[This post was first published in the Fairfax NZ Sunday Star Times on 3 August 2014]
New estimates of global food demand and supply through to December 2023 have recently become available in a joint publication from the OECD and FAO (Food and Agriculture Organisation of the United Nations). One big message is that demand for most products will increase by between 10 and 20 percent from 2014 through to 2023. A second big message is that the overall increase in supply will at least match the increase in demand. Hence, for most products, and particularly the staple grains of rice and wheat, any price increases will be at a lower rate than overall inflation.
About half of the overall rise in demand for food will be due to increasing global population. This global population will increase at about 1% per annum, driven primarily by growth in Asia and Africa. The other half of the demand increase will come from rising consumption of protein based foods including meat, fish and dairy. This will increase the amount of animal feed that needs to be grown.
The starting point of 2014 is proving to be a remarkable year, with large increases in production for almost all crops occurring in 2013 and further increases likely for 2014. The primary reason is benign weather, despite the impression one can easily get from some media reports. It is easy to focus on specific areas – such as California with its current drought – and lose sight of the big picture.
Currently, there are record stockpiles for the major grains. This is in marked contrast to the situation back in 2008 when there was global concern about a lack of food security. Since then, countries have purposefully built up stockpiles, and farmers have responded to higher prices by increasing investment in new technologies.
Of course there will still be parts of the world where food will be in short supply over the coming decade and under-nourishment will remain a huge problem. Progress in Asia has been led by China which is undergoing major structural reform of its agriculture sector. There is still some way to go, but the number of people facing food insecurity in China has declined by more than 100 million in the last 20 years.
The biggest challenges are in parts of South Asia, and Africa in particular. Africa is the continent with by far the highest population growth rate at 2.4% per annum. Although food production there is also increasing rapidly, the per capita consumption of calories is unlikely to increase significantly.
The current patterns of trade in agricultural products are expected to become even more pronounced. Latin America will see the highest increase in exports, followed by North America and Oceania (New Zealand and Australia). Eastern Europe is expected to become a net exporter for the first time. The big importing continents will be Asia and Africa.
The news for New Zealand, with its emphasis on meat and dairy, is generally good. Prices are expected to increase at least as fast as inflation. The increased demand for dairy products is expected to be more in cheese and non-fat milk powder rather than in whole milk powder. Cheese consumption typically increases markedly as countries develop, with consumption in developed countries being more than ten times that in developing countries. In the United States, more dairy production is consumed as cheese than as fresh products.
There is also an expectation that the demand for lamb and beef as premium products will increase. Currently, pork is the most consumed meat globally, but by 2020 it will be overtaken by chicken. The improvements in feed conversion efficiency of chicken production over the last 30 years are remarkable, and poultry has become the low cost meat of the world.
Fish harvesting from the ocean is unlikely to increase given obvious sustainability constraints. However, aquaculture production, led in particular by China, will make aquaculture considerably more important than ocean harvested fish by the end of the period.
Of course there are lots of things that could go wrong. Drought is always a potential issue, but food security experts have understood for a long time that famines are usually caused more by wars than by lack of rain. Without a functioning civil society, short term survival strategies quickly take over from sustainable practices.
There are also concerns about the depletion of underground aquifers and the implications for irrigated agriculture. However, there is still scope for increasing grain yields across much of the world. This will come both from investment in existing technology plus ongoing development of new technologies, particularly around precision agriculture.
A key message would seem to be that overall we are taking more steps forward than backwards. But there are still lots of challenges ahead, and we cannot afford to let down our guard. The needed cry is onwards and upwards towards sustainable agriculture.