Predictions for the Global Farming Outlook 2016
The outlook for the global agricultural industry in 2016 cannot be viewed in isolation.
The interdependencies between this and the other segments of economic activity are complicated and subject to wide disagreement in interpretation, but they exist nonetheless. So what does that mean in terms of 2016?
the worldwide economy
Writing in the first few weeks of the year, it seems clear that the coming year will once again be a tough one for the global economy. While this may sound like a repeat of the news for any year since 2008, sadly, it seems likely.
Right now, the US and UK economies are growing moderately healthy, but their economic recoveries remain fragile. Consumer spending in both countries is extremely low and unpredictable.
China’s once-unstoppable economy is slowing, though growth still remains at levels almost any other country would consider an unattainable ideal. It seems likely that the demand for certain types of agricultural products in China will continue to increase, which is good for its domestic producers and for those countries from which they import things like tractors and agricultural machinery, as well as produce.
Unfortunately, from that moment on, the picture looks increasingly bleak.
Australia and the Eurozone appear to be facing relatively anemic growth prospects next year. Furthermore, Greece remains a major concern for European financiers, although it is not currently ‘front page news’.
Many economies in South America and Africa seem to be headed for serious trouble and even the once energy-rich Russian economy seems in danger of spiraling ever deeper, almost out of control.
The first few weeks of 2016 have also seen a number of mild panics across the various stock markets and while these have yet to fall off a cliff into a panic sell-off, things have come close to it on a few occasions. Once again, there is some evidence that capital is beginning to return to things like gold and other safe havens.
In terms of the political effects on the global economy, the situation in the Middle East is far from encouraging, although it probably has to be said that the world has become largely used to that over the last 70 years. Unless oil supplies are threatened by the situation there, the terrible tragedies may not have an immediate direct impact on the world economy.
Of more immediate concern to markets and economists is the growing tension between Russia and NATO along their huge border in Europe. The economic instability in Russia and the lack of predictability in relation to its political decision-making is on the minds of many investors.
The situation in terms of mass migration to Western Europe is also proving to be an economic concern.
The exact numbers are unknown. The European Union itself estimates that approximately 1.8 million people migrated to Europe in 2015.
Even conservative estimates of the numbers that have entered Europe since 2012 and will enter by the end of 2017 are quite staggering. Given the unequal distribution of immigrants in relatively few of the more industrialized and richer EU countries, the immediate short-term impact of the costs involved and the potential for social disruption, with the economic effects that could entail, is a cause for concern. for some.
Summary
It seems sensible to anticipate that at least some of this will be reflected in the agricultural sector and have a detrimental effect on producers trying to raise investment capital. However, that negative impact may be more than offset by the ongoing global demand for affordable food due to population growth.
Agriculture may be one of the relatively few sectors doing reasonably well in 2016, even if times elsewhere are tough.