The United States is redefining its relationship with the broader world, and agricultural producers will feel the impact through trade and labor, predicted geopolitical strategist Peter Zeihan. But little in the reordering of the world will undercut the success of U.S. agricultural producers.
“You are looking at the greatest agricultural expansion in history – and you are almost all alone,” Zeihan said.
Zeihan, an expert in global energy, demographics and security, spoke to producers at FCSAmerica’s 2017 Executive Summit. For the second consecutive year, Zeihan helped make sense of global upheaval and its impact on U.S. agriculture.
Since the advent of the Cold War, the U.S. has patrolled sea-lanes to keep them open and safe for trade. The world has prospered as a result – although there has been little economic benefit to the U.S. In fact, Zeihan said, the U.S. is less dependent on export markets than any other advanced economy.
For much of the past 70 years, this has been fine with American policymakers. The U.S. always approached its role from a security rather than an economic standpoint, he said. But the Cold War is over, the shale industry has made the U.S. energy independent and America stands apart from the developed world as the only country with the demographics to support long-term economic success.
“This has changed the way the U.S. views security, trade and energy,” Zeihan said.
As the U.S. pulls back from the international stage, he said, the potential exists for “hot wars” in key shipping areas, which would disrupt much of the world’s oil, manufacturing and agricultural trade. The U.S., however, would be largely unaffected because it has the resources to produce and move its own food and goods.
Still, Zeihan said, farmers and ranchers face risks in a new world order:
Labor – Population trends indicate that the availability of migrant farm workers from Central America is at its peak. A coming decline will force producers to look to more distant labor markets or increase their use of robotics.
Trade – Uncertainty about the direction of U.S. trade deals could lead to lost opportunities, Zeihan said. But if the U.S. and Cuba can normalize relations, Midwest producers will be major winners. Despite its relatively small population of 11 million consumers, Cuba is hungry for everything American, including U.S. grown beef and corn.
Longer term, U.S. producers could be among the few who can expand productive acres to meet global demand. In a world where conflict and trade are disrupted, “the U.S. can add more new land to its agricultural output than all other countries combined put together,” Zeihan said. “In fact, only five other countries can add productive land.”
The Five – Australia in wheat and high-end beef, Myanmar in rice and New Zealand in dairy.
New Zealand has tripled its dairy production in the past 25 years and could triple it again if it adopts U.S. practices, Zeihan said. The country also has become the No. 5 beef exporter in the world because of dairy. If New Zealand decided to get into beef production, Zeihan predicted, “it would turn the international beef market inside out.”
Lastly, Argentina and France share attributes that allow them to prosper well into the future, including energy self-sufficiency, independent infrastructures, no military threats and quality land on which to grow a little bit of everything.