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International Comparison of Oilseed Pruduction

International Comparison of Oilseed Pruduction. Prof. Dr. Folkhard Isermeyer & Dr. Yelto Zimmer GCIRC Technical Meeting, New Delhi, February 2009. Content. 1 The global network agri benchmark : goal and concept 2 Selected results 2.1 Sector developments

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International Comparison of Oilseed Pruduction

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  1. International Comparison of Oilseed Pruduction Prof. Dr. Folkhard Isermeyer & Dr. Yelto ZimmerGCIRC Technical Meeting, New Delhi, February 2009

  2. Content 1 The global network agri benchmark:goal and concept 2 Selected results 2.1 Sector developments 2.2 Production systems, cost of production 3 Summary

  3. Content 1 The global network agri benchmark:goal and concept 2 Selected results 2.1 Sector developments 2.2 Production systems, cost of production 3 Summary

  4. World Population 0 1000 2000 agri benchmark is part of a global navigation system for the agricultural sector For typical farms we provide information about: Production systems Cost of production Framework conditions Everything under Control ? Before take-off we should have a good navigation tool

  5. Dairy Beef Arable Crops The Networks Typical Farms & farmers & advisors Quantitative Analysis Components of agri benchmark

  6. Typical farms are the backbone, but agri benchmark is much more … • Analysing international trade flows (e.g. FAO and OECD data bank) • Compiling regional information on a global level(commodity prices, legal framework conditions, potential for expansion of agricultural land) • Forecasting regional farm development („Snapshot“: farmers compare their future with others)

  7. Partners in agri benchmark cash crop (I) Countries in agri benchmark Cash Crop Priorities for new countries

  8. Partners in agri benchmark cash crop (II) Canada USA/Iowa USA / N. Dakota Brazil Argentina South Africa UK Italy France Sweden Denmark Ukraine Hungary Czech Rep. Russia Poland Romania China Malaysia Australia

  9. Partners in agri benchmark cash crop (III) 4thagri benchmark Cash Crop Conference, Canada, July6-1, 2008

  10. Content 1 The global network agri benchmark:goal and concept 2 Selected results 2.1 Sector developments 2.2 Production systems, cost of production 3 Summary

  11. Impact of Bioenergy Policy: Evolution of Global Ethanol Production Quelle: FO Licht, Impact of Biofuels on Commodity Markets (2007).

  12. 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/081) 2008/092) Production3) Consumption3) 1.481 1.448 1.463 1.467 1.444 1.468 1.475 1.492 1.443 1.506 1.471 1.534 1.644 1.587 1.588 1.604 1.585 1.633 1.687 1.688 1.760 1.743 Surplus + 33 - 4 - 25 - 17 - 63 - 64 + 57 - 16 - 48 - 1 +17 Corn Use for US-Ethanol (Mio. t) 16 18 25 29 34 41 54 76 104 US-Corn – DDGS (Mio. t) 11 13 18 20 24 29 38 53 73 150 150 100 100 Stocks shrinked by 50% (from 112 to < 60 days) 50 50 Accumulated deficit (till 2007/08): -148 Mio. t 0 0 -50 -50 -100 -100 Accumulated deficit, if US-ethanol would not have expan-ded since 2000 (till 2007/08): -30 Mio. t Impact of US Ethanol Production on the World Markets for Grains 1) April-Projection of USDA-WAOB. 2) Estimated 3) World production and/or consumption of coarse grains, in mio. t. Quelle: USDA, ACTI, eigene Berechnungen.

  13. Interim Conclusions Is it possible, that bioenergy crops on less than 2% of the global acerage have caused such a price increase? Short term: „yes“, because 60 mio. t represent ¼ of the world grain trade. Long term: „no“, because 60 mio. t require 10 mio. ha, and there are more than 100 mio. ha unused. Besides: High commodity prices lead to intensification and yield increases on cultivated acreage. Bioenergy can be produced on much more than 2% of global agricultural land. Challenge: Find the appropriate pathway for expansion (best product mix and no „overburdening“ of global agriculture) And: We should not pretend that bioenergy can fuel the world (500 mio. ha a 80 GJ/ha = 40 EJ = <10% of global energy consumption)

  14. Conclusions re. future commodity prices In principal two alternative szenarios are possible: I. Global economy takes off again and policies to promote biofuels are pursued aggressively (high mandatory blending rates).  In a few years commodity prices will be very high again II. Global economy takes off again but policies to promote biofuel are put on hold.  Commodity prices will be driven by crude oil prices: • 40 $/bbl: „old“ price levels (pre 2006) will prevail • 100 $/bbl: prices go up in the medium and long run („long run“, because first investments in plants are needed for the bushel-barrel correlation to be realized)

  15. Development of vegetable oil prices (USD/t) Source: FAO, own calculations; (1) Crude, cif North West Europe, (2) Dutch, fob ex-mill, (3) fob North West European port

  16. Development of price premium for rapeseed vs. soybean oil (USD/t & in %)

  17. Content 1 The global network agri benchmark:goal and concept 2 Selected results 2.1 Sector developments 2.2 Production systems, cost of production 3 Summary

  18. Oilseed yields agri benchmark farms 2007 (t/ha) Rapeseed: EU yields twice as high as in overseas. Strong position of soybeans

  19. Vegetable oil production (t/ha) 0.6 0.7 0.8

  20. Total cost of oilseed production (USD/t) Major issue for European producers: high land cost (will decrease with decreasing direct payments) and high operating cost

  21. Operating cost: Major differences between Europe and Overseas (3 Example, 2006) France 150 ha, rapeseed following barley, reduced tillage Tillage etc.1) Plant protection Fertilization Canada 2,430 ha, rapeseed following fallow, no tillage Tillage etc.1) Plant protection Fertilization Argentina 1,800 ha, Soybean following Soybean (DC with wheat), no-till Tillage etc.1) Plant protection Fertilization 1) incl. seeding & harvest

  22. Crop establishment cost (USD/ha) Per hectare: EU cost 3 - 4 times higher, yields just 2 times higher

  23. Summary (I) • Global commodity prices will go up again when global economy recovers. • All somewhat suitable arable land will be in use in order to cope with global demand. • Even with higher prices entrepreneurial challenge remains the same: Do things right, and do right things. • agri benchmark: global comparison of production systems, framework conditions and competitiveness

  24. Summary (II) • Rapeseed is facing major challenges, especially from an EU perspective. • Western European rapeseed production has higher cost than Overseasor Eastern rapeseed production. • Some cost components will be reduced, if policy support for EU agriculture is reduced (land cost) and/or EU farms get bigger (operating costs, partly). • Other disadvantages may even increase (better quality and higher yields through GMO in America and Asia, both in soy and rapeseed?) • Compared to soybean production, fertilizer and plant protection cost of rapeseed production are considerably higher. • Remember: Until now, we only have “first results”, with many open questions remaining • Interested to participate? Please contact www.agribenchmark.org

  25. Thanks a lot for your attention

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