Christopher B. Barrett Guest lecture to Govt 3553 (Prof. N. van de Walle) February 22, 2012 Cornell University The Global Food Security Challenge In the.

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Presentation transcript:

Christopher B. Barrett Guest lecture to Govt 3553 (Prof. N. van de Walle) February 22, 2012 Cornell University The Global Food Security Challenge In the Coming Generation

Agricultural demand and supply will evolve significantly 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 US agricultural and foreign policy must adapt to these structural changes. Overview

Main Demand-Side Drivers Population – slowing growth, especially in high-income nations, but still big absolute growth, almost all in developing countries. Urbanization – especially in developing countries, market demand increases faster than aggregate demand as rural people migrate. Income Growth – especially in developing countries, with major implications for commodity composition of diets and trade. Demand Drivers

But large absolute growth (due to population momentum), almost entirely in currently less developed countries Demand Drivers

Urbanization increases the population share buying its food Demand Drivers

Real per capita GDP Growth Demand Drivers IMF forecasts for real per capita growth : US: 6.3% All advanced economies: 9.5% Emerging and developing economies: 21.5% But initial scales trump growth rates in $ terms.

Income Elasticity for Food Demand Drivers 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.

Changing Diets Bennetts 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. More modest growth in demand for staple foods such as wheat, rice and other cereals. Demand Drivers

Over the coming generation, there will be significant growth in market demand for food. Due mainly to population and income growth, especially in urban areas. Growth disproportionately in developing countries and for higher value commodities. Demand Summary

Land and water scarcity: Little untapped arable land and significant soil degradation in many regions, plus growing water scarcity limit capacity for expanding the agricultural frontier other than Africa/Latin America. Climate Change: Shifting climate patterns – esp. volatility – 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, esp. with climate change. Supply Drivers Main Supply-Side Drivers

Arable Land Only 0.4% growth in arable land from (14.1 million km 2 ).Essentially fixed without major (ecologically risky) conversion of forest, wetlands or drylands. On a global scale, no land shortage for agriculture. But a real problem in certain regions. Supply Drivers

Arable Land 80% of global agricultural land expansion expected in Africa/Latin America. Risks soil mining and stagnant or declining yields. Soil nutrient loss is already a serious challenge in many developing countries. Urban expansion competes with agriculture for prime land. Increasing demand for biofuels also competes for prime agricultural lands as well as for food/feed crops. FAO estimates a tripling-quadrupling of land in biofuels (from 14 mn hectares in 2004 to mn by 2030). Land grabs in the developing world by emerging market investors (sovereign wealth funds, etc.) threaten to remove some lands from open market supply. Supply Drivers

Water Globally, agriculture accounts for almost 70% of human water usage. 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 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 CO 2 will act as a natural fertilizer for crop production. Tropics and Water-Scarce Regions at risk: –Increased temperatures lead to increased evapo- transpiration and decreased soil moisture levels. –Some tropical grasslands and cultivated areas will become increasingly arid and unsuitable for cropping. Supply Drivers

Climate Change & Agriculture (continued) 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. Expected sea level rise will flood fertile, low-lying coastal lands and lead to greater inland seawater intrusions, contaminating freshwater supplies and agricultural land. Climate change will reinforce food security differences between wealthier, temperate regions and poorer, tropical regions. Supply Drivers

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 Climate Change & Agriculture (continued) Supply Drivers

Agricultural technological change Supply Drivers Slowing rates of yield growth and uneven experience across regions.

Rapid expansion and globalization of use of genetically modified crops Supply Drivers

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 increasingly focuses on abiotic and biotic stresses related to climate change and water scarcity. Supply Summary

Demand growth continues to outpace supply growth, especially in low-income countries, which increasingly become net food importers. 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%). Continued Growth in Agricultural Trade Market Impacts

High and Volatile Commodity Prices -Structural pressures of demand growth outstripping supply will lead to relatively high real prices. OECD forecasts prices stay 30-90% above levels. - Prices also remain volatile due to supply shocks (including from energy and financial markets). Market Impacts Data source: FAO food price index, 1/ /2011

Induced Innovation Market Impacts - Higher commodity and input prices will fuel greater private investment in improved agricultural technologies. - Higher and more volatile global market prices will also prompt greater FDI in developing country agriculture, much of which will 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 shifting agricultural value chains and inducing institutional innovation that boost productivity.

Higher food prices and more frequent price spikes pose serious risks to the poor. Humanitarian Impacts

Micronutrient Deficiencies The problem is not just protein-energy undernutrition. Major micronutrient deficiencies worldwide are an even wider-scale and less visible challenge. Best addressed through income growth among the poor and productivity growth in higher-value commodities. 633 million individuals suffer from goiter (severe iodine deficiency) –31% of developing world households do not consume iodized salt million children are deficient in vitamin A, mainly in South Asia and sub-Saharan Africa 2 billion people are iron deficient, mainly women Humanitarian Impacts

Source: World Bank (2007) 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. South Asian progress Sub-Saharan African stasis Humanitarian 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 21% by 2020 from Methane is 25x more powerful a GHG than CO 2. 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. Environmental Impacts

Structural demand and supply patterns will have significant market, humanitarian and environmental impacts. These pose major challenges. Growth in food demand – especially in the developing world – will require accelerated technological progress in the developing world in order to avoid major humanitarian and environmental problems. But also greater attention to distributional issues. Summary

Thank you for your time, interest and comments! Thank you