Post on 30-Mar-2015
Current and future challenges for agriculture and food security Kostas G. StamoulisDirector, Agricultural Development Economics Division Food and Agriculture Organization of the United Nations
Page 3 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Rapid rise in the number of hungry in recent years
Source: FAO
Page 4 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Short-term developments
Page 5 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Food price developments, 2003-2009
0
50
100
150
200
250
300
350
2003 2004 2005 2006 2007 2008 Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Year
FA
O C
om
mo
dity p
rice
in
de
x (
20
02
-20
04
=1
00
)
Meat Dairy Cereals Oils and Fats Sugar
FAO commodity price indices (2002-2004 = 100)
Source: FAO Food Outlook (Dec. 2009)
Page 7 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Paradox 1: No serious production shortfalls
0
200
400
600
800
1000
1200
1400
Wheat Coarse grains Rice Cassava Oilseeds Sugar
Pro
du
cti
on
(m
illi
on
to
nn
es
)
2007/2008 2008/2009 (estim.) 2009/2010 (forecast)
Source: FAO Food Outlook (Dec. 2009)
Global crop production
Page 8 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Price transmission (1) : International vs. domestic prices
Page 10 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
The Price Transmisson Paradox(2): Prices Inflexible downward
Page 11 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Paradox 3: Determining the impact of price hikes
Households adjust differently:
– Net producers, net consumers• extent of separability
between consumption and production decisions
– Production/expenditure patterns
– Liquidity constraints, investment capacity
– Fact:
-4.79
-15.52
-30.03
15.69
3.110.94
-40
-30
-20
-10
0
10
20
Malawi Zambia Uganda Malawi Zambia Uganda
Changes in expenditure on maizeChanges in quantity of maize consumed
Impact of % 50 increase in the price of maize on food expenditure
Source: FAO
Page 14 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Could a similar crisis happen again?
Can some of the basic drivers be reproduced – Shortfall in stock levels ? Energy prices? Financial markets ?
– Will underinvestment in agriculture continue ?
– Who will be able to respond to the higher prices
Incoherent policy responses– Initial reaction of exporters to food price increase (export restrictions)
exacerbated price instability : Safeguards ?
– Longer-term reaction of importers (land acquisition, supply arrangements) could reduce residual market size and further increase market instability
– Loss in confidence in international markets
Energy and agricultural markets will become more strongly interlinked: can food prices be determined by much larger energy markets ?
Will new players in international grain markets provide a safeguard ?
Page 15 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Long-term challenges
Page 16 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Food security in perspective
664
556
370
810
823
1000
0
100
200
300
400
500
600
700
800
900
1000
99/0
1
2003
2006
2009
2012
2015
2018
2021
2024
2027
2030
2033
2036
2039
2042
2045
2048
Source: FAO (2009)Year
Undernourished in developing countries (Million)
Page 17 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Key challenges
Key overall challenge: To eliminate food insecurity
Challenges for agriculture:
– Meet the food and energy needs of 9.2 billion people by 2050
– Meet additional demands from energy markets
– Cope with local resource scarcity and shift to more sustainable production methods
– Adapt to the agro-ecological changes related to climate change and contribute to the mitigation effort
– Protection of livelihoods as agriculture transforms and markets are integrated
Page 18 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Demand Outlook : Slow-down in global demand for agricultural commodities
Slowdown in Population growth– +2.3 billion to 2050 after +3.3 billion over the last 40 years– Highest growth in the poorest regions: Sub-Saharan Africa (+114%)– Lowest growth in East and South East Asia (+14%)– +2.7 billion in urban areas, significant urbanization
Optimistic on income growth– Overall a richer world by 2050– +2.9% growth per annum for the world a a whole– higher in developing countries (5.2%), lower in industrial countries
(1.9%)– Less poverty (scenarios differ), but low poverty line of US$ 1.25
Page 19 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Change in the composition of diets
Source: FAO
Other, 5%Milk and dairy products, 3%
Meat and eggs, 7%
Fruits and vegetables,
5%
Vegetable oils, 10%
Sugar, 8%
Roots and tubers, 6%
Cereals, 56%
2000Average daily per
capita consumption: 2667 kcal
Other, 5%Milk and dairy products, 5%
Vegetable oils, 14%
Fruits and vegetable,
6%
Meat and eggs, 10%
Cereals, 46%
Roots and tubers, 6%
Sugar, 8%
2050Average daily per
capita consumption:
3068 kcal
Page 20 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
The global food outlook to 2050
255
97
63
23
148
70
0 50 100 150 200 250 300
past
future
past
future
past
future
De
ve
lop
ing
De
ve
lop
ed
Wo
rld Agricultural production
Source: Bruinsma (2009)
Baseline: How much more needs to be produced by 2050? (%)
past = 1961/63 to 2005/07; future = 2005/07 to 2050
Page 21 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
A Baseline Scenario shows that globally we can meet effective demand
Globally: 91% from increased yields and cropping intensities
In developing countries: 79% from increased yields and croppping intensity– Improved seeds
– More efficient input-use (especially water and fertilizer)
– Small increase in cultivated area
Yield growth: considerable slow down: 0.8% p.a. in the future compared to 1.7% in the past
Still considerable untapped/bridgeable yield potentials and increases in yield ceilings BUT
R&D needed for crops that are important for the poor (millet, sorghum, R&T, pulses, plantains)
Key Challenge : In 27 countries prevalence of food deprivation more than 50% in 2050 not counting climate change and bioenergy demand
Page 22 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Exploitable yield gaps for maize in Africa
0
1
2
3
4
5
6
Malaw i(n=4566)
Ethiopia(n=310)
Nigeria(n=2501)
Uganda(n=461)
Mali (n=163) Mozambique(n=508)
Ton p
er
hecta
re
Average national yield Average yield in farm demonstrations
Source: WDR, 2008, Sasakawa Africa
Page 23 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Agricultural system
transformation
Page 24 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Structural shifts in agriculture and agro-industry
As economies develop and incomes rise, emphasis shifts to value addition, risk management, quality and safety characteristics
– Trade liberalization and FDI intensifies the spread of agribusiness
– Gains from scale economies dominate
– Knowledge of how to manage complex systems
Concerns:
– Rapid transformations increase risk of smallholder marginalization
• lack of access to knowledge, capital of all kinds, organisation
– Agriculture-development-poverty reduction link is broken
Page 25 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Structural transformation (1)
Share of agriculture in GDP and per-capita GDP (180 countries)
Note:GDP per capita refers to 2005 PPP USD. Source: World Development Indicators, 2009.
Page 26 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Structural transformation (2)
Uganda
Nigeria
Kenya Cote d'Ivoire
Indonesia
Thailand
Malaysia
Brazil
Chile
Argentina
0
10
20
30
40
50
60
GDP per capoita, 2000 US$ log scale
Perc
ent share
of G
DP
AgricultureAgribusiness
Agriculture
Agribusiness
150 810030001100400
A declining share of agriculture in GDP, but a high and rising share of agribusiness in GDP in developing countries
Source: World Bank, WDR 2008
Page 27 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Importance of smallholdersWho is a smallholder ??70 percent of world’s poor concentrated in rural areas where 2 out of 3 bn people reside in about 450 million small farm households.
Focus on poverty reduction forces a better look at smallholders
Smallholder growth has collateral positive effects on local economies.
Page 28 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
inclusive commercialization ??
Smallholder participation into markets
– Traditional constraints ( infrastructure; input markets; information)
– Which Markets ?
– Ease of entry depends on market characteristics (e.g. volatility: volumes, prices; integration between rural, urban, regional, global)
– “Willingnesss” of producers to generate sufficient surpluses
Smallholder participation in value-chain development– Which Value chain ?
– Ease of entry depends on the specific value-chain (e.g. capital intensity, knowledge intensity, land intensity; policy induced risks)
What is the ultimate objective ( smallholder orthodoxy) – Operating through labour markets ( demand and supply)
Page 29 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Policy interventions/ VCD initiatives to alleviate constraints
Characteristics of the constraint/market failure will determine appropriate delivery mechanism/intervention– Public/merit good
• research, extension, quality assurance, market intelligence, trade facilitation, dialogue, coherence
– Private good • access to/affordability of inputs (subsidies, distribution)• output price support (level/volatility)
When to deliver support/service? Who and how to deliver? – Trade Policy
• Target primary product ? • Protect processed or raw material ?• Characteristics of industries to be protected
Page 30 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Sources of Failure in Agricultural Markets Source of market
failure:What is the constraint to private sector
involvement?Possible PPP Solutions
1. Lack of enabling environment
Unstable macro-economic environment;Inadequate physical infrastructure;Weak property rights and/or contract
enforcement
PPPs for provision and/or maintenance of infrastructure
2. Public goods Non-excludability, non-subtractability Contracting out for service delivery; Facilitate private coordination
3. Merit goods Lack of effective demand, hence market “under-provides”
Contracting out for service delivery; Subsidies
4. Barriers to entry Lack of access to: Capital, Training (technical information)Market information
-
5. High transaction costs/risks
Imperfect information about attributes or actions of other actors and/or attributes of goods being sold
Certification; Publicly supported assurance schemes; Risk sharing schemes
6. Coordination failures (complementary investment)
Asymmetric information, no mechanism to enforce commitments; hence lack of trust
Deliberative fora
Page 31 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Policy challenges..and opportunities
Page 32 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Key Conclusions
The world can produce enough food to feed itself in the long-run – if appropriate policies and investments are put in place also to deal with wild cards ..biofuels and CC
Producing enough food will not eliminate hunger – access to food must also be increased
Improving the performance of agriculture is necessary to increase both food production and access to food
Rapid transformation of the agri-food sector creates risks of marginalisation of “small “ producers.
Page 33 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Interventions vs initiatives
More creative role for public sector that goes beyond creation of basic enabling environment
Mechanisms by which public sector support can be used to leverage greater private sector participation– State seeks to align incentives facing private sector with public policy goals
such as service provision to poor groups
– Public sector risk sharing to encourage greater participation and investment
Counterproductive interventions– Crowding out
– Policy environment (e.g. ad hoc use of trade restrictions)
Page 34 3rd Conference on Sustainable Agriculture “The Art of Farming” Brussels, 11-12 May 2010
Thank you
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http://www.fao.org/economic