Feeding the World – A Growing Challenge

Within the last ten years, real food commodity prices have doubled, underpinned by high economic growth in emerging developing countries, and higher global prices for energy and associated inputs. But high and volatile food prices have raised the possibility of future shortages and focus attention on the ability to feed the world, in a context of climate change, scarcity of land, water and nutrients and an uncertain economic oulook.

The growing demand for food, feed, fuel and fibre is well documented. The UN estimates that the world population will reach 9.1bn by 2050, an increase of 2.3bn, or 34%, from today. This increase will take place almost entirely in the developing world. Accelerating rural migration will lead to a significant majority of the population living in urban areas (compared to about 50% today), and dependant on purchased rather than home-produced food.

With higher incomes, the shift to western type diets to include more protein-rich food has major implications for the environment. This rising food demand will be dampened by a slowdown in population growth and because an increasing share of world population is reaching medium to high levels of food consumption.

The Food & Agricultural Organisation (FAO) estimates that agricultural production will need to increase by 60% globally and nearly 77% in developing countries by 2050 to cope with a larger, more urban and wealthier population. This translates into additional consumption of 940m tonnes of cereal and 200m tonnes of meat a year by 2050. These estimates do not include additional demands coming from the growing biofuel sector.

Overall, production gains in agriculture have kept pace with demand growth over recent time. Increased production has been attained by increases in the use of land, capital and variable inputs (such as fertiliser), as well as by increases in the productivity of those inputs. However, this will become increasingly challenging.

According to World Bank estimates, yield improvements of the three most important cereals (rice, wheat and maize) rather than area expansion has been the basis of production increases over the last 50 years. See chart below.

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For the period 1960 to 2011, overall production growth rate per year was 2.4% in total, of which yield contributed 1.9% and area increase contributed 0.5%. But according to the latest OECD – FAO Agricultural Outlook, assumptions are changing. The average annual growth in global agricultural production to 2021 will be lower than that of the previous ten years at 1.7% compared to 2.6%.

What are the land and water constraints for agriculture? The OECD – FAO suggest that ample land resources with potential for crop production remain. However, much of this potentially arable land is located in Latin America and sub-Saharan Africa, often in remote locations, far from population centres and agricultural infrastructure.

There is potential to expand agricultural land use but there is competition for much of this land for urban growth, industrial development, environmental reserves and recreational uses. Given commodity prices, technology and competing demands, the feasible scope for area expansion is limited. FAO predicts that from the 2005-2007 base period to 2050, only 10% of the global growth in crop production (21% in developing countries) is expected to come from land expansion, with the remainder coming from higher yields and increased cropping intensity. At present, agriculture accounts for over 70% of water use globally, but both the absolute amount of water available for agriculture and its share are expected to decline to 40% by 2050 according to the OECD.

The availability of fresh water resources shows a similar picture to that of land availability, with sufficient resources at the global level being unevenly distributed and an increasing number of countries, or parts of countries, reaching critical levels of water scarcity. So although there are sufficient total supplies, there will be increasing constraints on water use by agriculture in the future.

Increasing agricultural productivity is critical to meet expected rising demand. Does recent performance indicate rising agricultural productivity? The chart below shows average annual growth rate for developed countries and developing countries in Total Factor Productivity (TFP) for four time periods.

For each of the previous last five decades (1960 – 2010), TFP grew more rapidly in developed countries than in developing countries. The period of most divergence was in the 70’s when TFP grew by 1.64% in developed countries compared to 0.93% in developing countries. TFP can be seen as a proxy for changing efficiency. The conclusion is that agricultural productivity growth is still low in most least-developed countries, in particular sub-Saharan Africa.

Discussions of productivity growth in agriculture inevitably make reference to the evolution of crop yields. Despite rapid yield growth over past decades, realised yields are still well below both their genetic potential and economic potential. It is possible to calculate actual gaps from crop yield potentials and whether it is feasible to close these gaps. The OECD-FAO Outlook does just that and estimates the size of yield gaps by region in 2005.

The results show that yield gaps vary markedly by region and in most cases are sizeable. There are greatest in sub-Saharan Africa where yields are estimated to be only about 24% of what could be produced. In contrast, the gap is lowest in East Asia at only 11%. The potential to increase output is particularly high in regions where the yield gap is larger than 30%. Future crop yields and global food security may well hinge on the ability of farmers around the world to narrow the gap between current and potential yields.

So far, the food & agricultural sector, despite yield gaps, has been relatively successful in providing for an increasing and wealthier population at the global level. TFP growth in agriculture has been strong and has exceeded the population growth rate. But the challenge is to increase agricultural productivity and production in a sustainable manner.

The need to increase production and productivity would be greatly reduced by reducing food losses and food waste in both post-harvest losses at the farmgate and food waste further along the food chain. A recent FAO study suggested that roughly one third of food produced for human consumption is lost or wasted globally.

What can contribute to sustaining agricultural productivity growth? More efficient use of land and water is a much sought after objective. An example is irrigation in dry areas using supplemental irrigation which entails harvesting the rain water run-off, storing it and applying it during critical crop stages. More efficient use of nutrients is an area of vigorous study. Nutrient use efficiency is particularly problematic for nitrogen fertilisers, since 15-70% of the applied nitrogen may not be taken up by a plant. More efficient use of crop protection is another objective. Between 26-40% of the world’s potential crop production is lost annually because of weeds, pests and diseases, and these losses could double without the use of crop protection practices.

Harnessing plant breeding and bio-technology is yet another area ripe for development. Research has shown thatcrop yields increased by about 2% per annum of which about half has been attributed to plant breeding and the adoption of new crop varieties. These are examples of how agricultural productivity can be raised.

In China, since the mid-60s the weight (Kg) of cereals grown per Kg of nitrogen used has reduced from over 140 to less than 40. In the US the opposite has happened, with an increase from the mid 1970s of around 45 Kg cereals per Kg nitrogen to almost 70 by 2005.

Adoption of agronomic practices such as minimum cultivation, optimum fertiliser use, higher nutrient efficiencies in livestock production and better use of organic fertilisers would all contribute to more sustainable agriculture. New bio-tech developments and plant breeding techniques may introduce crops that are more drought and heat resistant or be able to survive saline soils or excessive rainfall.

To improve production efficiency in a sustainable manner, well-functioning markets must provide clear price signals that reflect the scarcity value of natural resources. A good example is water quota policies. For developing countries, investments in physical capital (infrastructure) in rural areas, is needed in the areas of storage, transportation and irrigation systems, and in electrification and information/ communication systems.

In innovation in agriculture, the focus must be on improving research & development (R&D) and innovation for small firms. Agricultural R&D is the main source of innovation and is needed to sustain productivity growth in the long-term. This is equally true of the agricultural industry in Scotland as it is of any other country in the world.

The demand for food is increasing with a growing population and increasing incomes coupled with an urbanising population. The potential to meet this rising demand by increasing the amount of land is limited. Increased production will need to come from increased productivity. Actual yields for the main food crops are well below potential yields and many regions have yield gaps in excess of 50%. The major challenge for the agri-food sector is to increase agricultural productivity in a sustainable manner. However, increasing productivity and improving sustainability in agriculture are not mutually exclusive objectives. Much can be done that contributes to both these objectives.

Encouraging better agronomic practices, creating the right commercial, technical and regulatory environment and strengthening the agricultural innovation system through research, education and extension are all essential steps. The private sector will need to play a lead role in developing and adapting innovation. Reducing food loss and food waste can significantly ease the pressure to increased productivity. Feeding the world in the next 50 years is a challenge that can be met.

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