Agro Commodities Glut Fuels U.S. Food & Beverage Expansions, Grassroot Projects

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SUGAR LAND--May 23, 2016--Researched by Industrial Info Resources (Sugar Land, Texas)--The U.S Food & Beverage Market appears to be accelerating production expansions throughout nation. Industrial Info Resources is tracking $18.37 billion of active food & beverage projects (desalination and storage not included) for grassroot production facilities as well as expansions to existing facilities.

Prices for many major crop commodities have fallen significantly since 2012, while corn and soybean production has increased. Additionally, prices for all major meat commodities have been consistently falling since 2014. Poultry prices have fallen somewhat since 2015. Also, nearly all major livestock commodities have expanded production.

Lower agricultural commodity prices spell higher food and beverage profit margins and appear to have become a boon to investments for projects. Investments in confirmed completed projects for this year to date (not including those for desalination and storage projects), are $768 million greater than those for the comparable period in 2015. Additionally, the total number of individual projects increased by over 57%.

Click image at right for graph on Completed U.S. Food & Beverage Production Additions.

The top 10 states with the most new Food & Beverage production investments for this year to date are, in order California (despite the drought) at $272 million, Kentucky at $210 Million, Missouri at $150 million Wisconsin at $140 million, Iowa at $140 million as well, Arkansas at $124 million, Indiana at $119 million, Michigan at $111 million, Illinois at $97 million dollars and finally Washington at $94 million dollars.

The food production projects for those top states come from a highly diverse set of industry segments. Some of the most prevalent include meat & poultry processing, breweries (continuing the well-known craft trend), prepared foods & flavors, feed mills, bakeries, cheese and pet food.

Not all news is good. Despite the falling prices at the time, between 2014 and 2015, the total investment in completed production expansions and grassroot facilities fell by $5.6 million on average per state (a drop of $280 million in all). However, the total number of individual projects significantly increased, thanks in part to the craft brewery trend, which saw its fastest growth during that time. Thus, the current acceleration should be taken with a grain of salt. Additionally, widespread concern over a new global recession, which may include China (a major importer of U.S. powdered milk) and raised concerns of global food security, could reverse the trend.

Nevertheless, global food demand continues to increase as the global population expands while the U.S. remains one of the largest food exporters.