With the global economy continuing to reflect great uncertainty, it is ironic that projections of future consumption trends in grains increasingly emphasize the importance of economic conditions, mainly personal income levels. Sure, trends in population, urbanization, governmental policies and political and trade relationships all continue to affect whether consumption of grains rises, slows or even reverses. But in assessing the outlook for the near term, it is striking the degree to which the path of global grain consumption is moved by incomes and how that will come to bear on what people around the world eat. Measuring this effect is difficult, but it is hugely important for the global grain-based foods industry to appreciate what a major change this is from the time when it could be assumed that world consumption was mainly governed by supply, not demand.

The economy’s effect is primarily evident in the way that feed consumption is at long last the driving force of total demand. Impacted primarily by the desire of people with increasing incomes to eat more meat and poultry, feed use has gained precedence as the main force affecting grain use. This marks the realization of expectations that have existed for decades. Students of grain markets have forecast for years that feed utilization will be front and center, easily surpassing food and other uses. For the past decade, that prospect, which constantly seemed on the verge of being realized, was interrupted by mandates in the United States creating a new outlet for grains, primarily corn, to make ethanol. Just as growth of ethanol use has slowed, income levels emerged as powerful forces, primarily in Asian leaders like China and India, but also in sub-Sahara Africa.

In its recent five-year global demand projections for grain, the Secretariat of the International Grains Council emphasizes the uncertainties surrounding the global economy. Noting how these worries
increased in the past year, the I.G.C. says it decided in the face of “significant downside risks which could undermine global growth in the period to 2016-17” to assume that these problems will not worsen. That assumption lies behind the forecast that feed use of grains five years from now will be up 10% from 2011-12. In contrast, the gain in food use of grains in the same period is projected at 4.6%. The Council sees industrial grain use gains of 13.6% in the same five years, but this is much slower than in the prior half-decade.
According to the I.G.C., diversifying diets, particularly favoring consumption of meat and poultry, relate directly to income levels. At the same time, these gains slow the rise in the direct use of grains for food. Within wheat specifically, these factors show in the prospect that food use of wheat in 2016-17 will be up a modest 4% from 482 million tonnes currently, while feed use of wheat will expand 10% in the same period, to 136 million tonnes. Wheat’s share of direct food use of grains has held constant at 74% in recent years, and there’s no change from that position likely in the next five years, the I.G.C. indicates.

Global economic conditions also play a key role in boosting export trade. For all grains, the I.G.C. forecasts exports in 2016-17 rising 9% from five years earlier to a new record of 273 million tonnes.
Wheat is likely to gain 5%, to 138 million tonnes, a new peak. Global corn exports are projected to exceed 100 million tonnes for the first time, reaching 107 million, which is up an impressive 15% from 2011-12. Growing incomes are credited with causing expanded demand for wheat-based foods in Asia and Africa as well as larger imports of corn for feed in Pacific Asia, mainly China. While expanding demand from rising incomes makes a positive force for the global grain foods business, it must also be recognized based on the past three years how this factor fluctuates.