An Urban's Rural View

More than 600 producers and agriculture professionals attended the just-ended Ag Summit in Chicago. It was the 10th year in a row that DTN/The Progressive Farmer has put on this event and the presentations were first-rate, chock full of interesting information and insights. DTN reporters have already written up many of the big takeaways. Here are a few interesting tidbits that didn't make the headlines:

-- Thomas Scott, Informa Economics' CEO, surveyed some worldwide demographic changes that will affect U.S. exports or food and agriculture products. On the plus side, urbanization in the developing world, which is associated with increased demand for meat, continues apace. Around 850 million of China's 1.2 billion people already live in cities, and by 2025 another 168 million will join them. The trend is even more dramatic in sub-Saharan Africa, where the number of urbanites will jump from around 350 million to more than 500 million.

Longer-term, Scott pointed out a less promising demographic trend to watch: aging. Worldwide, the number of people age 65 or over will double by 2050. China's working-age population will fall to less than 500 million from close to 900 million now. Fewer workers to support more retirees is not a formula for a strong economy. As demographers like to say, China's challenge is to get rich before it gets old.

-- DTN's senior analyst Darin Newsom didn't exactly predict $2 corn but he did present a scatter chart that suggested it's possible. Over the last 20 years, when USDA has reported corn ending stocks at 16% of use or higher cash corn has sold for about $2 a bushel. Today ending stocks are at 16% of use; DTN's national average cash price is north of $3. Darin is famous for his doubts about the reliability of USDA supply and demand data. Corn growers have to hope his skepticism is justified this time.

-- Bruce Sherrick of the TIAA Center for Farmland Research at the University of Illinois compared investment returns on eight asset classes during four different time periods: 1970-2015, 1980-2015, 1990-2015 and 2000-2015. In each of those periods, farmland had the highest rate of return; in each, farmland investments were less risky than the S & P 500 and the Nasdaq. Even those who bought at the top of the market in the 1980s had strong returns as long as they held on during the downturn.

-- Mark von Pentz, Deere's president for Europe, Asia and Africa, had a slide laying out the revenue and input costs of a grain farm in Kazakhstan. Tally it all up and the farm's profit is only $11 an acre. But the annual profit exceeds $24 million for the simple but mind-boggling reason that the farm has 2.2 million acres.

At the end of a tumultuous year in agriculture -- and aren't most of them tumultuous -- the Ag Summit is a wonderful way to recharge, pick up tips for making your operation more profitable and network with some of the industry's best. We hope you will be able to join us next year in Chicago.

Urban Lehner can be reached at urbanity@hotmail.com

(CZ)

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