The Minnesota Agri-Growth Council Annual Meeting and Speakers Conference is the organization’s premier annual event, bringing together key stakeholders in the food and agriculture industry from Minnesota and the Upper Midwest. As part of this program, Michael Swanson with Wells Fargo Bank presented on the Global Agricultural Economic Outlook.

1. Global Economic Outlook
Agricultural Risk
Michael Swanson Ph.D.
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2. Economic and Agricultural Risk
Everything is connected.
We just can’t see how.
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3. Is Economic Risk Rising?
 Yes
 Quantifiably
 Emotionally
 Drivers
 Interconnected global markets
 Policies
 Domestic
 Global
 Implications
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4. Not a physical constant
Daily percent price volatility CME corn
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5. Everything is connected …
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6. Global factors – specific implications
 Growth drivers
 Population – minor
 Income – major
 Policy – wildcard
 Suppliers
 Interconnected markets
 Opportunity costs
 Implications
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7. The most “predictable” factor
High
Low
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8. Dubious assumptions – doubtful outcome
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9. The income components – TBD
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10. Dramatic growth – High Risk
Why Now?
How Much?
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11. Follow the dollars
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12. Net Trade by Category
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13. Currency strength: Fundamentals v speculative
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14. Who is our biggest trade
partner?
NAFTA
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15. Is the shoe on the other foot?
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16. Every product is unique story
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17. Can the Euro Zone still
function?
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18. Polite Fiction
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19. Why the 10 year reprieve?
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20. What about the Euro?
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21. How about China?
More of the same: Uncertainty
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22. What if China stumbles?
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23. Talk about a murky relationship
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24. The Chinese Trade
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25. Net Trade Growth
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26. If China was stock, would you buy?
 Interactions with the global market
 How much export growth could they get?
 How much import growth can they allow?
 Would the global markets stand a “sudden”
devaluation?
 What are their sustainable competitive
advantages?
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27. Slow growth better than no growth
US Economic Factors
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28. US economic key policy distortions
 Fiscal
spending
 Monetary
 Low interest rates
 High money supply growth
 Exchange rate
 Weak dollar – strong exports?
 Trade is a fickle source of demand
 Regulation/Biofuels
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29. What’s our real growth potential?
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30. Volatility is an important as the average
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31. Relative prices matter most
 Labor
 Increasing cost
 Quality?
 Capital
 Falling cost
 Increasing quality
 Automation
 Information processing
 Add capital not labor
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32. Jobs …We’re missing a decade of them
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33. The investment is happening
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34. Why they love their automation
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35. Deliberate choices
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36. Limitless demand ≠ Limitless Income
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37. Taxes will go up as a percentage
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38. They don’t buy because they love us
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39. Bad economic policy
 Simple answers are simply wrong
 Keynesian?
 Supply side?
 Monetarism?
 Complex systems
 Structural change
 Feedback loops
 Random shocks
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40. Don’t predict – plan on scenarios
 Economic volatility will get worse
 Price volatility will be extreme
 Working capital per unit will need to increase
 Margin management will be key
 Asset Pricing
 Real interest cost will increase
 Global market for assets and cash flow
 US agriculture needs to follow the links
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