The World Food Situation
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The World Food Situation

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CGIAR Annual General Meeting, Beijing December 3, 2007 ...

CGIAR Annual General Meeting, Beijing December 3, 2007

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  • 1. The World Food Situation Joachim von Braun International Food Policy Research Institute CGIAR Annual General Meeting, Beijing December 3, 2007
  • 2. Overview 1. New world food equation 2. Food: Scarcity and energy price links 3. Poverty, food, and nutrition 4. Pro-poor policy actions Joachim von Braun, IFPRI, December 2007
  • 3. Forces changing the world food equation World food = f {income growth, climate change, globalization, urbanization, energy scarcity, biofuels, …} Changes in food availability, prices, and (super) markets will impact the poor and hungry, and farmers. Joachim von Braun, IFPRI, December 2007
  • 4. Changing supply, demand and price for cereals 2000 - 2006 2000=100 P S2006 D2000 153 100 D2006 S2000 1,917 2,070 Q million tons Joachim von Braun, IFPRI, December 2007 Source: Based on data from FAO 2003, 2005-07.
  • 5. Drivers of change: Income growth • Growth (2004-06 per annum) - 9% in Asia - 6% in Africa • Scenario 2025: Consumption with 5.5% annual GDP growth in South Asia - meat, eggs, and fish 100% - milk and vegetables 70% - rice 4% Sources: IMF 2007; Kumar, et al. 2007. Joachim von Braun, IFPRI, December 2007
  • 6. Shifting consumption Joachim von Braun, IFPRI, December 2007
  • 7. Drivers of change: Urbanization and globalization • 61% of population in urban areas by 2030 • Asian diets towards wheat, temperate zone vegetables and dairy • Rural poverty will continue to exceed urban Joachim von Braun, IFPRI, December 2007
  • 8. Consumption: 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 feed for meat and dairy production and by population growth Joachim von Braun, IFPRI, December 2007 Source: Data from FAO 2007.
  • 9. World cereal production: not growing enough and future growth hampered by climate change Total Million tons 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, December 2007 * Forecast.
  • 10. Disruptions in production (2004-06) Wheat Coarse grains US 16% 12% EU 14% 16% Australia 52% 33% However, coarse grain output 12% in China and rice output 9% in India. Source: Data from FAO 2006 and 2007. Joachim von Braun, IFPRI, December 2007
  • 11. The World eats more than it produces: cereal stocks decline Million tons 700 600 500 400 300 Total stocks 200 100 China 0 2000 2001 2002 2003 2004 2005 2006 2007* Source: Data from FAO 2003, 2005-07. Joachim von Braun, IFPRI, December 2007 * Forecast.
  • 12. High-value food production on the rise (2004-06) Average production growth (%) 5 4.0 4.0 4 2.9 3.0 3 2 1 0.6 0.2 0.2 0.3 0 Vegetables Fruits Meat Milk Developed countries Developing countries Joachim von Braun, IFPRI, December 2007 Source: Data from FAO 2007.
  • 13. Trade policy: stagnation at global level, movement at regional levels • Global (WTO) agreement: stalled; gains for developing countries not realized • Regional agreements: number of deals increased from 86 to 159 (2000-07) • Share of developing countries in global exports increased from 32% to 37% (2000-06), however, share of Africa only from 2.3% to 2.8% Joachim von Braun, IFPRI, December 2007 Source: UNCTAD 2007.
  • 14. The world food chain from a corporate perspective Consumers Agricultural Food input processors Food industry Farms and traders retailers top 10: $37 bln Agricultural top 10: $363 bln top 10:$777bln value added: • Syngenta $1,592 bln • Nestle • Wal-Mart • Bayer • Cargill • Carrefour $4,000 billion • BASF 450 million • Unilever • Royal Ahold • Monsanto >100 ha: 0.5% • Metro AG • ADM • DuPont • Kraft Foods • Tesco < 2 ha: 85% Source: WDI 2007, von Braun 2005 Joachim von Braun, IFPRI, December 2007
  • 15. A “corporate view” of the world food system Sales of top 10 companies (billion $US) 2004 2006 37 363 777 40 409 1,091 Agricultural Food processors Food retailers input industry and traders Joachim von Braun, IFPRI, December 2007 Source: Planet Retail 2007, Morning Star 2007, company financial reports.
  • 16. Overview 1. New world food equation 2. Food: Scarcity and energy price links 3. Poverty, food, and nutrition 4. Pro-poor policy actions Joachim von Braun, IFPRI, December 2007
  • 17. Surge in cereal and oil prices Commodity prices (US$/ton) Oil 400 Corn 80 Wheat 300 Rice 60 Oil (right scale) 200 40 100 20 0 0 0 1 Ja 2 3 4 5 6 7 00 01 02 03 04 05 06 07 l-0 l-0 l-0 l-0 l-0 l-0 l-0 l-0 n- n- n- n- n- n- n- n- Ju Ju Ju Ju Ju Ju Ju Ju Ja Ja Ja Ja Ja Ja Ja Joachim von Braun, IFPRI, December 2007 Source: Data from FAO 2007 and IMF 2007.
  • 18. Meat and dairy prices January 2000 = 100 300 Beef Poultry 250 Butter Milk 200 150 100 50 Ja 0 Ja 1 Ja 2 Ja 3 Ja 4 Ja 5 Ja 6 7 00 01 02 03 04 05 06 07 l-0 l-0 l-0 l-0 l-0 l-0 l-0 l-0 n- n- n- n- n- n- n- n- Ju Ju Ju Ju Ju Ju Ju Ju Ja Joachim von Braun, IFPRI, December 2007 Source: Data from FAO 2007.
  • 19. What policy response not to choose to deal with the high prices? Not: • Export stops (starving your neighbor) • Food subsidies for vocal middle class • Slow change in outdated production control policies • Continued public underinvestment in agriculture productivity increases But needed: sharing through open trade and increased aid Joachim von Braun, IFPRI, December 2007
  • 20. World and domestic prices: Maize in Mexico (Jan. 2004 = 100) 160 Mexico maize 140 World maize 120 100 80 60 Ja 4 Ja 5 Ja 6 4 5 6 7 04 05 06 07 4 5 6 7 -0 -0 -0 -0 -0 -0 -0 l-0 l-0 l-0 l-0 n- n- n- n- ct ct ct pr pr pr pr Ju Ju Ju Ju Ja O O O A A A A Joachim von Braun, IFPRI, December 2007 Source: Data from Bank of Mexico 2007 and IMF 2007.
  • 21. Biofuels: hopes and threats • Can foster rural growth, and jobs: needs small farmer friendly technology • Can mitigate climate change • Can be positive or negative for forests, and soils • Can create new lobbies: Subsidies for biofuels are anti-poor Needed: A global trade regime with transparent standards for biofuels Criteria that internalize the positive and negative effects of biofuels (energy balance; and CO2 net- emissions) Main concern: Food – fuel competition and food security of the poor Joachim von Braun, IFPRI, December 2007 Sources: IEA 2004 and Henniges 2005.
  • 22. The biofuels boom World ethanol and bio-diesel production, 1975-2005 40 4 35 30 3 Billion liters Billion liters 25 20 2 15 10 1 5 0 0 1975 1980 1985 1990 1995 2000 2005 1991 1993 1995 1997 1999 2001 2003 2005 Ethanol > 90% of biofuel production; Biodiesel: EU is the largest Brazil and US dominate ethanol producer and consumer market Joachim von Braun, IFPRI, December 2007 Source: Worldwatch Institute, 2006.
  • 23. Countries’ plans for expansion Annual growth in biofuel production…2010/12 Ethanol Biodiesel USA: 16% USA: 19% EU: 45% EU: 37% Brazil: 8% Malaysia: 248% India: 15% Indonesia: 143% China: 3% Thailand: 70% Joachim von Braun, IFPRI, December 2007 Source: USDA, 2006; 2007.
  • 24. IMPACT-Model: 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, December 2007 Source: IFPRI IMPACT–model projections.
  • 25. Calorie consumption changes in 2020 compared to baseline (%) N America SSA S Asia MENA LAC ECA EAP -9 -6 -3 0 Biofuel expansion Drastic biofuel expansion Joachim von Braun, IFPRI, December 2007 Source: IMPACT-WATER.
  • 26. Reducing the food-fuel competition • Second-generation technologies will: - utilize waste biomass - use less land (and water?) resources 2nd generation technologies will not overcome the food-fuel competition unless they are smart (e.g. joint product technology like sweet sorghum; or algae based technologies) Implications: 1. Slow down on biofuels now ! (wait smart 2nd ) 2. Accelerate general food crop productivity investments ! Joachim von Braun, IFPRI, December 2007
  • 27. What Price Food in the future? Projections have underestimated price increases. Will they continue to do so? FAPRI: Wheat and corn P to by 2 and 4% by 2016 OECD-FAO: Wheat and coarse grain P to by 20 and 34% by 2016 Projections need to accommodate the complex nature of the world food equation Joachim von Braun, IFPRI, December 2007
  • 28. Modeling cereals price changes (2000-05 and 2006-15) US$/ton 300 200 100 0 2000 2005 2010 2015 Rice Wheat Maize Oilseeds Soybean Joachim von Braun, IFPRI, December 2007 Source: M. Rosegrant (prelim. results with IMPACT-WATER)
  • 29. Overview 1. New world food equation 2. Food: scarcity and energy price links 3. Poverty, food, and nutrition 4. Pro-poor policy actions Joachim von Braun, IFPRI, December 2007
  • 30. Price increase: Impact on the poor Bolivia Ethiopia Bangladesh Zambia Staple foods 2002 2000 2001 1998 % of total expenditure of all poor Purchases by the poor 11.3 10.2 22.0 10.3 Sales by the poor 1.4 2.8 4.0 2.3 Country- and crop-specific outcomes Joachim von Braun, IFPRI, December 2007 Source: Adapted from World Bank 2007.
  • 31. Price-effects for Bangladesh five-person household living on one dollar-a-day per person Spend…their $5 $3.00 on food $.50 on household energy $1.50 on nonfoods  A 50 percent increase in food and energy prices requires them to cut $1.50 of their expenditures Cuts will be made most in food expenditures:  Reduced diet quality, and  Increased micronutrient malnutrition Joachim von Braun, IFPRI, December 2007
  • 32. Looking beneath the $1 a day line Subjacent poor ($.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, December 2007 Source: Ahmed, et al. 2007.
  • 33. Looking beneath the $1 a day line Subjacent poor Medial poor Ultra poor ($0.75 and <$1): ($0.50 and <$0.75): (<$0.50): 485 mln in 2004 323 mln in 2004 162 mln in 2004 ECA LAC ECA 0.4 mln MENA LAC 3 mln MENA LAC ECA 1. 1 mln MENA 0.2 mln 11.5 mln 19 mln 3.3 mln 16 . 6 mln 0 . 9 mln EAP SSA 8.8 mln EAP 87.0 EAP SSA 109.3 mln 5 1 mln 9 0 . 2 mln SA mln 19.7 mln SSA SA SA 121 mln 263.6 16 2 . 9 mln mln Source: Ahmed et al. IFPRI, 2007. Joachim von Braun, IFPRI, December 2007
  • 34. The growing number of the poorest in SSA Living below US$.50/day (1990-2004) 29 30 15 5 Million 0 -15 -30 -27 -31 -45 -38 Developing World East Asia & Pacific South Asia L America & Caribb. Sub-Saharan Africa Joachim von Braun, IFPRI, December 2007 Source: Ahmed et al. 2007.
  • 35. Global Hunger Index (GHI) Contribution of components to the GHI proportion of calorie deficient people 30 prevalence of underweight in children 20 under-five mortality rate 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, December 2007 Source: Wiesmann, et al. 2007.
  • 36. Performance in hunger index and income Trends in the GHI and GNI per capita (1981, 1992, 1997, 2003) 50 40 Ethiopia 30 GHI India 20 Ghana 10 China Brazil 0 0 2,000 4,000 6,000 8,000 Joachim von Braun, IFPRI, December 2007 GNI per capita Source: Wiiesmann, IFPRI.
  • 37. Hunger, growth and governance 1990-2004 Proportion of undern. progress indicator Ethiopia Ghana 1.0 Brazil Nigeria Uganda China 0.5 Kenya India 0.0 -0.5 -10 -5 0 Tanzania 5 10 -1.0 -1.5 -2.0 -2.5 Congo, DR -3.0 Annual growth rate in GNI per capita, 1990-2004 (in %) Low gov effectiveness Higher gov effectiveness Source: Wiesmann, 2007. Low government effectiveness is assigned to countries in the Joachim von Braun, IFPRI, December 2007 lowest quartile of Worldwide Governance Indicators.
  • 38. Overview 1. New world food equation 2. Food: Scarcity and energy price links 3. Poverty, food, and nutrition 4. Pro-poor policy actions Joachim von Braun, IFPRI, December 2007
  • 39. Pro-poor policy actions (1) 1. Developed countries - Eliminate agricultural trade barriers, and expand / re-visit aid priorities 2. Developing countries - Increase investment in agriculture, rural infrastructure and market access for small farmers 3. Science and Technology (CGIAR and NARS) - Facilitate production response by agriculture science- and technology-based solutions (China, India, Africa) Joachim von Braun, IFPRI, December 2007
  • 40. Pro-poor policy actions (2) 4. Social-protection measures - Need expansion; productive safety nets; and focus on early childhood under-nutrition 5. Climate change agenda - Incorporate agriculture and food issues for adaptation now and for long-run mitigation Joachim von Braun, IFPRI, December 2007