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Crop Presentation (10.12.07)

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Crop Presentation (10.12.07)

  1. 1. United States Agriculture andOperations ManagementAndrew T. Pulvermacher, CMA, CPIM
  2. 2. YIELD RISK Approved Yield x Coverage Level x Base Premium Rate x Base PriceREV RISK: Approved Yield x Coverage Level x CRC Base Rate x CRC Low Price FactorPRICE RISK Approved Yield x Coverage Level x Base Premium Rate x CRC High Price Factor RISK PREM
  3. 3. Objective 1: US ECONOMY and AG
  4. 4. US Economy and Agriculture 1947 2006 US GDP $244B $13.1T AG GDP $19.9B $129.7BSources:
  5. 5. GDP ($trillions)Sources: $- ($trillions) US GDP $10.0 $12.0 $14.0 $6.0 $2.0 $4.0 $8.0 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 US Economy and Agriculture 1995 1998 2001 2004
  6. 6. US Economy and Agriculture Top US Industries as a Percent of US GDP Agriculture Manufacturing Finance Professional services 30.0 25.0 20.0 % of US GDP 15.0 10.0 5.0 - 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004Sources:
  7. 7. US Economy and Agriculture Agriculture GDP Performance 10.0 % of GDP $160.0 $GDP 9.0 $140.0 8.0 $120.0 7.0 $100.0 $GDP ($billions) 6.0 % of GDP 5.0 $80.0 4.0 $60.0 3.0 $40.0 2.0 $20.0 1.0 - $- 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004Sources:
  8. 8. AG Productivity Improvements U.S. Agricultural Output, Input, and Total Factor Productivity 2.80 2.60 2.40 2.20 2.00 1.80 Input Output 1.60 Total Factor Productivity 1.40 1.20 1.00 0.80 1948 1950 1956 1958 1964 1966 1968 1974 1976 1982 1984 1990 1992 1998 2000 1952 1954 1960 1962 1970 1972 1978 1980 1986 1988 1994 1996 2002 2004Sources:
  9. 9. US Economy and AgricultureSources:
  10. 10. Objective 2: AG PRODUCTIVITY
  11. 11. AG Productivity Improvements Productivity Innovation Efficiency Management ResearchSources:
  12. 12. AG Productivity Improvements Production History and Stats 1900s Today Fertilizer 3.7m tons 50m tons Hrs to Prod. 100 bushels 100hrs 2hrs One farmer supplies… 5 people 110 people Exports ($b) $0.92b $77.5bSources:
  13. 13. AG Productivity Improvements Sources of AG Inputs Capital Labor MaterialSources:
  14. 14. AG Productivity ImprovementsAgriculture: Sources of Production 3.00 Material Labor Capital 2.50 2.00Input Index 1.50 1.00 0.50 0.00 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 Sources:
  15. 15. AG Productivity Improvements Sources of Material Input Farm origin Energy Chemicals Purchased services 6.000 5.000 4.000 Input Index 3.000 2.000 1.000 0.000 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002Sources:
  16. 16. AG Productivity Improvements U.S. Agricultural Output, Input, and Total Factor Productivity 2.80 2.60 2.40 2.20 2.00 1.80 Input Output 1.60 Total Factor Productivity 1.40 1.20 1.00 0.80 1948 1950 1956 1958 1964 1966 1968 1974 1976 1982 1984 1990 1992 1998 2000 1952 1954 1960 1962 1970 1972 1978 1980 1986 1988 1994 1996 2002 2004Sources:
  17. 17. AG Productivity Improvements GDP without Technology Impact $160.0 GDP Adj. GDP $140.0 $120.0 $GDP ($billions) $100.0 $80.0 $60.0 $40.0 $20.0 $- 1953 1956 1959 1971 1974 1977 1989 1992 1995 1947 1950 1962 1965 1968 1980 1983 1986 1998 2001 2004Sources:
  18. 18. AG Productivity Improvements Sources of ProductivitySources:
  19. 19. AG Productivity Improvements Sources of ProductivitySources:
  20. 20. AG Productivity Improvements Sources of ProductivitySources:
  21. 21. Factors Affecting Agricultural Productivity R&D Extension Education Infrastructure Gov’t programs
  22. 22. AG Productivity Improvements Advances in TechnologySources:
  23. 23. AG Productivity Improvements Today’s Advancements Herbicide-tolerant (HT) soybeans Conservation Tillage Bt Crops Precision AgricultureSources:
  24. 24. Objective 3: GLOBAL MARKET
  25. 25. Global Marketplace World Population (in Billions) 10.0 9.2 World Pop. (billions) 9.0 8.0 6.5 7.0 6.0 5.0 4.0 3.3 3.0 1965 2006 2050
  26. 26. Impact of Global DemandCBOT Corn 40% 70% Example, Georgia chickens Wheat 75% Soybeans
  27. 27. Global Marketplace - DEMAND•US Biofuel Tax Incentives•Economies of Asia and Latin America – Growing Middle Class•Global Grain Stockpiles Decreasing
  28. 28. Global Marketplace – FOOD CONSUMPTION• US: 10% of Income = Food Purchases – Bread up 24% – Milk up 26%•Italy / Mexico / Pakistan / Russia
  29. 29. 30 18 20 15 13 12 2Home Debt Energy Food Goods Savings Taxes
  30. 30. Global Marketplace – Food Companies
  31. 31. Global Marketplace – The American Farmer•Income up 48% to a record est. $87B•Exports up 15% to $79B•Reinvestment: – John Deere up 76% – Monsanto up 79% – Mosaic up 200%
  32. 32. Global Marketplace – Developing Nations•Long-Term Prices•Increased Demand• Part of the reason for the drawdown can be seen in China, where soaring demand for milk has increased the number of dairy cattle threefold so far this decade. Half of the worlds hogs now live in China, which is importing about 13% of all the soybeans grown in the U.S. to help fatten its livestock.•Price burdens• The prospect for a long boom is riveting economists because the declining real price of grain has long been one of the unsung forces behind the development of the global economy. Thanks to steadily improving seeds, synthetic fertilizer and more powerful farm equipment, the productivity of farmers in the West and Asia has stayed so far ahead of population growth that prices of corn and wheat, adjusted for inflation, had dropped 75% and 69%, respectively, since 1974. Among other things, falling grain prices made food more affordable for the worlds poor, helping shrink the percentage of the worlds population that is malnourished.
  33. 33. Global MarketplaceOutlookIncreased resource use and improvements in technology and efficiency have increasedglobal food production more rapidly than population in recent decades, but 800 millionpeople remain food insecureGiven economic and environmental constraints on cropland expansion, the bulk ofincreased crop production will need to come from increased yields on existing cropland

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