From Kuala Lumpur, in the heart of Southeast Asia, it’s almost 10,000 miles to Julius Schaaf’s corn and soybean farm in Randolph, Iowa, but Schaaf is quick to point out the region’s growing importance as a market for U.S. farmers.
“The economic development there is just like the rest of Asia,” says Schaaf. “There’s tons of investment going in, and that creates jobs and brings people into the middle class. People start eating meat. And wherever the meat production takes place, it’s going to take grain.”
The numbers give an idea of the region’s growth potential, beginning with 620 million people who currently have little meat in their diets. For example, people in Thailand eat less than half the amount of meat as people in Mexico (30 kg [66 lbs.])/person/year vs. 60 kg). Indonesians consume just one-sixth (10 kg annually) that of Mexicans.
Feeding that population is a challenge for the region. Southeast Asia is slightly less than half the size of the U.S., and only 13% of the land is suitable for agricultural production. Most of that is dedicated to rice and palm oil production, according to Adel Yusupov, who directs the U.S. Grains Council’s (USGC) market development efforts in the region.
“Their climate and soil just will not allow them to grow their own grain supplies,” says Schaaf. “They will always have to look to others to supply their grain needs.”
Economic growth is increasingly providing the money to pay for imports. The regional economy, second largest in Asia, has been growing by 6-7% annually and is expected to continue expanding faster than the world average, Yusupov notes.
GDP has risen by 170% in the last decade for the 10 countries that make up the region’s ASEAN community – Brunei, Burma, Cambodia, Laos, Indonesia, Malaysia, the Philippines, Thailand, Singapore and Vietnam. Countries like Indonesia and Thailand are also in a strong position to attract investments because they fall at the low end of the Global Risk Index, notes John Lindblom, regional director for ASA International Marketing.