Long term opportunities in the agricultural market are more positive than they have been in many years. We urge you to read Who Will Feed China? Wake-Up Call for a Small Planet, by Lester R. Brown (W.W. Norton & Company, 1995).

In this short book, Brown presents a convincing case. Most of the rapidly developing countries around the world are spending more of their GDP on food. At the same time their citizens are demanding an improved diet that includes increasing amounts of protein rich grains, meat, eggs, etc. Historically, the countries that have gone through this phase go from net exporters of high quality foodstuffs to net importers. Recent examples are Japan, South Korea, and Taiwan.

Now, it is China's turn. However, with its 1.2 billion people the magnitude of the impact on worldwide demand could easily overshadow past events. 1.2 billion times anything is a lot. For example, the official goal for egg consumption in China was set at 200 per capita per year by the year 2000, double the level of 1990 but still less than the average of 235 in the U.S. The number of chickens necessary to generate these eggs would consume the entire grain export volume of Canada. Two more beers per person in China would take the entire Norwegian grain harvest.

This is all the result of predictable long-term patterns. As developing countries' populations increase, land is taken out of agricultural production for urban uses such as roads, factories, parking lots, etc. Also, agrarian people migrate to urban areas where incomes are higher.  Perhaps most important, water becomes more scarce and is given over to industrial uses (this is a particular problem in China where available water in the agricultural areas is limited to begin with).

Thus the internal demand for food, and the demand for higher quality diets increases, while internal supply decreases. In any given country, increased agricultural productivity will rise, but will only make up a portion of the increasing gap between supply and demand. The developed countries, typically, must make up the remainder.