I was struck with this claim by the US commodities trader Cargill. World population is forecast to grow from 7 to 9 billion or by something less than 1 third. But total food production needs to grow by 70% because wealthy consumers in developing countries eat more meat. Is it true? Food prices are estimated to climb sharply over the next decade at least according to the OECD-FAO with grain prices rising 20% and meat prices by 50%. That seems consistent with this story.
Update: After writing the above I went to a session on food policy presented by Cornell’s Professor Per Pinstrup Anderson being held at the Australian Agricultural and Resource Economics Conference in Fremantle Western Australia.
Professor Anderson opened his talk by criticizing ‘alarmist” bloggers and international organizations such as FAO who predicted coming food shortages. Ouch! Well, not really – I think the lines above are sufficiently cautious to exclude me from being included in the alarmist camp. Anyway, I listened with interest to his presentation to find out why I might have got it wrong. I walked away at the end unconvinced that he had provided good arguments to support a position that global food price trends will settle at lower levels than at present.
Professor Anderson noted that international organizations such as IFPRI in their ‘Food Security and Climate Change, 2010, had forecast real food prices would double to 2050 while OXFAM had forecast that maize prices would increase by nearly 200% in 20 years. He claimed these estimates as well as estimates of numbers of hungry people in the future were very exaggerated.
The reasons he gave for this exaggeration were basically supply side reasons. He claimed yields in developing countries could still be substantially improved, that increased investments in infrastructure could further boost productivity, that better risk management approaches could be introduced to protect farmers, that property rights could be assigned to small-scale farmers in developing countries and that full charging for environmental damages could all act to substantially increase supply. He also claimed that the costs of desalination could fall substantially in the future that would bring about greater access to low cost water again driving up supply.
All these supply side effects, he argued, would more than offset demand side effects including increased grain feed-protein demands from emerging economies and the increasing diversion of plant products into biofuels.
Well, maybe but this type of conclusion needs to be backed up with evidence. The demand side effects – increased protein demands, increased biofuel demands – are well backed up by evidence. For example, China’s meat consumption doubled between 1990 and 2002. IFPRI in many publications (for example, here) have emphasised the contribution of the use of biofuels to food price increases. The supply side effects that Professor Anderson relies on to offset these price-increasing effects are much less well documented. In other contexts – for example, debates on energy prices – these assumed supply effects are described disparagingly as ‘technological optimism’.
Climate change effects are likely to impact negatively on water supplies and, overall, can be expected to intensify the demand-side effects I emphasize. Another class of supply side effects – namely the increasing urbanization trends in developing countries – can be expected to drive up wages in agriculture and again reduce supply. This has already occurred in countries such as China where surplus labour has all but vanished from agriculture. The claims that cheaper desalination technologies will drive greater productivity in agriculture seems quite implausible to me. There is some evidence that the past reductions in desalination costs that have been widely commented on have now stalled.
This means that the main supply effects that Professor Anderson’s results hinge on must be efficiency gains through better yields, more spending on infrastructure and through better environmental policies such as land privatizations and full cost pricing of environmental damages.
Again, maybe, but I’d like to see the evidence on this. Are there not qualifications being raised about the dependence of Green Revolution yield improvements on fertilizer-pesticide and irrigation reforms all of which have negative environmental consequences as well as being subject to energy cost restrictions?
Generally the evidence on environmental sustainability in agriculture is ambiguous. I am not as knowledgeable in these areas as a leading expert such as Professor Anderson. But I would like to see his arguments spelt out. When I get some time I will chase these issues up further.