Biotechnology offers a path for feeding the world

By ANDREA JOHNSON, Assistant Editor
Friday, October 10, 2008 11:52 AM CDT

PLATO, Minn. - The world has a monumental task ahead.

That task is growing enough crops to supply an expanding world population with food, feed, energy and building materials.

John Baize, president of John C. Baize and Associates, recently spoke on this topic with foreign agriculture attaches visiting rural Minnesota.

“This may not be popular with some of our friends in Europe,” he said. “It's a fact of life that biotechnology is the only way we're going to address market demands of a growing population in the world.”

Baize has more than 19 years experience providing consultant services to international agribausiness firms, agriculture trade associations and investment firms.

Producing enough corn is a challenge

Global corn consumption for 2008/2009 is forecast at 797 million metric tons (31.3 billion bushels). Production is forecast at 789 million metric tons (31.1 billion bushels).

The global demand for corn is expected to increase by 24 million metric tons (945 million bushels) in 2008/2009, Baize said. Global ending stocks for 2008/2009 are forecast at 112 million metric tons (4.4 billion bushels).

The United States produces much more corn than other countries. In 2007, the U.S. produced 332 million metric tons (13 billion bushels) of corn vs. 152 million metric tons (6 billion bushels) from the next largest producer - China.

Brazil harvested 57.5 million metric tons (2.26 billion bushels) last year, while the EU-27 harvested 47 million metric tons (1.85 billion bushels). Next was Mexico, 23 (906 million bushels) Argentina, 21 (827 million bushels), India, 19 (748 million bushels), South Africa, 12 (472 million bushels), and Canada with 12 million metric tons (472 million bushels).

Yields are also higher in the U.S., Baize said. For 2008, the U.S. is forecast to raise an average 9.7 metric tons (381.8 bushels) of corn per hectare (2.471 acres). The rest of the world is forecast to raise an average of 3.7 metric tons (146 bushels) of corn per hectare (2.471 acres).

“There is no other place in the world that is as good at growing corn as the U.S.,” Baize said. “It's also a function of what we've seen in the last seven or eight years with all the new biotechnology traits that are introduced.”

Growing corn that controls corn rootworm and European corn borer, and is tolerant to herbicides has significantly increased U.S. corn yields.

China is the next largest producer of corn, but they use their corn domestically. Argentina and Brazil offer corn for export. Ukraine, Romania, Russia and Bulgaria may become corn exporters in the future.

Japan imports about 16.6 million metric tons (653.5 million bushels) of corn, while the EU-27 imports 13 million metric tons (511.8 million bushels) per year. Mexico and South Korea both import about 9 million metric tons (354 million bushels).

“They need it for their livestock industry and they come to the U.S. to get their supplies,” Baize said.

The United States exported 61.6 million metric tons (2.425 billion bushels) of corn for the 2007/2008 marketing year. Argentina ranked next with 15.5 million metric tons (610 million bushels), followed by Brazil with 9 million metric tons (354 million bushels) in corn exports.

Soybeans supplies are tight

The U.S. had been the number one consumer of soybean meal. That changed as U.S. livestock growers become comfortable feeding distillers grains to their livestock.

The world's largest soybean consumers for the 2007/08 marketing year included the EU-27, followed by the U.S., and then China.

Although China is raising a good soybean crop, they remain the largest importer of soybeans - importing 35 percent of the world's soybean imports.

“They are importing now the equivalent of over half of Brazil's crop,” Baize said. “That's going to continue to grow.”

On a global scale, soybean production and consumption are both just under 240 million metric tons (8.817 billion bushels) in 2008/2009.

During that time, the United States will grow 34 percent of the world's soybeans, Brazil will grow 26 percent, Argentina 21 percent, China 7 percent, India 4 percent, Paraguay, 3 percent, Canada 1 percent and Bolivia 1 percent.

The U.S. as well as Brazil and Argentina continue to serve as the world's soybean exporters too. Brazil is expected to export about 29 million metric tons (1.065 billion bushels) of soybeans, while the U.S. exports about 27 million metric tons (992 million bushels). Argentina is forecast to export 12.5 million metric tons (459 million bushels) in the 2008/2009 marketing year.

Baize believes that by 2018, the world will need 70 million more tons (2.57 billion bushels) of soybeans than are raised now.

“Brazil is the second largest producer and they produce 61 million tons. We have to have another Brazil, Paraguay and Uruguay combined to reach 70 million tons,” he said. “How do we get that done? We are going to have to do it several ways.”

The EU-27 at 14.5 percent, Japan at 4 percent, Mexico at 4 percent, Argentina at 2.5 percent and Taiwan at 2 percent are the top five soybean importers following China.

As a result of the strong demand for soybeans, world stocks of soybeans remain tight.

Countries look for energy independence through renewables

According to Baize, energy costs is driving up commodity prices.

“That's one of the reasons we need big corn crops everywhere in the U.S. every year, or we're going to be in a tight supply worldwide,” he said.

From July 2007 through August 2008, the prices for soybeans, soybean oil and corn held a strong correlation with the price of crude oil.

“One of the reasons is our Congress approved a biofuel mandate beginning in 2008, which mandates the usage of ethanol and biodiesel appropriation in our fuel supply,” Baize said, adding that eventually a majority of the ethanol will be supplied by cellulose.

“I would say that is rather interesting that our Congress mandated the use of something we don't know how to make yet, but that's what happened.”

Baize said he also expects to see rapid expansion of biodiesel throughout the world.

“We have a huge potential to expand production of biodiesel (in the United States). We've got the plants built in the U.S., but the food industry keeps the price high enough to keep that from being competitive, because they can't afford to have the energy industry use up all of the oil, because they need it for the food market,” he said.

He expressed concern that India has announced they will start making biodiesel. The vegetable oil is needed for food, Baize said.

Global soy oil consumption continues to rise every year.

Global vegetable oils stocks to use ratio has decreased by about 30 percent from 2000/2001 to 2008/2009.

Baize believes vegetable oil stocks will be drawn down, and any type of shortage of vegetable oil around the world could greatly increase prices.

Food needs increase as population grows

By 2040, some countries are expected to greatly increase their populations, while other countries will experience negative population growth.

India is expected to grow by 536 million people to reach 1.68 billion people, while China's population increases by 125 million to 1.45 billion people. Pakistan grows by 99 million to 272 million people, Bangladesh by 97 million to 251 million people and Nigeria by 93 million to 239 million people

The U.S. population also grows to 392 million people - an increase of 88 million people in the next 32 years.

Populations are expected to decline in Japan, Russia and Europe.

In order to increase food supplies, some people will turn to cutting down forests and turning the land into soil for raising crops.

Many people around the world feel that cutting down rainforests and trees around the equator is not good for the health of the planet.

A better idea, biotechnology, can help farmers increase yields and quality of food. Traits such as drought tolerance and nitrogen utilization offer hope to increase crop production in many parts of the world.

Baize sees biotechnology as a way to conserve the environment in a responsible manner and provide food, feed, bioenergy and building materials.

Currently about 86 percent of the world's soybeans are biotechnology-derived, but some anti-biotech groups still want to biotech stay out of their countries.

Baize encouraged the foreign ag attaches listening to his talk to consider all of the research and development that has gone into biotechnology vs. the fear brought on by some groups.

“We're not going to get there as fast as we want if we don't get our governments to start making these decisions based on the facts of science, not on emotion,” Baize concluded.

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