"Food scarcity is emerging as the defining issue of the new era now unfolding, much as ideological conflict was the defining issue of the historical era that recently ended": so concludes the economist, Lester Brown, in his much-discussed work on food scarcity. His scenario may be regarded as overly pessimistic, since the agro-food sector does appear to have the ability to cope even with an unprecedented increase in food demand, at least for the next thirty years.
Yet, today, some 830 million people in the world do not have enough to eat. It is a scourge which may reflect less a problem of shortages or excessively high prices per se than underdevelopment and weak purchasing power, and may only affect some sections of the world's population, particularly in parts of Sub-Saharan Africa and Asia.
But while food scarcity might not be the defining issue of the next century, it is quite clearly going to be a vital one. True, the situation could deteriorate over the very long term -- a century or a millennium -- as uncertainties and breaks in the food supply could occur, stemming from a range of factors, including drought, cataclysms (floods, hurricanes, tidal waves, volcanic eruptions), war and revolution. Such events are hard or often impossible to predict. But there is one major change that is bound to affect us within the next half century and that is the virtual doubling of the world population (see page 29).
In practice, that means food output will actually have to double by 2025, especially if average consumption per head rises in the poorer countries. And it is precisely in those countries that almost 95% of the population growth will occur. Yet, for the moment, food surpluses are concentrated mainly in OECD countries. According to an FAO study, by 2010 the OECD countries will be producing 723 kg of grain per head (a little over 1 billion tons) compared with only 230 kg (1.3 billion tons) in non-member countries. These will have to import some 162 million tonnes of grain from the OECD area, and that will have implications for their financial resources.
Another major trend is that by 2025 some 60% of the world population, or 5.2 billion people, will be living in towns and cities. Feeding them will require the kind of production, logistics and distribution structures that suit urban markets. These will be especially important because, for the moment, urbanisation and infrastructure in non-member countries appear to be following the urban model prevalent in OECD countries, where settlement patterns require a supply chain that is complex, costly and energy-intensive, particularly in terms of packaging, transport, conservation and waste.
Food quality trends will also have major implications. Obesity problems may well become more serious in the developed world, while in the developing world malnutrition and the deficiencies it causes will persist. WHO studies show that nutritional deficiency problems are expected to become less acute, but remain just as widespread nonetheless. There will only be a small decline in the number of people with an iron deficiency, for instance, from 3.5 billion in 1995 to 2.7 billion in 2025.
Rising standards of living in some countries outside the OECD area are also expected to make diets richer in protein, a factor that is bound to affect the demand for meat products. China, for instance, has already seen meat consumption rise from 20 kg to 38 kg per person between 1986-88 and 1993-95. And when meat consumption rises, so does grain consumption, but in far higher proportions. It takes an average of 2 kg of grain to produce 1 kg of poultry, 4 kg for the same amount of pork and 7 kg of grain to produce 1 kg of beef.
A relatively plausible scenario supported by the work of many international organisations -- the OECD, the FAO and the World Bank -- holds that by 2010-2020 food supply will be growing faster than demand. One of the FAO's projections up to the year 2010 sets the annual growth in output at 1.8%. This trend is not as sharp as that observed in the 1980s, but it will suffice to meet demand.
In non-OECD countries, however, growth in agricultural output will not be high enough to ensure food self-sufficiency. They will consequently have to increase their output and enhance yields, for instance by cultivating a further 130 million hectares of land. Fertiliser use could be nearly doubled, from 62 kg per ha in 1995 to 110 kg per ha in 2010. After that, by 2020 or so, and allowing for a decline in the price of staples, grain imports could be as high as 220 million tonnes and meat imports 12 million tonnes, or 20 times the 1995 levels.
But even the validity of this scenario depends on other factors too, such as the availability of land. Urbanisation is encroaching on arable farmland and will continue to do so. The decline in farmland could be as much as 15% over the next quarter century, which in global terms would mean that farmland would shrink from 1.5 billion hectares in 1999 to about 1.3 billion in 2025. If so, there will have to be a significant increase in yields if demand needs are to be met. Uncultivated land will also have to be farmed, with the risk of further deforestation. Europe and the United States appear to have opted not to enlarge their farmlands, while the Asian countries have practically ruled out the possibility of cultivating any more arable land. In fact, the greatest potential for extending farmland lies in sub-Saharan Africa and Latin America.
Since not all available land is of the same quality, a combination of new farmland and enhanced yields will have to be envisaged if a 20% increase in grain output is to be achieved by the year 2010. All this assumes that water supply does not become a critical resource problem in the meantime (see next article). Better water use means adjusting prices to reflect costs more closely, since this would encourage farmers to be more sparing as well as more efficient in their irrigation and spraying techniques. It would also encourage the use of varieties that require less water, such as sorghum instead of maize.
Another factor to consider is technical change, which looks as inevitable in agriculture as in any other walk of life. The goal should be a more efficient mix of production factors. Thanks to progress in R & D, tomorrow's "precision agriculture" will be based on new, maybe even genetically modified, seed that is more resistant and more productive. The farms of the future will also use more scientific growing techniques, choosing the best time to plant and optimising the mix of factors, such as fertilisers, water and soil. They will also be able to look to sophisticated satellite monitoring techniques to forecast the weather, monitor the risk of drought or assess crop maturity. But all this will only be possible if farmers have the right skills. Training, computer literacy and access to various means of telecommunications are just as important as the findings of scientific research or the availability of land and water.
Governments and markets
Government policy is clearly important in all this, but does the market have a role to play too? Yes, it does. Take the example of intervention to create emergency stocks. These are a relatively expensive solution to the problem of fluctuating harvests. And buffer stocks are an unwieldy solution to fluctuating prices. But a globalised market would be the best way of smoothing out these variations, both in time, by keeping buffer stocks to a minimum, and in space, by using a surplus in one area to offset a shortage elsewhere, at least up to a point. Additional production capacity can also, where necessary, be developed in OECD countries -- the United States, Canada, France and Australia -- and in non-member countries such as Argentina. However, for this to work, food can no longer be used as a weapon in international politics. Rather, "secure" food supplies should be guaranteed. Food embargoes hamper the market's ability to do its job of regulating and achieving an optimal balance between supply and demand.
As to more routine market distortions, there is the question of government price controls and market intervention in the form of subsidies and tariff or non-tariff trade barriers. The trend is now towards dismantling such arrangements. Nevertheless, government will continue to have a key role to play, in helping to cope with new risks, for example, in protecting the environment and in meeting public health demands regarding the quality of food products on the market.
But overall the market is likely to exert an increasing influence over agro-food and the fact that markets are becoming global will reinforce the downward trend in prices over the long term, even if some uncertainties remain as to the risk of price volatility. The geographical ramifications are important too. It is highly likely that China will account for between 20 and 50% of grain imports within a decade. Conversely, Ukraine, for example, could well become a major grain exporter. While it is still hard to predict the scale of any developments of this sort, the supply and demand situation on world markets is likely to be altered anyway. Another factor in the equation is world or regional economic growth, though such is the strength of the downward trend in prices from now to 2020-2025 that it would not be reversed by even a rapid increase in world GDP.
The agro-food sector does indeed appear to have the resources to deal with future rises in food demand. Productivity gains achieved through technological change, better diffusion of new techniques and easier access to inputs will all act in the industry's favour. A better distribution of the fruits of economic prosperity, together with more efficient markets, will be needed for the battle against world hunger. In the meantime, countries with a high level of poverty and heavy reliance on agriculture will probably have to introduce agricultural development policies directed at both output and income. Those that cannot switch to other crops and adapt to land or water supply constraints will have to redirect their development policy towards other sectors of the economy if they are to create enough wealth to finance imports. As for OECD countries, keeping markets open to farm and non-farm imports from the rest of the world is a sine qua non of winning the ongoing battle to eradicate malnutrition and reduce the risk of famine for years to come.
Alexandratos, N. (Ed.), Agriculture: Towards 2010, FAO study, Polytechnica, Paris and FAO, Rome, 1995.
Brown, L., Tough Choices: Facing the Challenges of Food Scarcity, W.W. Norton & Company, New York, 1996
The Agro-Food Sector in the 21st century, Highlights, OECD, No. 15, December 1997.
China in the 21st century: Long-Term Global Implications, OECD, 1996.
The Future of Food: Long-Term Prospects for the Agro-Food Sector, OECD, 1998.
Life in the 21st century: A Vision for All, World Health Report, WHO, Geneva, 1998.
©OECD Observer No 217/218, Summer 1999