New Boom in Agriculture: Changing Diet in Emerging Nations Article from July-September 2004 issue of Business Strategies Newsletter By Bill Birnbaum, CMC Thanks to globalization, much money is flowing into emerging nations, particularly India, China and Brazil. Thus, more and more people in developing nations are enjoying increased income. Certainly this will continue, as the economies of these emerging nations further develop. Historically, when people receive more money, their diet changes. They shift from carbohydrate to protein. Specifically, they eat less grain and more meat. For example, during Japan’s rapid economic expansion from 1960 through 1990, its meat consumption increased by 360%. As India's population of 1.1 billion people is largely vegetarian, that country may well prove the exception to this rule. Maybe. But Chinese and Brazilians eat meat. And their economies are thriving. So, over time, they'll eat less and less grain and more and more meat. Let's assume that some fellow in China eats one pound less grain (probably rice) and one pound more meat. So what? Well, for one, some rancher (of cattle, or poultry, or sheep) must now raise one more pound of meat. Yes, but do you know what it takes to raise a pound of meat? It takes grain. In fact, it takes quite a lot of grain. According to the World Resources Institute, the exact ratio depends on the specific feed grain and animal variety. But the rule of thumb is 10 pounds of grain for each pound of meat. So if our Chinese friend were to stop eating a pound of grain and replace it with a pound of meat, the pound of grain he stopped eating would have to be accompanied by an additional nine pounds, and all ten pounds fed to some cow (or sheep, or pig, or chicken). Even if our Chinese friend gave up a pound of grain for only an half pound of meat, still an additional four pounds of grain would be needed for animal feed. Clearly, the demand for meat, and especially for grain, will increase dramatically because of the developing economies of China and Brazil. And remember this too – there are 1.3 billion people in China. That's one fifth of the world's population! While Americans’ meat consumption is 268 lbs per capita per year, Chinese consumption is only 103 lbs (Source: "How Much Do We Consume?" by Gregory Mock, Published: World Resources, 2000-2001). But there are 4.4 times as many Chinese as there are Americans. So if the Chinese were to increase their meat consumption by say 60% (remember, Japan increased its by a full 360% in 30 years) to 165 lbs, that increase alone would equal all of the meat currently eaten by Americans! That's like creating another meat-eating country the size of the United States. This trend has already begun. China has purchased a full 13% of the total US soybean crop in 2004. In fact, China already accounts for a third of the world’s soybean trade. If you think that this grain-to-meat shift is kind of interesting but not of much importance to you and me, guess again. For growing more meat, plus much more grain, requires energy. Energy to grow and harvest grain, and to feed livestock. Plus more energy to transport grain, and to freeze and ship meat. In fact, because of these significant energy requirements, all people in all nations – and all businesses – will feel the effect. Whether we end up referring to this trend as an “Agricultural Boom” or "The New Agricultural Revolution," historians will later decide. But it's very significant. Watch for signs of it. More importantly perhaps, figure out how it’s likely to effect your business. And develop strategies to deal with it. Originally published in the Business Strategies Newsletter