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Corn+Soybean Digest

A World Of Opportunity: A global market has more potential than danger

While some farmers feel threatened by a new global economy, Bart Ruth, Rising City, NE, believes it opens the door to export more U.S. grain. With one in four bushels of soybeans now shipped out of the U.S, those growing markets are vital.

While it may look like a "new" economy to some, with uncertain implications, it’s really not new at all, according to Ruth, president of the American Soybean Association. "We tend to think of globalization as a late 20th century development, but the first real era of globalization started in the mid-1880s and lasted until it was broken apart by World War I, the Russian revolution and the Great Depression," he says. "The volumes of trade, capital flows and flow of labor across borders then were very similar to the globalization era of today."

There are other similarities. "Great Britain, then the dominant global power, was a huge investor in developing markets. The flow of people around the world was quite large. Other than in war time, passports weren’t required for travel before 1914," he says.

"Inventions such as the steamship, telegraph, railroad and other industrial revolution advances shrank the world," Ruth says.

Globalization: Round II.

The demise of the Cold War marked the beginning of the next era of globalization, according to Ruth. "Where the pre-1914 era was built on falling transportation costs, this era is built on speed of communication and information exchange," he says. "If the pre-1914 era shrunk the world to a size "medium," the current system has shrunk the world to a size "small."

Americans aren’t the only ones to question the benefits of a wide-open, world-wide markets, according to Ruth. But, he believes that global trade, information exchange and engagement are still desired by the majority of the world’s people. "Global trade and interaction are still the best way to bring under-developed nations to a level of self-dependence," he says.

Some cultures fear and resent the inevitable homogenization that results when countries freely trade technology and lifestyles, Ruth says. He points out that countries, such as Japan, have been able to successfully blend the new culture into their society without losing their distinct traditions and culture. Others fear the loss of their old ways, get left behind and lash out at the global system.

But, for American agriculture, Ruth believes a global economy provides numerous markets to absorb this country’s continued growth in productivity. "On the grain side, China has become our #1 soybean customer followed by Mexico due to its continued growth," he says. "Japan, long our #1 customer for soybeans, is now #3. And, Russia is back in the soybean market as well.

"In the last 10 years global demand for soybeans has increased 55.7%; corn, 26.9%; rice, 15.3%; and, wheat, 6.2%," he says. "On the livestock side, poultry demand is up 54% globally and pork demand is up 23%."

In response to global demand, the U.S. has increased soybean acres dramatically in the last five years. Much of that 25% increase in planted acres occurred in the Northern Plains states, according to Ruth.

That continues a trend that started more than 20 years ago. "From 1980 to 2000, traditional soybeans states like Iowa (28.9%), Nebraska (154.1%) and Minnesota (52.1%) have seen significant increases in soybean acres," he says. "North Dakota (804.8%), South Dakota (464.1%), Kansas (90.3%) and Oklahoma (31.4%) have seen large acreage increases at the same time."

As he travels the world to develop more markets for U.S. soybeans, Ruth sees many signs for optimism. "The China feed industry is modernizing and is now moving into bulk packaging and shipping. The port facility near Shenzhen recently installed new grain silos to offload cargo ships and then refill smaller barges for transport up river," he says. "The Chinese interest in U.S soybeans is driven in part by its growing livestock industry.

"China is the world’s largest producer of aquaculture. The shift from using traditional fishmeal rations to high protein soy rations is revolutionizing the industry," he says. "The poultry industry there is expanding using modern U.S. technology as is the hog industry."

The opportunities for U.S. grain in Mexico are "only days away by rail," Ruth says. "The growth there of a new middle class is creating a consumer base using increased quantities of vegetable oil and protein," he says. "Mexico’s demand for soy meal has grown very rapidly over the past few years as a result of the growing consumption of animal protein, with poultry consumption growing the fastest on a per capita basis as a low cost source of protein."

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