Agriculture for Sustainable
Economic Development: A Global
R&D Initiative to Avoid a Deep and
Complex Crisis
Joachim von Braun
Director General
International Food Policy Research Institute
Charles Valentine Riley Memorial Lecture
Washington D.C., February 28, 2008

Overview
1. The world food equation: Out of balance
2. Unsustainable agriculture: Risks and
insecurity
3. Actions needed now: Technology and
policy change
Joachim von Braun, IFPRI, February 2008

The food and agriculture equation: Changes
Production Demand
Land Income growth
Water Poverty and inequality
Inputs & Transport costs Consumer behavior
Workforce Bioenergy
Climate change Biomass (CO2)
Agrarian structure
Technology
Trade and Markets
Information & Standards
Supermarkets
Joachim von Braun, IFPRI, February 2008

The new situation: Surge in prices
Commodity prices (US$/ton)
400 Corn 100
Wheat
80
300 Rice
Oil (right scale) 60
200
40
100
20
0 0
00
01
02
03
04
05
06
07
08
n-
n-
n-
n-
n-
n-
n-
n-
n-
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Joachim von Braun, IFPRI, February 2008 Source: Data from FAO 2008 and IMF 2008.

Cereals price changes: IFPRI projections
US$/ton
300
200
100
0
2000 2005 2010 2015
Rice Wheat Maize Soybean
Joachim von Braun, IFPRI, February 2008 Source: M. Rosegrant (prelim. results with IMPACT-WATER)

Income growth: Rising consumption
Growth (2004-06 per annum)
• 9% in Asia, 6% in Africa
• 2% in industrialized countries
Since 2000, global cereal use for:
• Food 4%, feed 7%
• Industrial purposes 25%
India, 2000 – 2025 Scenario:
• Meat 176%, milk and vegetables 70%
• Grain 27%
Sources: FAO 2003 and 2007b; Kumar, et al. 2007.
Joachim von Braun, IFPRI, February 2008

Shift towards high-value commodities
2005/1990 ratios of per capita consumption
India China Brazil Nigeria
Cereals 1.0 0.8 1.2 1.0
Meat 1.2 2.4 1.7 1.0
Milk 1.2 3.0 1.2 1.3
Fish 1.2 2.3 0.9 0.8
Fruits 1.3 3.5 0.8 1.1
Vegetables 1.3 2.9 1.3 1.3
Future grain consumption is driven by
income growth, population growth, and feed
for meat and dairy production
Joachim von Braun, IFPRI, February 2008 Source: Data from FAO 2007.

Drivers of change:
Globalization of the agri-food business chain
Agricultural Food
Consumers
input processors Food
industry Farms and traders retailers
top 10: $40 bln Agricultural top 10: $409 bln top 10: $1,091
value added: bln
• Syngenta $1,592 bln • Nestle
• Monsanto • Cargill • Wal-Mart
• Bayer C No. of farms: • ADM • Carrefour
$4.000 bln
• BASF AG ca. 450 mln • Metro G
• Unilever
• Dow Agro • Kraft Foods • Tesco
Size distr.
• Seven & I
>100 ha: 0.5%
< 2 ha: 85%
Source: von Braun 2008.
Joachim von Braun, IFPRI, February 2008

World cereal production: Not growing enough
Million tons
Total Million tons
1,200 2,000
900
1,600
600
1,200
300
0 800
1999 2000 2001 2002 2003 2004 2005 2006 2007*
Wheat Coarse grains Rice Total (right)
Source: Data from FAO 2003, 2005-07.
Joachim von Braun, IFPRI, February 2008 * Forecast.

Agricultural production:
Decreasing share of developed countries
Agricultural production, % of world total
Africa
Brazil
China
W Europe
India
United States
0 5 10 15 20
1984-6 2004-6
Source: FAO 2008.

Cereals: The world eats more than it produces
Million tons
700
600
500
400
Total cereal stocks
300
200
100 China
0
2000 2001 2002 2003 2004 2005 2006 2007*
Source: Data from FAO 2003, 2005-07.
Joachim von Braun, IFPRI, February 2008 * Forecast.

IFPRI biofuel scenarios by 2020
Price changes
Scenario Biofuel expansion
(% by 2020)
corn: +26
Actual plans & assumed
1 sugar: +12
expansions
oilseeds: +18
corn: +72
Doubling of Scenario 1
2 sugar: +27
expansion
oilseeds: +44
Joachim von Braun, IFPRI, February 2008 Source: IFPRI IMPACT–model projections.

World food equation: Reasons for imbalance
1. Income growth
2. Biofuels
3. Lack of technology to respond
4. Low stocks
5. Production shocks
6. High input and transport costs due to energy price
7. Population growth
Joachim von Braun, IFPRI, February 2008

Overview
1. The world food equation: Out of balance
2. Unsustainable agriculture: Risks and
insecurity
3. Actions needed now: Technology and
policy change
Joachim von Braun, IFPRI, February 2008

Declining productivity growth
6
maize
Average annual growth rate (%)
5 rice
wheat
4
3
2
1
0
1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003
Joachim von Braun, IFPRI, February 2008 Source: World Development Report 2008.

Sources of cereal production growth
Annual cereal production growth rates, 2000-2050
2.5
2
1.5
1
0.5
0
-0.5
LAC ESAP SSA CWANA NAE
Area expansion Yield improvement
Joachim von Braun, IFPRI, February 2008 Source: IFPRI IMPACT projections 2007.

Competition
for land
Field and
pastures: ~40%
Forests: ca. 10
million km2
(~ 20%)
Cities, roads:
2%
Joachim von Braun, IFPRI, February 2008 Foley et al., SCIENCE 309, 2005

Climate change and sustainability
• Agriculture is part of the problem:
13.5 % the CO2 of equivalents
(Transport: 13.1%)
• Agriculture is part of the solution:
Biomass; CO2 sequestration
• CO2 trade: A new agricultural
commodity market of the future?
Joachim von Braun, IFPRI, February 2008

Agriculture: Other sustainability threats
Water resources
Irrigation = 80% of water use in developing
countries
Soils
Overgrazing, deforestation, inappropriate
agricultural practices
Biodiversity
Traditional crops replaced by genetically
uniform modern varieties
Joachim von Braun, IFPRI, February 2008

970 million people live on less than $1 a day
Subjacent poor
($.75 cents – $1)
485 million people
Medial poor
($.50 cents – $.75 cents)
323 million people
Ultra poor
(less than $.50 cents)
162 million people
Joachim von Braun, IFPRI, February 2008 Source: Ahmed, et al. 2007.

GHI: Hunger remains high
Contribution of components to the Global Hunger Index
proportion of calorie deficient people
30
prevalence of underweight in children
under-five mortality rate
20
10
0
1990 2007 1990 2007 1990 2007 1990 2007 1990 2007
Sub-Saharan South Asia East Asia & Middle East & L. America &
Africa Pacific N. Africa Caribb.
Joachim von Braun, IFPRI, February 2008 Source: Wiesmann, et al. 2007.

Bangladesh: Household price effects
Five-person household living on one dollar-a-day per
person spends its $5
$3.00 on food
$0.50 on household energy
$1.50 on nonfoods
A 50% increase in food and energy prices cuts $1.75
from their expenditures
Food expenditures will be cut most, and will be
accompanied by:
• Reduced diet quality
• Increased micronutrient malnutrition
• Delays in wage rate adjustments
Joachim von Braun, IFPRI, February 2008

Security synergies and conflicts
Food insecurity Political security risks
Rising food prices:
• The poorest suffer silently, the middle class
protests and lobbies
• Mass protests against rising prices
Decline in building international agriculture
capacity contributes to insecurity
Joachim von Braun, IFPRI, February 2008

Overview
1. The world food equation: Out of balance
2. Unsustainable agriculture: Risks and
insecurity
3. Actions needed now: Technology and
policy change
Joachim von Braun, IFPRI, February 2008

Agriculture to address poverty
in the Critical Square
Governance Economic
& Conflicts Growth
Innovation Productivity
& Capacity (in agriculture)

Why invest in agriculture?
Agricultural growth is more pro-poor
Projected Poverty Rate in Ethiopia
(Both with 5% of GDP annual growth)
44
42
40
38
36
34
32
30
28
Ag-led grow th Nag-led grow th Base run
26
2003 2005 2007 2009 2011 2013 2015
Source: IFPRI, 2007

Global public agricultural R&D
1981 2000
$15.2 billion* $23.0 billion*
100% Middle East-North Africa
Latin America-Caribbean
80%
Other Asia-Pacific
India
60%
China
40% Sub-Saharan Africa
Developed
20%
0%
Source: Pardey, 2006
Joachim von Braun, IFPRI, February 2008 * in 2000 international prices

Policy responses NOT to choose
• Export stops (“starving your neighbor”)
• Food subsidies for vocal middle class
• Maintaining outdated production controls
• Continued public underinvestment in
agriculture productivity increases
• Exclusion of agriculture from climate change
mitigation strategies
Joachim von Braun, IFPRI, February 2008

Five milestones for the roadmap
1. Global political attention at the highest levels
2. Specific policy action to protect the poorest
from excessively high food prices
3. Major investments in services, rural
infrastructure and input supply and finance for
small farmers
4. A global R&D initiative for accelerated
agricultural productivity
5. Enhanced collaboration of old and new key
global agricultural players
Joachim von Braun, IFPRI, February 2008

A global initiative
Accelerated investment in agricultural
productivity now:
• makes economic sense
• is pro-poor and good ethics
• enhances sustainability
• serves security
Joachim von Braun, IFPRI, February 2008