global food-markets
DESCRIPTION
TRANSCRIPT
The New Normal? A Tighter Global Agricultural Supply and Demand Relation and its Implications for
Food Security
Mark W. Rosegrant, Director Simla Tokgoz, Research Fellow
Prapti Bhandary, Senior Research Assistant
Environment and Production Technology Division
ABARES's Outlook 2012 Annual Conference Canberra, Australia
March 6-7, 2012
www.ifpri.org
Outline
Drivers of agricultural growth and food security
Model description
Baseline projections of supply, demand and food security
Alternative scenarios for crop productivity and energy price
Conclusions and policy implications
Drivers of Agricultural Growth and Food Security
www.ifpri.org
Drivers of Agricultural Growth and Food Security
Demand drivers • Population growth: 9 billion people in 2050
• Urbanization: 2008 = 50% urban; 2050 = 78% urban
• Income growth
• Biofuels and bioenergy
• GHG mitigation and carbon sequestration
• Conservation and biodiversity
www.ifpri.org
Drivers of Agricultural Growth and Food Security
Supply drivers • Water and land scarcity • Climate change • Energy prices • Investment in agricultural research • Science and technology policy • Management and governance reform
Model Description
www.ifpri.org
The IMPACT Model
IMPACT – “International Model for Policy Analysis of Agricultural Commodities and Trade”
Representation of a global competitive agricultural market for crops and livestock
Global • 115 countries
• 281 food production units (countries x river basins)
• 46 agricultural commodities
www.ifpri.org
Flow Chart of IMPACT Model
Baseline Projections of Supply, Demand and Food Security
www.ifpri.org
Annual Average Growth in GDP between 2010 and 2050 – Baseline Projections
Source: IFPRI IMPACT Model, September 2011 simulations
www.ifpri.org
Annual Average Growth in Population between 2010 and 2050 – Baseline Projections
Source: IFPRI IMPACT Model, September 2011 simulations
www.ifpri.org
World Crop Yields Annual Average Growth Rate
Source: IFPRI IMPACT Model, September 2011 simulations
www.ifpri.org
World Crop Area Baseline Projections
Source: IFPRI IMPACT Model, September 2011 simulations
www.ifpri.org
Source of Cereal Production Growth, 2010 - 2050
Source: IFPRI IMPACT Model, September 2011 simulations
www.ifpri.org
Percent Change in World Prices of Cereals between 2010 and 2050
Source: IFPRI IMPACT Model, September 2011 simulations
www.ifpri.org
Percent Change in World Prices of Meat between 2010 and 2050
Source: IFPRI IMPACT Model, September 2011 simulations
www.ifpri.org
Cereal Production Baseline Projections
Source: IFPRI IMPACT Model, September 2011 simulations
www.ifpri.org
Meat Production Baseline Projections
Source: IFPRI IMPACT Model, September 2011 simulations
www.ifpri.org
Per Capita Meat Demand Baseline Projections
Source: IFPRI IMPACT Model, September 2011 simulations
www.ifpri.org
Population at the Risk of Hunger
Source: IFPRI IMPACT Model, September 2011 simulations
Alternative Scenarios for Crop Productivity and Energy Price
www.ifpri.org
Scenarios Compared to Baseline
Scenario 1 – Yield Increase • Higher crop productivity growth rate resulting in higher crop
yields
• Increase the productivity growth rate for each crop such that the projected crop prices in 2050 in real terms are the same as crop prices in 2010 in real terms
Scenario 2 – Energy Shock • Doubling of oil prices in 2050 compared to baseline • Higher fertilizer price (fertilizer price growth rate increased
by 75%)
www.ifpri.org
Changes in World Prices of Crops Relative to Baseline, 2050
Source: IFPRI IMPACT Model, September 2011 simulations
Commodity/Scenario Yield Increase Energy Shock
Rice -20.2% 9.8%
Wheat -26.3% 10.1%
Maize -36.3% 13.4%
Other Grains -12.0% 6.4%
Soybeans -19.2% 8.2%
Sorghum -17.7% 6.5%
Source: IFPRI IMPACT Model, September 2011 simulations
www.ifpri.org
Changes in World Prices Relative to Baseline, 2050
Commodity/Scenario Yield Increase Energy Shock
Beef -4.9% 2.2%
Pork -5.8% 2.2%
Poultry -8.8% 2.5%
Soybean Oil -15.3% 26.3%
Rapeseed Oil -22.8% 50.5%
Milk -3.4% 1.1%
Source: IFPRI IMPACT Model, September 2011 simulations
www.ifpri.org
Commodity/Scenario Yield Increase Energy Shock East Asia and Pacific -11% 6%
Europe and Central Asia -4% 2%
Latin America and Caribbean -19% 17%
Middle East and North Africa -16% 8%
South Asia -32% 19%
Sub-Saharan Africa -32% 15%
Developed -1% 4%
Developing -26% 14%
World -24% 14%
Source: IFPRI IMPACT Model, September 2011 simulations
Impact on Population at Risk of Hunger Relative to Baseline, 2050
Conclusions and Policy Implications
www.ifpri.org
Conclusions
World prices of most cereals and meat are projected to increase in real terms in the coming decades with business-as-usual
Rising prices will slow food demand growth for poor consumers, adversely affecting food security and human well being
Population growth in developing world will lead to rapid growth in cereal demand
www.ifpri.org
Conclusions
Rising income and rapid urbanization in Asia will change composition of demand towards meat and dairy
On the supply side, water scarcity, climate change, land degradation and lack of necessary resources will reduce yield growth rates
With declining water availability and land for profitable cultivation, expansion of area will contribute little to future production growth
www.ifpri.org
Conclusions
Intensified linkages between energy and agricultural markets
• through growth in biofuels production
• through higher input costs to agricultural production
Developments in energy markets impact agricultural markets and affect food security in developing countries
www.ifpri.org
Energy Policy Implications
Adopting a low-carbon fuel standard (like the California policy, versus the existing national RFS) would shift ethanol production away from grains and towards other lower-carbon feedstocks
Reduce OECD subsidies and mandates for biofuels; liberalize trade in biofuels
Reduce water, energy, fertilizer subsidies
www.ifpri.org
Increasing crop productivity: agricultural research, water management, and rural investment • Emphasis on crop breeding (including
biotechnology) targeting abiotic and biotic stresses • Water harvesting, precision agriculture, minimum
tillage, integrated soil fertility management, integrated pest management, reduce post harvest losses
• Rural infrastructure investment to improve access to markets, information, credit, inputs
Agricultural Productivity