Global Food-Markets

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Global Food-Markets

  1. 1. The New Normal?A Tighter Global Agricultural Supply andDemand 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 ABARESs Outlook 2012 Annual Conference Canberra, Australia March 6-7, 2012
  2. 2. 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 www.ifpri.org
  3. 3. Drivers of AgriculturalGrowth and Food Security
  4. 4. 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 biodiversitywww.ifpri.org
  5. 5. 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 reformwww.ifpri.org
  6. 6. Model Description
  7. 7. 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
  8. 8. Flow Chart of IMPACT Modelwww.ifpri.org
  9. 9. Baseline Projections of Supply, Demand and Food Security
  10. 10. Annual Average Growth in GDP between 2010 and 2050 – Baseline Projections Source: IFPRI IMPACT Model, September 2011 simulationswww.ifpri.org
  11. 11. Annual Average Growth in Population between 2010 and 2050 – Baseline Projections Source: IFPRI IMPACT Model, September 2011 simulations www.ifpri.org
  12. 12. World Crop Yields Annual Average Growth Rate Source: IFPRI IMPACT Model, September 2011 simulationswww.ifpri.org
  13. 13. World Crop Area Baseline Projections Source: IFPRI IMPACT Model, September 2011 simulationswww.ifpri.org
  14. 14. Source of Cereal Production Growth, 2010 - 2050 Source: IFPRI IMPACT Model, September 2011 simulationswww.ifpri.org
  15. 15. Percent Change in World Prices of Cereals between 2010 and 2050 Source: IFPRI IMPACT Model, September 2011 simulationswww.ifpri.org
  16. 16. Percent Change in World Prices of Meat between 2010 and 2050 Source: IFPRI IMPACT Model, September 2011 simulationswww.ifpri.org
  17. 17. Cereal Production Baseline Projections Source: IFPRI IMPACT Model, September 2011 simulationswww.ifpri.org
  18. 18. Meat Production Baseline Projections Source: IFPRI IMPACT Model, September 2011 simulationswww.ifpri.org
  19. 19. Per Capita Meat Demand Baseline Projections Source: IFPRI IMPACT Model, September 2011 simulationswww.ifpri.org
  20. 20. Population at the Risk of Hunger Source: IFPRI IMPACT Model, September 2011 simulationswww.ifpri.org
  21. 21. Alternative Scenarios for CropProductivity and Energy Price
  22. 22. 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
  23. 23. Changes in World Prices of Crops Relative to Baseline, 2050Commodity/Scenario Yield Increase Energy ShockRice -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 Source: IFPRI IMPACT Model, September 2011 simulations -17.7% 6.5% Source: IFPRI IMPACT Model, September 2011 simulations www.ifpri.org
  24. 24. Changes in World Prices Relative to Baseline, 2050Commodity/Scenario Yield Increase Energy ShockBeef -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
  25. 25. Impact on Population at Risk of Hunger Relative to Baseline, 2050Commodity/Scenario Yield Increase Energy ShockEast 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 www.ifpri.org
  26. 26. Conclusions and Policy Implications
  27. 27. 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
  28. 28. 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
  29. 29. 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
  30. 30. 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
  31. 31. Agricultural Productivity 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 www.ifpri.org

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