Rising Food Prices? The Role of Agricultural R&D

Mark W. Rosegrant, Director Environment and Production Technology Division

2013 AAEA & CAES Joint Annual Meeting Session 1019: Whither Global Food Prices?Marriott Wardman Park, August 4‐6, 2013

Outline

Drivers of agricultural growth and food security Model description Baseline projections of supply, demand and food security Scenario of increased investments in agriculture R&D Conclusions and policy implications

Drivers of Agricultural Growth, Prices, and Food 

Security

Supply and demand pressures affect agricultural growth and food security

Demand pressures Supply pressures

▪ Population growth – direct– Increased domestic /

urban use– Increased food demand

▪ Economic growth –– Increased urban water

use– Increased industrial

water use– More resource-intensive

diets ▪ Biofuels/Bioenergy

▪ Climate mitigation

▪ Conservation and biodiversity

▪ Land and water scarcity

▪ Climate change

▪ Investments in agricultural research

▪ Science and technology policy

▪ Management and governance reform

Higher food prices

More variable food prices

Pressures on ecosystems (quantity and quality impacts)

Increased competition and higher prices for natural resources

Economic / political conflict

Food security at risk

Model Description

The IMPACT Model

IMPACT – “International Model for Policy Analysis of Agricultural Commodities and Trade” Global partial equilibrium model  Global

• 115 countries • 281 food production units (countries x river basins)

• 46 agricultural commodities

Flow Chart of IMPACT Model

IMPACT Model Structure Crop area is a function of crop prices, irrigation investment, 

water input, climate change  Yield is a function of crop price, input price, irrigation 

investment, water inputs, exogenous yield growth  Yield growth is a function of investment in agricultural 

research, irrigation, and rural roads Food demand is a function of commodity prices, income, 

and population Feed demand is a function of livestock production, feed 

prices, and feeding efficiency  Biofuel demand is computed based on policy mandates and 

targets Crush demand is a function of crush profit margins

Baseline Projections of Supply, Demand and Food Security

Annual Average Growth in Per Capita GDP between 2010 and 2030 – Baseline Projections

0

1

2

3

4

5

6

Percen

t Growth Rate pe

r Year

Source: IFPRI IMPACT Model

Annual Average Growth in Population between 2010 and 2030 – Baseline Projections

0

0.5

1

1.5

2

2.5

Percen

t Growth Rate pe

r Year

Source: IFPRI IMPACT Model

World Crop Yields  Annual Average Growth Rate

0

0.5

1

1.5

2

2.5

3

3.5

Maize Rice Soybeans Wheat

Percen

t Growth Rater per Year

1970‐1990 (FAO) 1990‐2010 (FAO) 2010‐2030 (IMPACT Baseline)

Source: IFPRI IMPACT Model

World Crop Area‐Baseline Projections

0

50

100

150

200

250

300

Rice Wheat Maize Millet Sorghum Other Grains

Million Hectares

2010 2030

Source: IFPRI IMPACT Model

Source of Cereal Production Growth, 2010 ‐ 2030 

‐10010203040506070

Percen

t Cha

nge

Area Expansion Yield Improvement

Source: IFPRI IMPACT Model

Percent Change in World Prices of Cereals between 2010 and 2030

0

5

10

15

20

25

Rice Wheat Maize Millet Sorghum Other grains

Percen

t Cha

nge

Source: IFPRI IMPACT Model

Percent Change in World Prices of Meats between 2010 and 2030

0

5

10

15

20

25

30

Beef Pork Lamb Poultry

Percen

t Cha

nge

Source: IFPRI IMPACT Model

Per Capita Cereal Demand‐Baseline Projections

020406080100120140160180

Developed Developing South Asia Sub SaharanAfrica

Kg per Cap

ita

2010 2030

Source: IFPRI IMPACT Model

Per Capita Meat Demand‐Baseline Projections

0102030405060708090100

Developed Developing South Asia Sub SaharanAfrica

Kg per Cap

ita

2010 2030

Source: IFPRI IMPACT Model

Number of Malnourished Children 

0

20

40

60

80

100

120

140

160

Developing South Asia Sub Saharan Africa

Millions

2010 2030

Source: IFPRI IMPACT Model

Population at Risk of Hunger

01002003004005006007008009001000

Developing South Asia Sub Saharan Africa

Millions

2010 2030

Source: IFPRI IMPACT Model

Scenarios of Increased Investments in Agricultural R&D

Investment in Ag R&D – CGIAR

CGIAR (million 2005 US$)

Region 1992 2000 2010

Sub Saharan Africa 171 157 278

Asia Pacific 145 124 171

Latin America & Caribbean  65 63 70

Central and West Asia and North Africa 45 35 46

Source: Agricultural Science and Technology Indicators, IFPRI

‐4‐3‐2‐101234567

Sub SaharanAfrica

Asia Pacific Latin America &Caribbean

Central andWest Asia andNorth Africa

% Rate of Growth

1992‐2000 2000‐2010

Source: Agricultural Science and Technology Indicators, IFPRI

Investment in Ag R&D –Rate of Growth CGIAR

Investment in R&D – NARS

CGIAR (million 2005 US$)

Region 1990 2000 2008

East Asia Pacific 909 1405 2450

South Asia 368 615 834

Sub Saharan Africa 527 628 803

Latin America  Caribbean  1373 1577 1819

West Asia and North Africa   n.a. 698 824

Source: Agricultural Science and Technology Indicators, IFPRI

0

1

2

3

4

5

6

7

8

East AsiaPacific

South Asia Sub SaharanAfrica

Latin AmericaCaribbean

West Asia andNorth Africa

% Rate of Growth

1990‐2000 2000‐2008

Source: Agricultural Science and Technology Indicators, IFPRI

Investment in R&D –Rate of Growth NARS

Increased Investment Scenario Compared to Baseline

Increased Investment in Agricultural R&D• Baseline assumes continuation of trend growth, 2000‐2008,  in CGIAR and NARS agricultural R&D. 

• Increased investment scenario: Level of CGIAR and NARS investment in agricultural R&D is doubled by 2020 compared to the baseline, then baseline trend to 2030 

Changes in World Prices of Crops Relative to Baseline, 2030

Commodity/Scenario Increased Investment

Rice  ‐23.7%

Wheat ‐13.5%

Maize ‐9.4%

Millet ‐20.9%

Sorghum ‐15.6%

Other Grains ‐7.7%

Source: IFPRI IMPACT Model

Commodity/Scenario Increased Investment

Beef  ‐14.6%

Pork ‐12.6%

Poultry ‐14.0%

Sheep & Goat ‐16.7%

Source: IFPRI IMPACT Model

Changes in World Prices of Meat Relative to Baseline, 2030

Commodity/Scenario Increased InvestmentsEast Asia and Pacific 22.0%

Europe and Central Asia 5.1%

Latin America and Caribbean 8.6%

Middle East and North Africa  21.6%

South Asia 21.4%

Sub‐Saharan Africa 20.2%

Developed ‐0.9%

Developing  16.9%

World  11.2%

Source: IFPRI IMPACT Model

Changes in Cereal YieldRelative to Baseline, 2030

Commodity/Scenario Increased InvestmentsEast Asia and Pacific ‐4.9%

Europe and Central Asia ‐5.1%

Latin America and Caribbean ‐5.7%

Middle East and North Africa  ‐3.4%

South Asia ‐5.7%

Sub‐Saharan Africa ‐7.6%

Developed ‐5.6%

Developing  ‐5.6%

World  ‐5.6%

Source: IFPRI IMPACT Model

Changes in Cereal Crop AreaRelative to Baseline, 2030

Commodity/Scenario Increased InvestmentEast Asia and Pacific 16%

Europe and Central Asia ‐0.3%

Latin America and Caribbean 2.4%

Middle East and North Africa  17.5%

South Asia 14.5%

Sub‐Saharan Africa 11.0%

Developed ‐6.5%

Developing  10.4%

World  4.9%

Source: IFPRI IMPACT Model

Changes in Production of CerealsRelative to Baseline, 2030

Commodity/Scenario Increased InvestmentEast Asia and Pacific 9.8%

Europe and Central Asia 10.5%

Latin America and Caribbean 8.6%

Middle East and North Africa  9.2%

South Asia 8.9%

Sub‐Saharan Africa 9.1%

Developed ‐2.0%

Developing  9.4%

World  6.0%

Source: IFPRI IMPACT Model

Changes in Production of MeatRelative to Baseline, 2030

Commodity/Scenario Increased InvestmentEast Asia and Pacific 5.0%

Europe and Central Asia 3.0%

Latin America and Caribbean 3.1%

Middle East and North Africa  2.8%

South Asia 5.4%

Sub‐Saharan Africa 6.0%

Developed 4.0%

Developing  4.8%

World  4.7%

Source: IFPRI IMPACT Model

Changes in Consumption of CerealsRelative to Baseline, 2030

Commodity/Scenario Increased InvestmentEast Asia and Pacific 5.4%

Europe and Central Asia 5.8%

Latin America and Caribbean 7.8%

Middle East and North Africa  6.5%

South Asia 7.8%

Sub‐Saharan Africa 8.9%

Developed 5.0%

Developing  6.4%

World  6.0%

Source: IFPRI IMPACT Model

Changes in Consumption of MeatRelative to Baseline, 2030

Commodity/Scenario Increased InvestmentsEast Asia and Pacific ‐16.5%

Europe and Central Asia ‐8.8%

Latin America and Caribbean ‐10.2%

Middle East and North Africa  ‐11.6%

South Asia ‐4.2%

Sub‐Saharan Africa ‐7.8%

Developed ‐5.6%

Developing  ‐7.1%

World  ‐6.9%

Source: IFPRI IMPACT Model

Impact on Number of Malnourished Children Relative to Baseline, 2030

Commodity/Scenario Increased InvestmentsEast Asia and Pacific ‐13.4%

Europe and Central Asia ‐2.8%

Latin America and Caribbean ‐30.6%

Middle East and North Africa  ‐11.7%

South Asia ‐32.2%

Sub‐Saharan Africa ‐27.3%

Developed ‐7.0%

Developing  ‐26.0%

World  ‐24.9%

Source: IFPRI IMPACT Model

Impact on Population at Risk of Hunger Relative to Baseline, 2030

Conclusions and Policy Implications

Conclusions Doubling of public investment in agricultural R&D by 2020: direct positive effects on crop yields Indirect impacts on prices, crop area,  production, food consumption and food security  World prices of major commodities decline relative to baseline  Significant improvements in food security indicators ‐ number of malnourished children and population at risk of hunger