The story of U.S. agriculture during the 20th century has been one of making two blades of grass grow where one grew before. The productivity growth in U.S. agriculture as averaged 1.8 percent per year for the past 50 years. This means that with the same inputs, on average we produce about 2 percent more agricultural output per year. As a result, every dollar of export sales generates 40 cents of U.S. net farm income. Domestic population growth is roughly growing at 1 percent per year.
Population growth is the most important factor in the growth of domestic food demand.
If the average person eats the same amount of food over time, then domestic demand for food grows by about 1 percent per year. The bottom line is that if farm output is to continue to grow by 2 percent per year, then either new uses and new markets are needed or prices inevitably fall. It is also important to recognize that most of the developed nations around the world have mature population growth rates similar to ours. So their domestic food demand is growing at about 1 percent per year, too. As their incomes grow, their demand for food tends to shift from food grains to meat and value-added products.