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Published November 16, 2010, 10:45 AM

Advisor: Ag outlook is bright, but expect some rough stretches

MINOT, N.D. — Jerry Gulke is optimistic about agriculture’s long-term future — and he has a lot of statistics to back him up.

By: Jonathan Knutson, Agweek

MINOT, N.D. — Jerry Gulke is optimistic about agriculture’s long-term future — and he has a lot of statistics to back him up.

Growing demand for food worldwide, particularly in China, makes this “a great time to be in agriculture,” he says.

Gulke spoke Nov. 9 in Minot, N.D., at the Crop Outlook and International Durum Forum. The annual event was sponsored by the North Dakota Wheat Commission and U.S. Durum Growers Association.

Gulke, a North Dakota native, is president of the Chicago-based Gulke Group, which provides risk management tools for agribusiness. He also farms in northern Illinois and manages family farm interests in North Dakota.

Gulke emphasizes the importance of China and its roughly 1.3 billion people. The country’s huge and growing middle class wants more and better food, he says.

These statistics help to make the point:

- The size of China’s hog herd has risen from about 700 million in 1990 to more than 1.1 billion today.

- Soybean meal consumption in China rapidly is rising. In 1990, the United States used roughly 20 times as much soybean meal as China. Today, China uses substantially more than the United States.

“They say there are 350 million middle-class Chinese that are equal to our salary, so to speak. What if they decide to increase their calorie intake and eat 300 to 400 calories more (daily)? We don’t have enough food in the world to feed them, or we may not have,” Gulke says.

Demand for food is increasing elsewhere in the world, too, he says.

For instance, world vegetable oil demand more than doubled from 1990 to 2010 and is expected to increase roughly 50 percent more in the next five years.

The declining value of the U.S. dollar, which makes American ag products cheaper for foreign customers, also is good for U.S. ag exports, he says.

U.S. farmers, especially younger ones new to the profession, shouldn’t assume conditions always will be good, Gulke says.

“There may be some troublesome times coming,” he says.

Agriculture is cyclical, with rough stretches alternating with good times, he says.

Years ago, when times were good in farming, Gulke bought land in Illinois for $3,200 per acre.

Later, when agriculture struggled, he watched as its value fell slowly to $1,200 per acre.

“I wondered if it would ever get back to $3,200,” he says.

Now, with agriculture prosperous again, the land has soared to about $6,500 per acre.

But while farmers shouldn’t be overconfident, they also should realize their current good fortune, Gulke says.

‘We’re in an oasis in a world of despair. You just don’t know how lucky we are until you look at other sectors of the economy,” he says.

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