“We are nearing the end of the downswing. It is inconceivable that prices will continue to go down indefinitely when production is dropping at the rate it is worldwide”
– TED BILYEA
The world may be going to hell in a handbasket, but in the meantime, Manitoba’s grain and livestock farmers will be doing a booming trade.
“Asia is going to need the food,” said Ted Bilyea, former Maple Leaf Food executive vice-president, agri-food consultant, and current member of the Alberta Livestock and Meat Agency (ALMA).
As the pain of the economic recession filters down, politicians the world over may reach for protectionist levers to prop up domestic markets, he said. But that’s only a short term hurdle, because the burden of an expected two billion more mouths to feed by 2030 will push the world’s ability to feed itself to the limit – especially in Asia.
“We’ve gained more market access through food supply issues in the past three years than we’ve managed to negotiate in the last 10. If you have a food supply issue, suddenly protectionism isn’t a problem,” he said.
Bilyea said that the collapse of global finance and international trade that began last fall has had a “buffering” effect on the pace of the 21st century’s converging crises, which include shortages of water for agriculture, an unstable climate that threatens yields, zoonotic disease, and increasing competition for what’s left of the world’s supply of fossil fuels.
“If we come out of this recession, as has been predicted within the next year or two or three, then all of these issues are going to be right back on the table,” said Bilyea.
“So from that perspective, the agricultural community in Canada, and particularly Manitoba, is in a singularly interesting position.”
He noted that China leapt from fourth place to No. 1 in the world for pork imports last year, not because of an outbreak of blue-ear disease, but because soaring domestic demand has outstripped capacity.
The number of food animals has doubled in the past 20 years, and is set to triple in the next 20.
“Ask yourself, how on earth is that going to happen in the context of Asia?” said Bilyea. “They are going to import that product and we can see it already occurring.”
Asia’s grain production dwarfs the combined output of Europe and North America, and one bad cropping season in that region could send prices soaring. UG99, a particularly destructive strain of wheat rust that has been spreading out of Africa in recent years, has already been detected in Pakistan and could devastate crops in India’s breadbasket.
“If it gets there, the Green Revolution is toast,” he said.
The situation is only going to get worse, he added, with 10 per cent of China’s farmland already too polluted for food production. In Korea, for example, 36 per cent of all available renewable water is already being tapped for agriculture.
Bird flu has already hobbled expansion in Asia’s poultry industry, but a new zoonotic disease shows up every year. In the struggle with antibiotic-resistant microbes, the region has fared far worse than western countries.
Despite the frightful charts and graphs projecting disaster down the road for many of the world’s most populous nations, which he called “the eye of the hurricane,” there’s reason for optimism here because the province’s northern location could see positive changes from global warming, such as a longer growing season.
He also pointed to the success of the Environmental Farm Plan program, which has seen over half of Manitoba’s arable acres covered, noting that much of the “heavy lifting” has already been done.
As public concern over global climate change reaches the critical tipping point and forces politicians to act to prevent the situation from becoming a full-blown catastrophe, Manitoba will already be out in front, he said.
“You have the opportunity of being sustainable. They don’t,” said Bilyea.
“The things that I’m telling you are real. Arable land, population growth, are real and measurable things. The reality that we cannot (feed two billion more people) by drawing down natural capital infinitely is beginning to sink in,” he said.
For livestock producers, especially beef and pork, the light at the end of the tunnel is coming as sow, cow and even chicken numbers plummet around the world. The Pilgrim’s Pride bankruptcy, and severe financial problems at Smithfield Foods and Tyson indicate that the agri-food giants may be headed for the same fate as the banking industry.
“We are nearing the end of the downswing. It is inconceivable that prices will continue to go down indefinitely when production is dropping at the rate it is worldwide,” said Bilyea.
“I can’t predict when the recession will end, but if we can get through this really difficult point, it could turn around really swiftly and go to significant heights. It’s really a question of whether you have the capacity to hold on.”
Those who argue that a return to global prosperity will restore upward pressure on input costs, don’t understand the advantages enjoyed by Manitoba farmers in that regard, he added.
“One thing that we should not fear in Canada, even in the meat business, is higher input costs because we use relatively less inputs than the rest of the world. If it’s costing us a dollar more, it’s probably costing someone else way more than that.” [email protected]