World Food Issues

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World Food Issues

• Robert L. Thompson
• Gardner Endowed Chair in Agricultural Policy
• University of Illinois at Urbana-Champaign
• April 14, 2008

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The Paradox of Hunger Amid Plenty

• Theres plenty of food produced in the world
  today.
• Hunger is caused by the inability of individuals
  or households to access the available supply
• due to lack of purchasing power
• except in times of war, natural disaster, or
  politically imposed famine.
• To address the latter, need emergency food aid
• To solve the basic world hunger problem, we must
  solve the poverty problem.
• Foreign aid (literally international welfare
  payments or gifts of food) can be a stop-gap.
• Job creation is the only long-term solution
  (Remember teach a man to fish or give him a
  fish)

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Current High Food Prices

• Causes
• Poor crops around the world in last two years
• Minimal worldwide stocks of grain
• Economic growth and successful poverty reduction
  in low income countries
• Biofuels expansion in the U.S. Western Europe
• Depreciation of the U.S. dollar.
• This is having devastating impact on low income
  people, who spend the largest fraction of their
  income on food, especially in low income
  countries.

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Evolution of World Population

• It took from the beginning of time to 1804 to get
  to the first billion people on earth.
• BUT, the population passed
• 2 billion in 1927
• (123 years later)
• 3 billion in 1960
• (33 years later)
• 4 billion in 1974
• (14 years later)
• 5 billion in 1987
• (13 years later)
• 6 billion in 2000
• (13 years later)
• 6.5 billion in 2006
• (6 years later)

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Projected Population Growth (U.N. medium
projections, in millions)

• Region 2007 2050
• World 6,671 9,191 38
• High Income 1,223 1,245 2
• Low Income 5,448 7,946 46
• Africa 965 1,998 107
• Asia 4,030 5,266 31
• Latin America 572 769 34
• North America 339 445 31
• Europe 731 664 - 9
• ______________

The UN Population Offices low and high
projections of the world population in 2050 are
7.8 billion and 11.9 billion, respectively.
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Population Density, 2050
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Poverty and Hunger

• 1.1 billion people live on less that 1/day 854
  million of them suffer under-nutrition or hunger.
• 2.7 billion people live on less than 2/day by
  2 per day, most hunger (calorie) problems
  solved.
• As their incomes rise from 2 to 10 per day,
  people eat more meat, dairy products, fruits,
  vegetables edible oils, causing rapid growth in
  raw ag commodity demand.
• After about 10 per day, people buy more
  processing, services, packaging, variety, and
  luxury forms, but not more raw ag commodities.

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One Dollar Per Day Poverty
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Two Dollars Per Day Poverty
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Huge Growth in Food Consumption Expected from
Economic Growth
Source World Bank. World Development Indicators
database
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Projected World Food Demand

• World food demand could double by 2050
• 50 increase from world population growth all
  in developing countries
• 50 increase from broad-based economic growth in
  low income countries
• The World Bank estimates that the number of
  people in developing countries living in
  households with incomes above 16,000 per year
  will rise from 352 million in 2000 to 2.1 billion
  by 2030.
• How many presently low income consumers are
  lifted out of poverty will be the most important
  determinant of the future global demand for food.

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Growing Demands on Forests, Too

• The same forces of population and income growth
  that increase demand for food also increase
  demand for things made out of wood, e.g. paper,
  furniture, building materials poles.
• In rich countries, growing demand for
  environmental amenities and preservation of
  (especially old-growth) forested areas.

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Biofuels Now Driving Ag Outlook

• Production of ethanol in the U.S. and biodiesel
  in Europe comprise the biggest shock to world
  agriculture since 1970s.
• Creating large demand for corn and edible oils,
  which is pulling land out of other crops in U.S.
  and destroying rainforests in S.E. Asia.
• Higher feed grains prices reducing profitability
  of livestock and poultry industries.
• When will we have technology for producing
  ethanol economically from cellulosic feedstocks?
  Can they be produced on inferior soils?

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Growth of U.S. Ethanol Industry

• 2000 1.7 billion gallons of ethanol produced
  used 6 of U.S. corn harvest.
• 2007 5.8 billion gallons produced used 20 of
  corn harvest (now larger than exports).
• Now 134 ethanol plants are operating with total
  capacity of 7.2 billion gallons 77 more are
  under construction or expanding.
• This will bring capacity to 13.4 billion gal. by
  2008-09
• Energy Bill of 2007 mandated 36 billion gal. of
  biofuels by 2022, of which 15 billion from corn.

Source Renewable Fuels Association
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Larger Fraction of Ag Production to Move Through
Trade
Distribution of Arable Land
Distribution of World Population

• With population growth, urbanization and
  broad-based economic development, many low-income
  countries food consumption will outstrip their
  production capacity, and they will become larger
  net importers.

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The Land Constraint

• There is at most 12 more arable land available
  that isnt presently forested or subject to
  erosion or desertification.
• And degradation of many soils continues.
• The area of land in farm production could be
  doubled
• But only by massive destruction of forests and
  loss of wildlife habitat, biodiversity and carbon
  sequestration capacity
• The only environmentally sustainable alternative
  is to at least double productivity on the
  fertile, non-erodible soils already in crop
  production.

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Constraints on World Ag Production

• 40 too dry 6 too rough terrain
• 21 too cold 2 unsuitable soils
• 21 too wet

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Global Climate Change
Before
After
Source International Institute for Applied
Systems Analysis, Laxenburg, Austria
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Can Technology Enable Expansion of Arable Land
Area?
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Water A Growing Constraint

• Farmers use 70 of the fresh water used in the
  world. They are both the largest users and the
  largest wasters of water.
• Water is priced at zero to most farmers,
  signaling that it is much more abundant than in
  reality. Anything priced at zero will be wasted.
• With rapid urbanization, cities are likely to
  outbid agriculture for available water.
• The worlds farmers need to double food
  production using less water than today. Biofuels
  will add further to this challenge.

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Need Research to At Least Double Food System
Productivity

• Make presently unusable soils productive
• Increase genetic potential (of individual crops
  and/or farming system) (ditto for farm animals)
• Achieve as much of that potential as possible by
• Improving nutrition of that crop
• Increasing water availability and control
• Reducing competition from weeds for water,
  nutrients and sunlight
• Reducing losses from disease and insects
• Reduce post-harvest losses

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Prophets of Doom Underestimated Power of
Technological Change

• Argued population growth (without considering
  income growth) would increase food demand faster
  than agricultural production could grow.
• Public and private sector investments in
  agricultural research have increased productivity
  faster than demand growth.
• Where adaptive research investments have been
  made, surplus, not scarcity, has prevailed.
• 150 year downward trend in real price of grains.
• But will biofuels reverse this trend?

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Agricultural Research Potential

• Most productivity enhancement potential of Green
  Revolution technologies already exploited.
• But biotechnology opens new frontiers
• Improve nutritional content of grains, etc.
• Increase tolerance to drought, wetness,
  temperature, salt, aluminum toxicity, . (to
  increase yields and/or planted area under adverse
  or variable conditions)
• Internalize resistance to diseases viruses
• Reduce pesticide use, esp. insecticides
• Herbicide-resistant varieties
• Slow down product deterioration

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World Agriculture in Disarray

• Most high income countries subsidize their
  agriculture, distorting relative returns to
  producing various outputs and inducing larger
  total investment in agriculture relative to other
  sectors.
• Many LDCs food policies turn the terms of trade
  against agriculture to keep urban food prices
  low, reducing the incentive to invest
  agriculture underperforms relative to its
  potential.
• Protectionist import policies and export
  subsidies further distort what is produced where.

to paraphrase D. Gale Johnsons book World
Agriculture in Disarray
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OECD Producer Support Estimates, 2004, in Percent
Percent of gross farm receipts attributable to
all forms of government subsidies, support and
protection from imports. Source OECD.
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Average Producer Support in OECD Countries,
2004, in Percent
Percent of gross farm receipts attributable to
all forms of government subsidies, support and
protection from imports. Source OECD.
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The Global Trading Environment Hurts LDC
Agriculture

• OECD protectionist barriers to LDC goods reduces
  their foreign exchange earning capacity and
  economic growth.
• OECD agricultural production and export subsidies
  depress world market prices below long term trend
  and increase variance around that trend
• Food aid is most available in years of OECD
  surplus, not LDC deficit.

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World Market Prices Depressed Below Long Term
Trend
Source World Bank. Global Economic Prospects
2002, Chap. 2.
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Developing Countries Own Policies Impede Their
Development

• Corruption and/or macroeconomic instability
• Lack of definition or enforcement of property
  rights and contract sanctity
• Underinvestment in public goods, such as rural
  infrastructure, education and RD.
• Cheap food policies to keep urban consumers
  quiescent often reinforced by food aid or
  subsidized exports from OECD
• Lack of technology adapted to local
  agro-ecological conditions (soils, climate
  slope)

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There Are Exceptions to Subsidized Agriculture

• New Zealand, which today has an overall PSE in
  agriculture of about 1 percent, used to subsidize
  agriculture, but went cold turkey in the
  mid-1980s. Its farm sector and agricultural
  exports have never been healthier.
• Australia underwent a similar, but more gradual,
  withdrawal from ag subsidies
• Many low income countries agricultural PSEs are
  negative, i.e. the net effect of government
  policy is to reduce, not augment, farm income.

Producer Support Estimatepercent of gross
receipts attributable to all forms of government
subsidies, support and protection from imports.
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Long-Run Prospects

• Since Malthus, prophets of doom have argued
  population growth will increase food demand
  faster than agricultural production can grow.
• Public and private sector investments in
  agricultural research have increased productivity
  faster than demand growth, with resulting 150
  year downward trend in real price of grains.
• Need to double world food production by 2050
  using less water and little more land than today
  also produce feedstocks for biofuels
  production.
• Future world market price trend will depend on
  whether research increases land and water
  productivity faster than world demand grows.