After Christmas Dinner: Considering Food Demand

Its Christmas night as I write this.  It’s a family tradition going back almost forever that the Shaw family eats an awful lot of food on Christmas day.  I think you could probably say ditto for all the farm families across southwestern Ontario.  It is tradition in this part of the world for families to gather and celebrate together.  For my extended family there is turkey, potatoes, dressing and all the fixings beyond whatever you can imagine.  Typically everybody find themselves fuller than 3-headed ticks.

In my position as an agricultural evangelist/economist that food consumption equation is one I find incredibly interesting.  Just think, in many parts of the world ate as well as we did at Christmas time, North American farmers would be able to sell a lot more corn and soybeans to those parts of the world.  Changing diets are also part of that equation.  Agricultural economists have always pointed toward China in that regard with incomes rising in a population demanding more meat in their diet.  So we see more grain demand in spades.  Food consumption and the changing patterns within it are inherently important to agricultural economics and our agricultural incomes across North America.

I find it incredibly interesting.  For instance last year I was a guest speaker at the Western Canadian Wheat Growers convention in Ottawa.  I gave a market outlook at the time, which reflected some of the bearish grain problems that we have seen in Western Canada accentuated by the lack of rail movement.  However, one of the other speakers was from the US Wheat Associates in Washington DC.  During the convention I had the opportunity to ask him about per capita wheat consumption in Egypt.  Their wheat consumption is incredible compared to a place like Canada.  He told me that it was amazing wheat and products mainly made from wheat were a huge part of the daily diet.  I walked away from that meeting thinking if we could all eat like Egypt then wheat would be in deficit instead of the constant surplus around the world.

I mentioned that on twitters this past weekend and was corrected by some others in Europe who I thought should know.  For instance I was told that Algeria and Tunisia actually have a higher per capita consumption of wheat.  I quickly checked the Internet and I found one source saying Kyrgyzstan had the highest consumption of wheat.  Needless to say, we can debate who has the highest per capita consumption but Egypt is up there and with 84 million people that is a lot of wheat demand.  With the Russians supplying them with the largest share of their domestic market, you can see why the problems with the Russian ruble over the last few weeks are reverberating in wheat prices throughout that region.

Of course the wheat market is not top drawer this Christmas night.   I just find it incredibly interesting especially when you think about per capita consumption of wheat products.  In my own case my per capita consumption of food at Christmas time goes through the roof.  I would say that it is for most of us and we try to get back to normal in the days after.  Food has become so ubiquitous in our society that we take it for granted.

It never used to be that way in North America at Christmas time.  For instance, I can remember plucking the turkey before we cooked it and ate it when I was a child.  Food took much more preparation than that it does now.   It is the same way around the world.  When I travel to Bangladesh, like I have 5 times in the last 20 years, now there is convenience food everywhere.  Simply put even in societies such as Bangladesh and China, food is becoming more ubiquitous, cheaper and much more like oxygen.  Simply stated, as incomes rise food is always there.

This shifting diets whether it is in wheat or meat is having a huge effect on our agricultural economics.    Take corn for example.  At the present time prices are much lower than they have been for the most part over the last 5 years.   However, the demand for corn is at record levels, almost exploding.  If there is any hiccup of production or continuing shift in food demand especially in the developed world, it bodes well for future commodity prices.  We all know that Mother Nature doesn’t always play nice.  2015 might be one of those years.

So as you take those antacids this Christmas season to quell our digestive overabundance, take time to consider that more of this is happening around the world and it is having a big effect on both agricultural demand and prices.  Take time also to consider the opposite, because despite our full stomachs there are still many in societies around the world where stomachs aren’t full and hunger remains a problem.  It is not only one-way.  We as a society have yet to get it right, but something tells me, at least from an agricultural perspective, we’re headed in the right direction.  Merry Christmas and Happy New Year to all.