2. YIELD RISK Approved Yield x Coverage Level x Base
Premium Rate x Base Price
REV RISK: Approved Yield x Coverage Level x CRC Base Rate
x CRC Low Price Factor
PRICE RISK Approved Yield x Coverage Level x Base Premium
Rate x CRC High Price Factor
RISK PREM
4. US Economy and Agriculture
1947 2006
US GDP $244B $13.1T
AG GDP $19.9B $129.7B
Sources:
5. GDP ($trillions)
Sources:
$-
($trillions)
US GDP
$10.0
$12.0
$14.0
$6.0
$2.0
$4.0
$8.0
1947
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
US Economy and Agriculture
1995
1998
2001
2004
6. US Economy and Agriculture
Top US Industries as a Percent of US GDP
Agriculture Manufacturing Finance Professional services
30.0
25.0
20.0
% of US GDP
15.0
10.0
5.0
-
1947
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
Sources:
7. US Economy and Agriculture
Agriculture GDP Performance
10.0 % of GDP $160.0
$GDP
9.0
$140.0
8.0
$120.0
7.0
$100.0
$GDP ($billions)
6.0
% of GDP
5.0 $80.0
4.0
$60.0
3.0
$40.0
2.0
$20.0
1.0
- $-
1947
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
Sources:
12. AG Productivity Improvements
Production History and Stats
1900s Today
Fertilizer 3.7m tons 50m tons
Hrs to Prod. 100 bushels 100hrs 2hrs
One farmer supplies… 5 people 110 people
Exports ($b) $0.92b $77.5b
Sources:
25. Global Marketplace
World Population (in Billions)
10.0 9.2
World Pop. (billions)
9.0
8.0
6.5
7.0
6.0
5.0
4.0 3.3
3.0
1965 2006 2050
26. Impact of Global Demand
CBOT
Corn 40% 70%
Example, Georgia chickens
Wheat 75%
Soybeans
27. Global Marketplace - DEMAND
•US Biofuel Tax Incentives
•Economies of Asia and Latin America
– Growing Middle Class
•Global Grain Stockpiles Decreasing
28. Global Marketplace – FOOD CONSUMPTION
• US: 10% of Income = Food Purchases
– Bread up 24%
– Milk up 26%
•Italy / Mexico / Pakistan / Russia
29. 30
18
20
15
13
12
2
Home Debt Energy Food Goods Savings Taxes
31. Global Marketplace – The American Farmer
•Income up 48% to a record est. $87B
•Exports up 15% to $79B
•Reinvestment:
– John Deere up 76%
– Monsanto up 79%
– Mosaic up 200%
32. Global Marketplace – Developing Nations
•Long-Term Prices
•Increased Demand
• Part of the reason for the drawdown can be seen in China, where soaring demand for milk has increased the number
of dairy cattle threefold so far this decade. Half of the world's hogs now live in China, which is importing about 13%
of all the soybeans grown in the U.S. to help fatten its livestock.
•Price burdens
• The prospect for a long boom is riveting economists because the declining real price of grain has long been one of
the unsung forces behind the development of the global economy. Thanks to steadily improving seeds, synthetic
fertilizer and more powerful farm equipment, the productivity of farmers in the West and Asia has stayed so far
ahead of population growth that prices of corn and wheat, adjusted for inflation, had dropped 75% and
69%, respectively, since 1974. Among other things, falling grain prices made food more affordable for the world's
poor, helping shrink the percentage of the world's population that is malnourished.
33. Global Marketplace
Outlook
Increased resource use and improvements in technology and efficiency have increased
global food production more rapidly than population in recent decades, but 800 million
people remain food insecure
Given economic and environmental constraints on cropland expansion, the bulk of
increased crop production will need to come from increased yields on existing cropland