FAPRI-ISU Presents 2011 World Agricultural Outlook, Adds Greenhouse Gas and Fertilizer Projections

Jacinto Fabiosa, FAPRI Co-Director; jfabiosa@iastate.edu
Dermot Hayes, FAPRI, Co-Director ; dhayes@iastate.edu
Sandy Clarke, Communications Manager ; sclarke@iastate.edu

April 11, 2011

New modeling capabilities that give 15-year projections for world greenhouse gas emissions and fertilizer use highlight the 2011 World Agricultural Outlook of the Food and Agricultural Policy Research Institute at Iowa State University.

“This year, FAPRI-ISU developed and implemented a fertilizer model and cellulosic ethanol model and it improved its greenhouse gas emissions accounting model,” said Jacinto Fabiosa, co-director. “This allows us to include world fertilizer use by nutrient, by country, by commodity, and by year. Also, projections of greenhouse gas emissions by source, by country, and by year are reported.”

Results of the greenhouse gas modeling show a 13.6 percent increase in global emissions from agricultural production over the projection period. These increases are mainly due to an increase in crop area and the associated emissions from agricultural soil management.

An increase in per capita meat demand, at 1.2 percent per year, leads to an increase in emissions from livestock products (especially enteric fermentation) but at levels that are still lower than emissions from cropland. Expanding crop area and livestock production put pressure on global forests and grasslands. The presence or absence of idle cropland in countries determines the degree of impact on greenhouse gas emissions and levels of deforestation.

New estimates of greenhouse gas emission efficiency, or GHGee, summarize information about countries’ market outcomes, productivity improvements, and greenhouse gas emissions in a single metric. The aggregate value of agricultural production per ton of greenhouse gas emissions is reported for each country, with higher GHGee values suggesting a more efficient emission performance. The results for 2010 show the European Union and United States at the higher end of efficiency, at $579 and $571, respectively, followed by Argentina at $349, India at $329, China at $324, and Brazil at $212. As productivity improves, these countries improve their GHGee by 9 to 21 percent over the projection period.

FAPRI-ISU projects that world fertilizer use increases 2.29 percent in 2011/12 relative to 2010/11, which reflects the expansion of the world’s agricultural frontier by 1.60 percent and also the more intensive use of fertilizers at the world level in most commodities. China, India, the United States, and the 27 member states of the European Union account for more than two-thirds (65 percent) of the world’s fertilizer consumption in agriculture. U.S. fertilizer use increases by 2.96 percent, dominated by higher use in corn, wheat, and sorghum because of expanded area and higher fertilizer application rates.

In the macroeconomic overview, despite tepid economic recovery in many developed economies, solid economic performance in developing and emerging economies provides a bright spot for a continuing worldwide economic recovery. In 2010, China posted growth of 10.3 percent and India’s economy grew 8.2 percent.

An economic turnaround, continuing population growth and urbanization, and ever-expanding biofuel mandates are key drivers in the recovery and strength of the world commodity markets over the outlook’s 15-year projection.

The United States is projected to import sugarcane ethanol to meet its advanced ethanol mandates at a level of 3.4 billion gallons by 2025, keeping the prices of world ethanol and sugar strong at $2.50 per gallon and 23.2¢ per pound, respectively. Meat demand increases by 9.4 kilograms. Derived corn demand for biofuel feedstock and for animal feeds keeps the corn price above $191 per metric ton in 2025. Food demand and industrial biodiesel demand support an upward trend in vegetable oil prices.

The full outlook, including projections for world food and feed grains, oilseeds, meat, dairy, sugar, and biofuels, is available at www.fapri.iastate.edu/outlook/2011/.

According to Fabiosa, budget constraints prevented the production of a joint baseline with the FAPRI group at the University of Missouri and at other institutions, as has been provided in past years. “These projections for the 2011 World Agricultural Outlook were run solely by the FAPRI staff at Iowa State University,” he said.

The multi-year FAPRI projections provide a starting point for evaluating and comparing scenarios involving macroeconomic, policy, weather, and technology variables in world agricultural trade. More information is available at the website: www.fapri.iastate.edu/.