The Herman Trend Alert|
November 14, 2007
Agriculture Will Continue to Boom
With the growing demand for farm products, agriculture in the United States and elsewhere is booming. This boom in agricultural products, like corn, soybeans, wheat, produce, milk, and poultry, translates to big profits for farmers and many others in related industries, including food processing plants, trucking firms, railroads, and even equipment makers.
In 2007, the USD$280 Billion sales in agriculture are up by 15 percent over 2006. Next year, they are expected to exceed USD$300 Billion. Net farm income this year is expected to hit the record level of USD$87 Billion; that is an impressive 50 percent increase over last year. Next year, the figure will undoubtedly increase again. Average crop prices are up by 20 percent over last year and will rise once more in 2008. Even prices for livestock are up 22 percent, especially from poultry.
A combination of dynamics is producing this boom. First and most publicized, is the growing demand for biofuels. 25 percent of this fall's corn crop will go to ethanol production which by 2015 will require about 30 percent of the total corn crop.
Second, there is an increasing demand for farm products from developing nations. Incomes are rising and the citizens have more disposable income to spend on better quality food. Asia and Latin America alone will add 700 Million new mouths to feed by 2020.
Third, the less expensive dollar means that our exports compete more successfully on world markets. Fourth, according to the website Common Agricultural Policy, the European Union has "largely failed to respond to a booming global dairy market".
Finally, on January 1st 2008, NAFTA will take full effect. This legislation will facilitate trade between the US and Mexico and a 15.1 percent increase in purchases.
However, all of this industry growth is not without its challenges . . . the major one being the "people factor". Crops do not plant and harvest themselves. Midwest farmers from Kansas to North Dakota are importing farm workers from South Africa and elsewhere for short periods to supply the manpower needed. Agriculture is certainly an industry in a intensifying workforce crisis.
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