Spurred by income and population growth, freer trade and globalization, don’t expect a letup in demand for the “4 Fs” – food, fuel, feed and fiber – that underpin an ongoing worldwide commodity boom. In its report, “The Boom Beyond Commodities,” Rabobank says the combined effects of this increased demand are pressuring ag to operate more efficiently, which has led to more investment.
Additionally, transportation networks around the world are being improved and countries with extensive natural resources previously relatively inaccessible are now far more accessible. This will further boost investment in ag and increase the value of inputs, particularly in South America, Eastern Europe and Southeast Asia.
The report predicts “extremely strong growth” for food-production and ag-sector firms, with substantial growth opportunities arising in such sectors as animal proteins and dairy, food processing, energy crops and commodities. It also stresses that while biofuels will be responsible for a significant share of added demand for commodities in the coming years, food will remain by far the primary consumer.
The report also warns of a high level of rural-urban migration over the next decade, particularly in China and India, which will keep price levels high. The forecast is that 50,000 people daily will move to the cities where the demand for food and energy is even higher than in the countryside.
Beyond demand for commodities, the scarcity of resources – land, water, labor, inputs, etc. – is also a factor that will keep prices high. For example, in the year 2000, nearly 2 billion people lived in cities worldwide. That’s expected to double by 2030, which will further decrease the available arable land for ag production. Additionally, over the last century, global water use has grown by more than twice the rate of population.