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Monday, July 01, 2013

Global food system vulnerable due to growing population and climate change

© Daniel Acker/Bloomberg
Immature corn plants are surrounded by standing water in a field outside Wyanet, Illinois, on May 28, 2013. Corn jumped to a record in August after the worst U.S. drought since the 1930s left limited supplies.
The global food system will remain "vulnerable" in the years to come as a growing population boosts demand for crops and climate changemakes weather disruption more frequent, according to the World Bank. 

The world will need to produce 70 percent more food by 2050 to feed a global population expected to grow to more than 9 billion from 7 billion now, the United Nations' Rome-based Food & Agriculture Organization estimates. The three biggest annual gains in food prices in the past 20 years occurred since 2007, with the FAO's food prices index of 55 items climbing to a record in February 2011. 

"Although we are having some good crops, we continue to expand our consumption, so our ability to replenish stocks is challenged," Marc Sadler, practice leader at the agriculture and environmental services unit of the World Bank, said in an interview in London today. "Demand continues to grow and a lot of that has been driven by emerging, new middle-income consumers who change their dietary patterns." 

Global demand will continue growing as increasingly wealthy consumers in developing economies eat more meat. The world's food-import bill is expected to remain stable this year as cheaper sugar and cooking oils compensate for higher dairy, fish and meat costs, according to the FAO. Countries will spend $1.094 trillion buying food this year from $1.092 trillion in 2012. Food-import costs rose to a record $1.26 trillion in 2011. 

Corn Record 

Wheat and soybeans led commodities gains last year and corn jumped to a record in August after the worst U.S. drought since the 1930s left limited supplies. Frosts in Brazil helped cut the sugar cane crop in the country's main producing region for the first time in a decade in the 2011-12 season, data from industry group Unica showed. Disruptive weather events are increasing in frequency and amplitude, Sadler said. 

"The real challenge for agriculture is that the environment, the production system, the variables that surround us, are increasingly volatile," he said. "It will continue to be a challenge to raise agricultural productivity in a resilient way in the face of climate change and this is the reality we face." 

While food production is increasing, a large proportion of stockpiles are in countries that won't export them, Sadler said. About 50 percent of global grain supplies are in India and China, he told the Agriculture Investment Summit in London. Global cereals production will be a record 2.46 billion metric tons this year, the FAO estimates. 

Better Crops 

"The reality is we have better crops, but when we look at available liquid stocks for the global export market as a percentage of stocks to disappearance, it's pretty low," Sadler said. "The good news is, food continues to move around the planet, that trade continues to be relatively free. Last year we had two big problems in the U.S. and in Russia and yet we saw very little in the markets in terms of barriers to trade, so a huge improvement, an important improvement and a difference from what happened in 2008 and 2010." 

Countries from India and Egypt to Vietnam and Indonesia banned exports of rice, a staple for half the world, during the 2008 food crisis. Russia in 2010 banned cereal exports after the country's worst drought in at least half a century destroyed crops and cut production. 

"Sudden changes to trade policy certainly in many previous circumstances have had a negative impact on price, by that I mean pushing prices up," Sadler said."That has had an impact not only in consumers in middle-income countries but it's had a severe impact on the highly vulnerable and the poor and developing countries." 

In a separate report, the U.S. Department of Agriculture said today the number of people experiencing food insecurity, defined as consuming less than 2,100 calories per person per day, in 76 low- and middle-income countries will rise 23 percent to 868 million by 2023. In 26 of the nations studied, more than 40 percent of the population faces hunger, with the biggest concentration in Sub-Saharan Africa.
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