31, 43]
– Nigeria [33, 49]
– Bangladesh [29, 54]
BRIIC
Watch for futureimport growth
Source of trade rankings: Economic Research Service, USDA, using WITS database of the World Bank.
BRIIC
• Large GDPs: China, Brazil, Russia, India• Large populations: China, India, Indonesia, Brazil,
Russia
• Among 10 Largest agricultural exporters: Brazil, China, India, Indonesia
• Among 10 largest agricultural importers: China, Russia, India
• On major sea routes: China
ERS publications on BRIIC• China’s Growing Demand for Agricultural Imports. Economic Information Bulletin 136, Feb. 2015. Fred
• Indonesia’s Modern Food Retail Sector: Interaction With Changing Food Consumption and Trade Patterns. Economic Information Bulletin 97, June 2012. John Dyck, Andrea Woolverton, and Fahwani Yuliati
Beyond the BRIIC: large emerging markets, among the top 25 in GDP or population
• Rank as global importer (M) and exporter (X) of agricultural goods[M, X]:
– Mexico-- GDP 11th, Pop 12th [7, 13]
– Turkey-- GDP 13th, Pop 18th [15, 14]
– Thailand—GDP 24th, Pop 20th [24, 10]
– South Africa—GDP 25th, Pop 22nd [32, 19]
– Colombia—GDP 22nd, Pop 25th [34, 22]
ERS publications on demand beyond the BRIIC
• Middle East and North Africa Region: An Important Driver of World Agricultural Trade. Outlook Report AES-88, July 2015. Getachew Nigatu and Mesbah Motamed.
• U.S.-Cuba Agricultural Trade: Past, Present and Possible Future. Outlook Report
AES-87, June 2015. Steven Zahniser, Bryce Cooke, Jerry Cessna, Nathan Childs, David Harvey, Mildred Haley, Michael McConnell, and Carlos Arnade.– http://www.ers.usda.gov/publications/aes-outlook-for-us-agricultural-trade/aes-87.aspx
• NAFTA at 20: North America’s Free-Trade Area and Its Impact on Agriculture. Outlook Report WRS-15-01, Feb. 2015. Steven Zahniser, Sahar Angadjivand, Thomas Hertz, Lindesy Kuberka, and Alexandra Santos.– http://www.ers.usda.gov/publications/wrs-international-agriculture-and-trade-outlook/wrs-15-01.aspx
• Using Household and Intrahousehold Data To Assess Food Insecurity: Evidence from Bangladesh. Economic Research Report 190, Aug. 2015. Anna D’Souza and Sharad
• Growth and change in size, proximity, and access are important to emerging trade--changes in trade flows or prospects– Economic growth, income distribution, growth of
the middle class– Institutional development– Population growth
• Demand for food• Distribution: urban population growth (retail
• NAFTA at 20: North America’s Free-Trade Area and Its Impact on Agriculture. Outlook Report WRS-15-01, Feb. 2015. Steven Zahniser, Sahar Angadjivand, Thomas Hertz, Lindsay Kuberka, and Alexandra Santos.
U.S. trade data formerly showed a long-term shift to value-added exports, which appears to have ceased
about 2000.
0%
10%
20%
30%
40%
50%
60%
70%
80%
19
67
19
70
19
73
19
76
19
79
19
82
19
85
19
88
19
91
19
94
19
97
20
00
20
03
20
06
20
09
20
12
Source: Economic Research Service, USDA, using data from Foreign Agricultural Service, USDA, GATS database, accessed 10-1-15.
U.S. agricultural exports: composition
Bulk
Intermediate
Consumer-oriented
U.S. soybean exports have grown, especially to China
0
5
10
15
20
25
30
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Billion US$
Source: Economic Research Service, USDA, using FATUS database of the Foreign Agricultural Service, USDA.
U.S. soybean exports
Other
EU
China
Ethanol byproduct, DDGS, is a growing part of feed exports
0
2
4
6
8
10
12
14
16
18
Billion US$
Source: Economic Research Service, USDA, using FATUS database of the Foreign Agricultural Service, USDA.
U.S. corn and DDGS exports
Corn DDGS
China’s Market for Distillers Dried Grains and the Key Influences on Its Longer Run Potential. Outlook report FDS-12G-01,
Aug. 2012. Michael Jewison and Fred Gale. http://www.ers.usda.gov/publications/fds-feed-
outlook/fds12g-01.aspx
U.S. meat exports grow despite disease outbreaks and trade barriers
0
5
10
15
20
25
Billion US$
Source: Economic Research Service, USDA, using FATUS database of the Foreign Agricultural Service, USDA.
U.S. exports of poultry meat, red meat, and products
BSE bans begin
HPAI
PEDv
U.S. meat exports to developing countries are growing fast
0
5
10
15
20
25
Billion US$
Source: Economic Research Service, USDA, using FATUS database of the Foreign Agricultural Service, USDA.
U.S. exports of red meats, poultry meats, and preparations
Developed Developing
Barriers to U.S. meat exports remain
China won’t import U.S. beef, citing BSE Hong Kong imports twice as much U.S. meat as China
0
200
400
600
800
1,000
1,200
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Million US$
Source: Economic Research Service, USDA, using FATUS data from Foreign Agricultural Service, USDA, GATS database.
U.S. meat and offal exports to China
Offals
PoultrymeatPork
Beef
0
500
1,000
1,500
2,000
2,500
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Million US$
Source: Economic Research Service, USDA, using FATUS data from Foreign Agricultural Service, USDA, GATS database.
U.S. meat and offal exports to Hong Kong
Offals
PoultrymeatPork
Beef
U.S. dairy product exports grow, especially to Mexico, China, and Southeast Asia
0
1
2
3
4
5
6
7
8
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
Billion US$
Source: Economic Research Service, USDA, using FATUS database of the Foreign Agricultural Service, USDA.
U.S. dairy product exports
Other
Canada
China
SE Asia
Mexico
U.S. nut, vegetable, and fruit exports: all are growing
• Sent to many foreign markets
– Except fresh vegetables--primarily to Canada
• Rely on U.S.
– Land
– Climate
– Water
– Labor
– Shipping and cold chain
– Inspection services
U.S. horticulture-based exports doubled in value, 2006-2014
0
5
10
15
20
25
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Billion US$
Source: Economic Research Service, USDA, using FATUS database of the Foreign Agricultural Service, USDA.
U.S. horticulture-based exports
Fruits & prep.
Veg. & prep.
Nuts & prep.
U.S. horticultural exports rising faster to developing-country markets
0
5
10
15
20
25
Billion US$
Source: Economic Research Service, USDA, using FATUS database of the Foreign Agricultural Service, USDA.
U.S. horticulture-based exports
Developed Developing
Takeaways from U.S. Experience
• Gravity factors along with trade policy reform in importing countries substantially explain U.S. agricultural trade
• Exports have been adapting to strong growth in emerging markets: increased exports of high-value (horticultural) and processed products (meat, dairy)
• Despite temporary slow downs, these medium-and long-terms trends are likely to continue
• Future opportunities: focus not only on countries, but also on products/inputs, services and investments
Extras
Largest 10 countries by population
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
Billion people, 2014
Source: Economic Research Service, USDA, International Macroeconomic Data Set.
Largest 10 countries by nominal GDP, average 2012-14
0
2
4
6
8
10
12
14
16
18
20
EU28 U.S. China Japan Brazil Russia India Canada Australia
Trillion U.S. $
Source: Economic Research Service, International Macroeconomic Data Set.