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Currently showing: Food security > Food industry

13 Jan 14 14:22

Food security can be analyzed at three mutually supportive levels. The first is at the global level where issues of aggregate supplies intersect with trade policies, global ecological constraints, and productive capacities. The second is at the national or regional level where agricultural policies, local resource endowments, local weather and climatic patterns, and national policies all play a key role. In some cases, regions and sub-regions (for example in Sub-Saharan Africa) suffer from periodic droughts and other disruptions to food supply causing famine and inadequate supply. The third is at the level of the household where intra-household distribution of food can be affected by overall household income and by levels of education and social and cultural norms. Understanding food security requires a deep understanding at all three levels and is both an issue of food supply and of income. In many parts of the world individual food security is a matter of inadequate income.

Demand for, and the delivery of, food commodities is undergoing major transformative changes. As disposable income rises in many parts of the world the demand for new dietary requirements change. In particular, the demand for livestock will increase placing new pressures on available land and water resources. New supply chains are entering the marketplace and replacing traditional markets: the rise of supermarkets as part of the food value chain is a recent phenomena now affecting many parts of the world. Constraints on the supply side include low and highly variable productivity, limited new land expansion opportunities, the impact of climate change and weather variability; and the rising cost of water and land. Pressure on land (and aquatic resources) will also heighten concerns over food safety as well as food security. A major effort will be required to stem the loss and waste of food commodities in both the rich and poor world (currently about one third of all food produced is wasted).

In sum, the next few decades will be challenging. It will require new science, new institutional arrangements and new farming practices linked to the growth of commercial value chains and emphasis not only on the quantity of food produced but also on the quality and safety of food. With rising land and water costs, attention to safety, and the need to reduce the carbon footprint of agriculture it is hard to imagine that we will live in a world dominated by low cost food: prices will inevitably rise: a boom for the producers but a challenge for poor consumers.

New challenges will raise new risks. These include production variability due to weather and climatic changes; competition for land; productivity gains and losses as agriculture intensifies; price variability; food safety outbreaks and public health issues management; local value chain management risks; and trade barriers including concerns on carbon and water content and subsidies. The “new” 21st Century farmer will face management challenges to meet quality and quantity food delivered to the market or supermarket. Consumers will become more price conscious, more prudent in their purchase and storage of food; and those with inadequate income to meet basic needs will require supportive public policies as food prices rise to reflect the new production realities of the coming decades.

Category: Food security: Food industry


Gavin Montgomery - 14 Jan 2014, 6:19 a.m.

What I find troubling is that, as this info-graphic demonstrates, the impact of rising food prices is completely asymmetrical:

In developed countries, food accounts for a negligible percentage of household income but in the developing world it is a major cost and most families would struggle to absorb an increase.

Rising food prices, then, is an opportunity killer in the developing world as it forces families to make choices between eating and, for instance, sending their kids to school. This has the potential to stifle development and to spill over into social or even military conflict. We've already seen the consequences of higher food prices during the Arab Spring and it seems likely that in future it will contribute to a rise in social tensions elsewhere.

Major powers are already moving to secure future food supply. In 2013, China effectively acquired 5% of Ukraine - 3 million hectares of arable land. You have to wonder how that is going to work out if there are food shortages in the country that endured Holodomor.

That being said, there are a lot of factors pushing in the other direction. Investment in African agriculture, for example, should massively increase yields while simultaneously releasing man power from the agricultural sector (the UN estimates that more than 70% of Africa's workforce is in the agricultural sector). Higher food prices also opens the door to new production, for example through urban farms, and would be a catalyst for a reduction in food waste, and it seems inevitable that GMO will be used globally to push yields.

Christophe Pelletier - 14 Jan 2014, 8:50 p.m.

I had addressed future price of food already in July 2009. However, one must make a difference between the different food groups. As future demand will be mostly about protein, and in particular animal protein, not all food sources will have similar price evolution. What I expect is a pattern of "accordion" for agricultural commodities, simply because crops farmers, who produce animal feed ingredients such as corn and soybeans, will not synchronize their production with animal protein demand. Some years prices of crops will be high and it will discourage animal protein producers to push production up. That will relax ag commodities markets. and when there is a relative abundance of crops for animal feed, animal protein producers will do better financially and push up production which will result in higher demand and higher prices for ag commodities again and so on and so on. Also realize that any increment of Chinese consumption of chicken meat by 10 kg per capita per year represents an additional production equivalent to the current US chicken production, for 10 kg more of pork this represents 60% of current EU pork production more and if it is 10 kg of beef, it represents 125% of current US beef production. And in the coming 25 years, Chinese are expected to increase their meat consumption by 25 kg per capita per year. And that does not include seafood demand which is also rising.
On the other hand, there is still room to increase arable land areas, in particular in Africa (FAO estimated in 2009 that the area of arable land not exploited on that continent was 700 million hectares, which is almost the size of continental US) and the potential for yield increase in Africa is also huge if the local farmers can have the proper resources to produce efficiently. The world has plenty of potential to produce all the food needed to feed the future population, as I have demonstrated in my two books on this subject, but action needs to be taken.
Other area of potential is the reduction of food waste both at consumer end as in developed countries and post-harvest as in developing countries.

If you wish more details I suggest you go to:
Effect of growing meat demand on future ag markets:

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