As world population increases, how will
agriculture have to change?
With
the Food and Agriculture Organization of the United Nations warning in its
latest report, Food Insecurity in the World, that food price volatility is here
to stay, what are the driving forces in global agriculture in the world today?
A study
by Johns Hopkins University’s Paul Nitze School of International Studies points
out that with the global population projected to grow by 2.6 billion between
now and 2050, “farmers everywhere will be asked to increase production
sufficiently to feed the equivalent of two more Chinas,” causing world demand
for agricultural products to possibly double by the middle of the century.
For the
very short term, the forces seem to be driving prices down, with global
commodity prices falling a further 0.3 percent last week, according to the Shanghai-based
research firm Research-Works, which tracks commodities. While the falls in food
prices are primarily due to the collapse in confidence that the Eurozone can
stay together in the wake of the Greek economic debacle as well as over Chinese
economic concerns, plantings are up sharply as a result of skyrocketing prices
kicked off by the 2006-2008 food crisis.
According
to the FAO, climate change, increased frequency of weather shocks, increased
linkages between energy and agricultural markets due to growing demand for
biofuels and increased financialization of food and agricultural commodities
all suggest that price volatility is here to stay.
The US
Department of Agriculture’s Foreign Agricultural Service identifies eight key
factors that will dominate global agriculture through 2020. The report is cited
in the current issue of Rice Today, the publication of the International Rice
Research Institute based in the Philippines.
At the top of the list is the rise of the
middle class,
which is expected to double across the planet, with developing countries
leading the growth, expanding by an estimated 104 percent, compared with a 9
percent expansion of the middle class in Europe and North America. That is
expected to dramatically change consumption patterns as those with rising
incomes shift from subsistence foods such as rice and millet to more meat and
more-expensive foodstuffs. China already consumes more than 25 percent of all
the meat produced worldwide. China’s meat consumption has skyrocketed from 8
million tonnes in 1976 -- a third of U.S. consumption of 24 million tonnes – to
71 million tonnes today, more than double that in the US, according to an April
254 study by the Earth Watch Institute.
Second is the seeming inevitable fall in the
US dollar
against other currencies despite the dollar’s current strength as other
currencies such as the euro take a beating from the continuing financial
crisis. Putting upward pressure on commodity prices, which are mostly
denominated in US dollars, thus raising foreign buyers’ purchasing power and
hence demand for the products they wish to buy.
Biofuel demand, which is third, is not
expected to slacken
as grains, vegetable oils and sugar have all been converted into fuels at an
increasing pace, especially in the United States and the Eurozone. Biofuel
production in fact is considered one of the factors behind the 2006-2008 food
crisis, with 30 percent of cereal price increases laid to biofuel demand. Led
by the United States, Europe, Australia and Brazil, global biofuel production
doubled in less than six years, reaching 140 billion liters in 2011. In the
United States and Europe alone, biofuel production has continued to increase,
growing by 70 percent since the 2007–08 food crisis, according to FAO
statistics.
Fourth is trade liberalization despite the
two-decade paralysis in talks over the Doha Development Round of the World
Trade Organization, which are meant to liberalize agricultural trade. Even
without the ratification of the Doha Round, trade liberalization has risen
by150 percent, with total trade reaching US700 billion and expected to cross
the US$1 trillion mark by 2020. Despite concerns over the so-called “noodle
bowl” of bilateral trade agreements, the free trade pacts are expected to
continue to fuel rising agricultural trade between countries.
By contrast, and in expectation of what could go
wrong the USDA cites the possibility of “policy errors” – rising protectionism
as the global financial turndown continues to bite. The WTO reported in June
2011 that the world's trading nations were beginning to limit exports of food
and raw materials and installing new import barriers, including Indian cotton,
Ukrainian wheat and other commodities.
Sixth, the USDA cites high input and energy
prices, which will continue to rise. Agriculture is about planting, harvesting,
transporting, and processing. When energy-intensive inputs such as diesel,
fertilizers and other agricultural chemicals become more expensive, farmers’
profits and output are affected. The limited sources of energy and global
growth of the middle class are anticipated to drive prices of inputs –
primarily fertilizer and agricultural chemicals – and fuels for planting,
harvesting, transporting and processing food. The Iowa State University
Extension Service forecast in January 2012 that non-land costs would increase
approximately 15 percent over 2011, led by higher fertilizer, fuel, seed and
crop protection costs, affecting soybean rotation and corn.
Seventh, the USDA cites the increasing role
of biotechnology. Between 1996 and 2010, the agricultural agency said, biotech crops
increased by 87-fold, making them the fastest-adopted technology in the history
of agriculture. The US along planted 170.43 million acres' worth in 2011, with
Brazil in second at 75 million acres under cultivation. Other countries are
catching up rapidly, however. Growth by developing countries was up by about 50
percent in 2011 despite environmentalist’s fears of so-called “Frankenfoods”
and concerns that crop diversity was being destroyed.
Finally, the USDA cites eighth the increase
in production area.
The world does not appear to be running out of planting land. Production, the
USDA says, is expected to increase in South America, particularly in Brazil,
and in the former Soviet Union countries including Ukraine. Africa, the report
notes, “offers a massive land resource, but given its poor infrastructure, high
transport and distribution costs, its role appears limited for now.” There is
not a lot of slack in the amount of amount of arable land, according to Johns
Hopkins Nitze School, which says the amount of land can’t increase by more than
about 10 percent, given population pressures, desertification and lack of
water.
The
USDA report doesn’t cite climate change. It is unsure just what role climate
change is going to play, although climate scientists forecast the increased
chance of weather incidents. Perhaps the most notable was last autumn’s
torrential rains, which appear to have been triggered by the landfall of
Tropical Storm Nock-ten and subsequent rains which put more than 20,000 square
kilometers of farmland under water and did US$1billion of damage to Thai
agriculture. On the other side of the planet, the damage was worse. Rice
farmers in Arkansas in the United States, which usually account for 42 percent
of US output, also were flooded, then faced drought, reducing their crop by 32
percent according to the USDA. Desertification is expected to increase in some
areas, but growing seasons could increase in northern climates where Canada,
Russia and other countries depend on agriculture for a major part of gross
domestic product.
Asia
Sentinel
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