GRAND FORKS, North Dakota — Challenges and opportunities abound in agriculture, a North Dakota State University agricultural economist says.

Both the challenges and the opportunities that the United States face in the global marketplace are the result of competition that has increased greatly over the past 50 years, as the U.S. share of soybean, corn and wheat exports have dropped and those of its competitors have risen, said William “Bill” Wilson, North Dakota State University agribusiness and applied economics professor.

While the U.S. marketing system has huge advantages when they aren't what Wilson calls “interventions” in the marketplace, the advantages are reduced when the interventions exist.

William "Bill" Wilson
NDSU photo
William "Bill" Wilson NDSU photo
“We have very intense international competition, more than we ever have had before,” Wilson told farmers Dec. 9 during a session about agricultural trade at the Prairie Grains conference in Grand Forks. ”That’s a challenge for us and an opportunity for us.”

Challenges that the United States faces include stiffer competition for agricultural exports from Brazil, which has lowered its shipping costs and the Ukraine, where rail transportation costs are low. Meanwhile, Ukraine is located near buyers in the Middle East, North Africa and the European Union, so it has a geographical advantage, Wilson said.

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Besides competition from Brazil and the Ukraine, the United States is facing challenges for agricultural exports from Russia, which is taking steps to shore up its grain supply to ensure food security. Russia also wants to reduce the reliance on imports which western nations put sanctions on in 2014, Wilson said.

Russia is striving to become a multi-international giant, and VTB, a leading universal bank in the country has asked President Vladimir Putin for assistance with creating a competitive advantage that would control the role of foreign traders, he said.

The VTB’s proposed grain holding company would control the supply chain, Wilson said, noting that VTB already is Russia's largest owner of facilities and rail cars, and the No. 1 exporter from the Black Sea.

Meanwhile, though U.S. companies have made great advances in agricultural technology, others have, too.

For example, Beijing has made clear that it will support its seed technology leaders, which will develop insect-resistant and herbicide-tolerant corn, Wilson said.

Dabeinong Biotechnology, one of two Chinese technology companies founded in 2011, is among those that were charged with stealing GMO corn seed in Iowa and Illinois, Wilson noted.

On the demand side, in the future, domestic need for biodiesel and sustainable fuels will result in reduction of U.S. trade, Wilson said. The reduction in commodity exports will be offset by the demand for the crops by U.S. companies driving prices, he said.

“That’s going to have a huge impact on the market,” Wilson said. “We’re going to have a huge battle for acres.”

According to Wilson, other factors that affect the agricultural commodity markets and global trade are:

  • Increased differentiation in demand. For example, U.S. consumers generally have been accepting of food produced using GMO technology, while consumers outside of the United States have not.
  • Changing technology, which has been adapted around the world in various ways. There have been substantial investments in agricultural productivity. “Everyone has the information. The advantage is who can analyze it best,” Wilson said.