Transcript Slide 1

The Global Food Security Challenge
In the Coming Decades
Christopher B. Barrett
Sydney Ideas Lecture
University of Sydney (Australia)
May 16, 2012
Overview
Agricultural success over 1940s-80s enabled dramatic
poverty reduction and better global standards of living
5-6 billion people have adequate calories today, up from only
about 2 billion 50 years ago.
Public/private sector ag research and policy reforms (esp. in
China) led to unprecedented productivity growth far outpacing
demand growth and driving down real food prices, lifting
hundreds of millions from poverty.
Land/water use efficiency increased dramatically.
Successes enabled population growth, urbanization and income
growth
… and induced a dangerous complacency.
Overview
We now face major challenges as food demand and
supply will evolve significantly (and predictably) over
the coming generation.
These structural patterns will have major effects on:
- Prices, including price volatility
- Induced technological change
- Global food security and poverty
- The natural environment
Policy, business and consumer behavior must and will
adapt to these structural changes.
Demand Drivers
Main Demand-Side Drivers
• Population – slowing rates of growth, especially in
high-income nations, but large absolute growth,
almost all in developing countries.
• Urbanization – especially in developing countries,
demand for purchased food increases faster than
aggregate demand as rural people migrate.
Increased demand for processed foods, especially.
• Income Growth – especially in developing
countries, with major implications for commodity
composition of diets and trade.
Demand Drivers
Population growth is slowing globally, but large
absolute growth due to population momentum
concentrated in less developed countries
Source: United Nations Population Division, World Population Prospects: The 2010 Revision, medium variant (2011)
Demand Drivers
Urbanization increases the share of the population
purchasing food from markets
7
80%
6
70%
60%
5
50%
4
40%
3
30%
2
20%
1
10%
—
0%
2000
2010
2020
2030
2040
2050
World Urban Population (billions)
Percentage of World Population Living in Urban Areas
Demand Drivers
Real per capita GDP Growth
IMF forecasts for real per capita growth 2012-17:
US: 16.4%
All advanced economies: 13.1%
Emerging and developing economies: 35.2%
But initial scales trump growth rates in dollar terms.
Real GDP per capita
(thousands 2000 US$, PPP terms)
45
40
35
30
United States
25
Advanced Economies
20
15
Emerging and Developing
Economies
10
5
0
2000 2002 2004 2006 2008 2010 2012 2014 2016
Drivers
Income ElasticityDemand
for Food
But food demand grows at a decreasing rate with income
growth. Marginal food demand growth due to income growth
in low-income countries is 5-8 times that in US. Hence the
concentration of food demand growth in the Global South.
Demand Drivers
Changing Diets
• Bennett’s Law: demand
for variety and quality in
diet grows with incomes.
• Biggest shifts are in diet
composition, especially
oils, meat, dairy, sugar,
fruits and vegetables, as
well as processed foods.
• Modest demand growth
for staple foods (wheat,
rice, other cereals).
Demand Summary
Over the coming generation, there will be
significant growth in market demand for food. So
both production and distribution systems will be
put under stress.
This is due to both population and income growth,
especially in urban areas, as well as predictable
dietary transitions.
Growth will be disproportionately in developing
countries and for higher value commodities.
Supply Drivers
Main Supply-Side Drivers
• Land and water scarcity – Little untapped arable land and
significant soil degradation in many regions, plus growing
water scarcity. Limited capacity for expanding the
agricultural frontier other than in Africa or Latin America.
• Climate Change – Shifting climate patterns, especially
volatility and extreme events, force greater and changing trade
patterns and reinforce North-South differences.
• Technology – Slowing growth in yields. Rapid spread of
biotechnology. Added pressure for new breakthroughs to
address land and water scarcity as well as evolving pest and
pathogen pressures, especially with climate change.
Supply Drivers
Arable Land
• Only 0.4% growth in arable land 1990-2007 (14.1 million km2)
• Total arable land is essentially fixed without major
(ecologically risky) conversion of forest, wetlands, or drylands.
• On a global scale, no land shortage for agriculture, but major
shortages will pose problems in specific regions.
• These patterns help stimulate international land acquisitions.
Supply Drivers
Arable Land
• 80% of global agricultural land expansion expected in Africa and
Latin America, often resulting in soil mining and stagnant or
declining yields. Soil nutrient loss is already a serious challenge
in many developing countries.
• Sources of competition for prime agricultural land:
– Urban expansion
– Feed crops for livestock
– Biofuels
• FAO estimates a tripling-quadrupling of land in biofuels (from
14 mn hectares in 2004 to 35-59 mn by 2030).
• “Land grabs” in the developing world by emerging market
(sovereign wealth funds, etc.) and urban investors threaten to
dispossess smaller producers.
Supply Drivers
Water
• Globally, agriculture accounts for almost 70% of human
water usage, but well over 80% in Africa and Asia.
• To keep pace with global food demand, annual
freshwater withdrawals are estimated to increase by 14%
over the next 30 years.
• 1 in 5 developing countries will face water shortages by
2030.
Supply Drivers
Supply Drivers
Climate Change & Agriculture
• Northern Latitudes expected to benefit:
– Temperature increases more pronounced in northern
temperate zones. Extends growing season, increases
suitable cropping land, decreases costs associated
with overwintering livestock, increases crop yields.
– Increased atmospheric concentrations of CO2 will act
as a natural fertilizer for crop production.
• Tropics and Water-Scarce Regions at risk:
– Increased temperatures lead to increased evapotranspiration and decreased soil moisture levels.
– Some tropical grasslands and cultivated areas will
become increasingly arid and unsuitable for cropping.
Supply Drivers
Climate Change & Agriculture (cont.)
• Increasing temperatures will expand the range of
agricultural pests and milder winters will increase the
ability of pest populations to survive
• Higher temperatures will induce higher rainfall amounts,
but rainfall distributions will not be even.
• Greater inter-year volatility in rainfall, with extreme
events especially problematic in the Global South.
• Expected sea level rise will flood fertile, low-lying coastal
lands and lead to greater inland seawater intrusions,
contaminating freshwater supplies and agricultural land.
• In general: climate change reinforces differences b/n
wealthier, temperate and poorer, tropical regions.
Supply Drivers
Climate Change & Agriculture (cont.)
Agriculture also affects climate change processes
• Agriculture contributes 10-12% of the total global
anthropogenic emissions of greenhouse gases (GHGs)2
– 47% of anthropogenic methane emissions
– 58% of anthropogenic nitrous oxide emissions
• Largest sources of agricultural emissions: agricultural
soils, enteric fermentation
• Other significant sources: biomass burning, rice
production and manure management
Supply Drivers
Agricultural Technological Change
Slowing/uneven yield growth rates.
If yield growth <1.0-1.5%, supply
begins to lag demand growth.
Supply Drivers
And productivity growth has to occur when demand
growth will occur because 85-90% of food is consumed
within the country where it is grown, even with food trade
growing faster than production.
Supply Drivers
Much of the growth will come from continued rapid expansion of
use of genetically modified crops, esp. in developing countries
Supply Summary
Over the coming generation, arable land and
freshwater for agriculture grow increasingly
scarce. Areas with greatest physical capacity for
expansion face greatest water and land
management challenges.
Climate change compounds these problems,
especially due to coastal flooding and
pest/pathogen pressures.
Slowing yield growth must be reversed.
Technological change must increasingly focus on
abiotic and biotic stresses related to climate
change and water scarcity.
Market Impacts
Continued Growth in Agricultural Trade
• Demand growth continues to outpace supply growth,
especially in low-income countries, which increasingly
become net food importers.
• Thus, greater global demand for agricultural trade due to
geographic patterns of supply and demand growth as
well as impacts of climate change.
• Renewed pressure for a WTO Agreement on Agriculture
and reduced domestic support/protection in the OECD
– >$1 billion/day in OECD subsidies to agriculture!
– Far greater protection in agriculture (19%) than
manufactures (4%) or energy (2%).
Market Impacts
High and Volatile Commodity Prices
- Continued demand growth outstripping supply growth
will continue high real prices. OECD forecasts prices
average 20% higher than 2012 levels for the next decade.
- Prices also remain volatile due to supply shocks
(including from energy and financial markets).
200
30
25
20
150
15
100
10
50
0
1/19901/19921/19941/19961/19981/20001/20021/20041/20061/20081/2010
Data source: FAO food price index, 1/1990-3/2012
5
0
Lagged 6 month standard deviation of
FAO Food Price Index
FAO Food Price Index (2002-4 = 100)
250
Market Impacts
Induced Innovation
- Higher commodity and input prices will fuel greater
private investment in land and water resources as well as
in improved agricultural technologies.
- Will also prompt greater FDI in developing country
agriculture, which will help close yawning yield gaps.
- Renewed government commitments to agricultural
development will begin to pay off in a decade or so,
reigniting yield growth in low-income agriculture.
- Demand growth is altering agricultural value chains and
inducing institutional innovation that boost productivity.
Market Impacts
Land Acquisitions
- Higher commodity and more volatility food prices,
combined with growing land scarcity (esp. in Asia) are
fuelling sharp increases in land investment.
- Land acquisitions in Africa in 2009 totaled 39.7 mn ha
(> agricultural land in Belgium, Denmark, France,
Germany, the Netherlands, and Switzerland combined!)
- Contentious because “land grabs” can displace marginalized rural peoples and terms of deals often opaque.
- 2008 Daewoo deal to lease 1.3 mn hectares led to
overthrow of government in Madagascar. More to come?
Market Impacts
Max Potential Value of Agricultural Output (US$/ha)
Source: Deininger, Arezki & Selod, 2011
Humanitarian Impacts
Persistent poverty and hunger are closely tied
to agricultural stagnation
Cereal yields and extreme poverty move inversely.
Real GDP growth from agriculture is 2.7 times more effective
in reducing extreme poverty vs. non-ag growth.
Sub-Saharan African Stasis
4000
3500
50
3500
3000
40
Poverty (right axis)
2500
30
2000
Yields (left axis)
20
1500
10
1000
500
1984
1987
1990
1993
Source: World Bank (2007)
1996
1999
0
2002
60
Poverty (right axis)
50
3000
40
2500
30
2000
20
1500
10
1000
500
1984
Yields (left axis)
1987
1990
1993
1996
1999
0
2002
Poverty incidence (%)
60
Cereal yields (Kg/Ha)
4000
Poverty incidence (%)
Cereal yields (Kg/Ha)
South Asian Progress
Humanitarian Impacts
Higher food prices pose
serious risks to the poor
Humanitarian Impacts
Micronutrient Deficiencies
• Micronutrient deficiencies pose a larger, more stubborn
and less visible challenge than dietary energy shortfalls.
• Best addressed through income growth among the poor
and productivity growth in higher-value commodities.
• 633 mn suffer goiter (severe iodine deficiency) …
31% of developing world hhs don’t consume iodized salt
• 100-140 million children are deficient in vitamin A,
mainly in South Asia and sub-Saharan Africa
• 2 billion people are iron deficient, mainly women
Developing world prevalence (%) of insufficient
Dietary energy
Vitamin A (under 5 serum retinol < 20 g/dl)
Iodine (urinary iodine < 100 g/dl)
Iron ( under 5 anemia)
Source: FAO SOFA 2013 (internal data)
1990-94
20
36
N/A
49
1995-99
17
35
37
49
2000-04
17
33
33
51
2005-09
15
31
33
61
Environmental
Impacts
Future Environmental
Impact
• Greenhouse Gas Emissions
– Agricultural nitrous oxide emissions are projected to
increase by 50% by 2020 relative to 1990 levels
– Combined methane emissions from enteric
fermentation and manure management will increase
by >20% by 2020 from 2005. Methane is 25 times
more powerful a GHG than CO2.
• Nitrogen Pollution
– Excess nitrogen from fertilizer spurs plankton growth,
which decreases oxygen levels in the ocean. EPA has
identified 150 dead zones worldwide. The biggest are
the Baltic Sea and the Mississippi River Delta.
Environmental
Impacts
Future Environmental
Impact
• Deforestation
– Agriculture accounts for ~80% of deforestation
worldwide, almost 10 million ha/year: Commercial
agriculture 32%, semi-subsistence farming 48%.
• Water Use
– Necessary expansion of food production requires
increased crop uptake of water.
– Since 70% of human water use is already on
agriculture, this will both stress water availability and
demand increased efficiency in water use, as well as
potentially seawater desalination.
Policy
Inadequate Policy Responses
• Sluggish public investment in agricultural research over
past generation … poor productivity growth and
increasing issues of corporate capture and IP.
• Shortcomings in land and water tenure policy, especially
for ensuring equitable and efficient control over land in
the face of sharply increased demand (“land grabs”).
• WTO multilateral trade agreement on agriculture stalled
but trade will grow ever more crucial.
• No significant progress on mitigating or adapting to
climate change.
• Failure to agree to renegotiated Food Aid Convention to
ensure orderly global arrangements for international
food assistance, especially in emergencies.
Summary
Past success proves the potential of food
systems to reduce human suffering. This is
challenge that, together, we can meet.
Structural demand and supply patterns for
food pose major challenges. Failure to meet
these challenges quickly and decisively risk
significant market, humanitarian and
environmental impacts in coming decades.
Must focus most attention where the needs
will be greatest : in Africa and Asia.
Thank you
Thank you for your time, interest and comments!