Angus University: Income growth sets stage for ag product boom -

Catlett, the regents professor in agricultural economics and agricultural business and extension economics, and dean of the College of Agricultural, Consumer and Environmental Sciences at NMSU, was the keynote speaker for Angus University, part of the Angus National Convention & Trade Show, held Nov. 5 in Kansas City.

The demand for food, especially protein, growing around the world is a result of income growth in many countries, Catlett said. Meat consumption in countries such as China and India has jumped seven and fivefold, respectively, since 1970.

Income growth is the key factor pushing higher demand for food, especially in developed countries, Catlett said.

Meat becomes more prominent in diets after incomes rise, he said. To produce enough food for a world population that will grow to 9 billion by 2050, the shrinking segment of farmers and ranchers will have to grow exponentially more food.

“It isn’t going to happen from pastoral agriculture,” Catlett said. “If you want to double production, it’s going to be from intensive animal operations. Because that’s where the efficiency, the animal health and the least impact to the environment comes on board. And guess where the most producers are that do that? U.S. and Canada.”

Catlett cited statistics from The Economist magazine showing the number of people in the world in impoverished environments who survive on less than $1.25 a day has dropped from 2 billion to 750 million in 10 years – the fastest recorded drop in any time of history.

Going even further back to 1970, the U.S. in that year became the world’s first $1 trillion economy in gross domestic product (GDP). The U.K. followed with a $250 billion GDP. But in that year, when the world population was 3.6 billion, half of that population was in China, India and Brazil. And those three nations combined fell short of the U.K.

“Well, what’s happened since then? In China a 19-fold increase in GDP, in India a 13-fold increase and Brazil a ninefold increase. Guess what? They got more money, and when people get more money, it changes them – they have fewer kids, and they get more picky.”

“People coming out of poverty change their diet, and the first thing they want is more meat protein.”

Catlett said this is shown by China’s meat consumption jumping sevenfold over the past 10 years, followed by India jumping five times.

Meanwhile, the U.S. combined net worth of 121 million households is a record-breaking $83 trillion. This is driven from generations choosing to have fewer kids and gaining more dispensable income, and results in more consumer demand for organic, natural and specified craft foods. All of those trends are good for today’s food producers, Catlett explained.

“In this world of wealth that’s occurring and in developed nations with more wealth than they can count, differentiating and segmenting markets is the most important thing that people can do, because it does add value.”

Catlett also explained how U.S. buying power will be preserved as the baby boomer generation sees its numbers of 82 million Americans begin to drop.

The X generation, born in the late-‘60s to mid-‘80s with 44 million Americans, will control more wealth from that transition, since they’re already the highest-paid generation at this stage of their careers than any generation before it.

“So we’re replacing the largest generation with the smallest generation, but the wealthiest generation ever,” he said.

One warning for those generations will be in how they transfer the assets and wealth between them. The coming decade he said will have “the largest intergenerational transfer of wealth that’s ever occurred in 6,000 years of recorded history.”

But statistics show that second-generation family businesses have a 20 percent survival rate in the U.S., and that goes down to 4 percent for a third-generation business.

Catlett pointed to three critical forms of technology that will shape how economies build products and spend dollars in coming years.

The end-of-one principle, a statistical term that means the population is going to end at one, places an importance on individual data sampling apart from the group.

Another factor will be growth of big data – that assimilates sets of information too vast for simple interpretation.

Using the example of a drone flying through a cattle herd and photographing animals’ conditions and happiness, Catlett said such a program can use data to affirm current practices.

“You put all that data together and you’ve got a hell of an argument, the argument we’ve always made in agriculture and ranches about our land, about our environment and our animals. If you do not treat them well, they won’t treat you well.”

Catlett took more time to emphasize 3D printing and its growing potential to manufacture three-dimensional, tangible products and goods with raw material and a digital blueprint. Recent demonstrations on high-profile stages have included manufacturing cars and even houses in a period of several hours using 3D printing.

That technology has been used in Europe recently to replicate an artificial kind of hamburger, which didn’t have a quality taste, Catlett said. But more revolutionary would be 3D printing to quickly produce vaccines for humans or livestock.

“Remember the old days when there used to be epidemics and pandemics? Folks get ready, what a time to be in agriculture. It’s going to be tied to everything that makes life better for everybody.”