(Oct. 18) ANAHEIM, Calif. — Emerging middle classes in China, India, Latin America and the new countries joining the European Union offer produce suppliers potentially lucrative markets.

But skyrocketing oil and natural gas markets and a China with both a rapidly growing economy and burgeoning agricultural capability also pose economic threats, an analyst with Rabobank says.

Deborah Perkins, the New York-based executive director of food and agribusiness research for Rabobank International, Utrecht, Netherlands, was the featured speaker at an Oct. 16 Fresh Summit 2004 workshop titled “Produce Supply and Demand: Global Economic Trends, Indicators and Analysis.”

Perkins argued that fruit and vegetable producers need to keep the changing demographics and economic realities of the entire world in mind.

On one hand, she said, economists forecast that the U.S. economy should continue to grow modestly. However, the U.S. continues to have the largest trade deficit in the world. And that is not expected to change, Perkins said, particularly with trading partners such as the EU manipulating prices to ensure that imports to the U.S. do not outpace consumers’ abilities to purchase them.

Meanwhile, the Japanese economy is improving, thanks in part to rapid growth in China, and that could present U.S. and other producers with lucrative export opportunities.

At the same time, China’s rapidly growing economy may cause significant inflation worldwide if not managed carefully, she said. And China’s thirst for oil could complicate transportation rates both domestically and internationally as the price of crude continues to climb. By mid-October, crude oil had jumped to well over $50 a barrel, with no ceiling in sight, she said. Pri
ces now are more than 57% above last year’s.
Perkins said China offers a suitable investment opportunity for export agriculture and that it has a competitive advantage in labor-intensive crops. However, it has critical water issues. And companies interested in exporting to China should keep in mind that 20% of its massive population is centered in 36 cities and represents 45% of its purchasing power.

Meanwhile, India offers exporters another potential market, Perkins said. While India has the world’s fourth-largest economy and agriculture makes up nearly a fourth of that, the country mainly grows for its own population.