World Agriculture, Food Security, and Global Warming. Bratislava, October 2010
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1 World Agriculture, Food Security, and Global Warming Harald von Witzke Humboldt University of Berlin Bratislava, October 2010
2 Outline 1. The end of the Agricultural Treadmill 2. Prospects for world food security 3. Climate change 4. Prospects for international agricultural markets: Empirical evidence 5. Conclusions 2
3 1. The end of the Agricultural Treadmill The Agricultural Treadmill: Rapid growth of global food demand: - Population growth; - Growth in per capita food consumption. 3
4 1. The end of the Agricultural Treadmill Even faster growth in global food supply: - Expansion of the acreage; - Productivity growth. Long-term trend in real food prices: negative. 4
5 The Agricultural Treadmill» Quelle: Tyers and Anderson An index of export prices in US$ for cereals, meals, dairy products and sugar, deflated by the US producer price index (primarily for industrial products), with weigths based on the importance of each product in global exports, Source: Authors calculations based mainly on price series made available by the World Bank s Economic Analysis and Projections Department ( see Grilli and Yang 1988) 5
6 1. The end of the Agricultural Economic consequences: Treadmill Agricultural income disparity; Declining work force. 6
7 Grain Prices in Europe, Source: Abel,
8 1. The end of the Treadmill Continued rapid growth in global food demand (100 % between 2000 and 2050). Population growth; Per capita income growth in developing countries. 8
9 1. The end of the Treadmill Limited growth in global food supply: Limited growth in agricultural acreage (arable land + 7 % between 2000 and 2020); 9
10 Change in global crop acreage by region, Source: von Witzke, 2008 Region Change in acreage (mill. ha) European Union 4 Russian Federation & UA 13 USA 15 Canada 2 Latin America 45 Sub-Sahara Africa 6 Asia and Australia -4 10
11 1. The end of the Treadmill Limited growth in global food supply: Limited cropping acreage (+ 7 % between 2000 and 2020); Production growth predominantely through productivity growth; Declining annual productivity growth ( : 4 %; presently 1%); 11
12 1. The end of the Treadmill Water is becoming ever scarcer and more expensive; Growing public demand for environmental and natural resource protection as well as for other quality components; Growing bio-energy production; Increasing energy price; Climate change. Economic consequence: Increasing price of food. 12
13 Market Price of Wheat Source: USDA 13
14 Market Price of Wheat Source: USDA 14
15 Economic and political implications Increasing price of food generates new employment and income opportunities for farmers, and for upstream and downstream industries. Increasing prices reduce the need for protectionism. World food security likely to become a significant political issue (civil unrest, migration). 15
16 2. Prospects for world food security UN objective of cutting in half by 2015 the number of malnourished humans in 1995 is out of reach. To the contrary the number of malnourished is increasing. 16
17 2. Prospects for world food security The poor countries once were net food exporters. Today they are net food importers. Food deficit is expected to quintuple between 2000 and
18 2. Prospects for world food security Food import gap of the poor countries can only be closed if rich countries produce and export more food. 18
19 3. Climate change Rising food prices increase the incentives for deforestation. Deforestation is a major cause of global warming. Climate effect of deforestation: 18 per cent. This is more than the climate effect of global manufacturing and more than the climate effect of global transportation. 19
20 3. Climate change Result: Productivity growth is the key - in the fight against hunger and malnutrition, - in the fight against global warming, and - for the preservation of natural habitats and biodiversity. 20
21 4. Agricultural world market prices: 2003/ /15 Source: von Witzke et al., 2008 Crop 2013/15 in percent of 2003/05 Wheat 114 Corn 130 Other grains 113 Oilseeds
22 4. World market prices, 2003/ /17 Source: von Witzke et al., 2009 Market 2003/05 $/mt 2015/17 $/mt Base scrno. 15/17 in p.c. of 03/05 Wheat Corn Other grains Oilseeds Sugar
23 4. World market prices: The roles of bio-energy production and the price of oil; Source: von Witzke et al., 2009 Crop 2003/05 $/mt 2015/17 $/ mt Base scnro. 2015/17 $/ mt const. P- oil Wheat /17 $/ mt const. bio-energy production Corn Other grains Oilseeds Sugar
24 5. Conclusions Productivity growth is the key for agricultural growth. Productivity growth is also the key in the fight against - hunger and malnutrition, - global warming, and - for the preservation of natural habitats. 24
25 5. Conclusions Productivity growth is man made Innovation is the key for productivty growth Innovation is generated through R & D investment Social rate of return tends to be high around the world. 25
26 3. Conclusions: What happens when R & D investments are lacking! EU and world productivity growth have declined. EU: increasing ag. net imports. EU: largest ag. net importer. EU: large and increasing net importer of ag. land Reduction in EU virtual land imports: Productivity growth Rising prices and productivity growth: Less need for ag. protectionism 26
27 Leading global ag exporters and importers, 2008 (bill. US$) Source: WTO, 2009 Exp. country Value Imp. country Value USA Extra EU Extra EU USA Brazil 61.4 China 86.8 Canada 54.1 Japan 80.6 China 42.3 Russia
28 The EU together with China is the worlds leading agricultural net importer EU net imports in 2008: 45.5 billion US$ China net imports in 2008: 44.5 billion US$ 28
29 EU net imports have increased significantly, Export quantity: decrease by 3 mill. tons Import quantity: increase by 25mill. tons 29
30 EU virtual net land import, 2007/08 Net land import: 34.9 mill. ha. Territory of Germany: Territory of Germany 35.7 mill. ha. 30
31 EU virtual cropland net imports. 1999/ /08 Source: von Witzke and Noleppa, 2010 Virtual land exports: Decline to 14 mill. ha. Virtual land imports: Increase to 49 mill. ha. Virtual net import: Increase by almost 10 mill. ha. (+40%) Territory of Portugal 9.3 mill. ha 31
32 EU virtual land net imports 2007/08 under alternative scenarios (mill. ha) Actual 2007/ Productivity growth: +.3 %- age points Expanded organic farming acreage Growing biofuel production
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