1) The document discusses global food security and agricultural productivity trends from 1950-2050. 2) It notes that from 1950-2000, called the "Age of Abundance", global food supply grew faster than demand, keeping prices low due to steady productivity gains. 3) Looking ahead to 2050, it estimates global food demand will need to increase 1.3% annually, and questions whether productivity can continue growing fast enough to meet this demand sustainably.

1. Lilyan E. Fulginiti
Professor
Department of Agricultural Economics

2. Food Security Wake-up:
2007-2008: “Perfect Food Security Storm”
• Crude oil reached $145/bbl (July 08)
• Growing demand for food in India and China
• Unfavorable weather in Russia and Australia
Prices of food commodities spiked upward (2008)

3. 2007-2008: “Food Security Wake-up”

4. 2008-2011: Cheap Food Again?
• The great price crash, July- Dec 2008:
– Oil: $133 to $40 (-70%)
– Corn: $5.47 to $4.11 (-25%)
• But crop prices remain 50% above 1990-2000, …so?
Focus away from spikes towards trends

5. The World Food Equation
Prices adjust so that:
Demand for Food = Supply of Food
More People More Inputs
Higher incomes Higher Productivity
(= Higher efficiency+
New technologies)

6. 1950-2000: “The Age of Abundance”
Demand increases less than Supply increases
Real Prices of Food Commodities Decreased

7. 1950-2000: “The Age of Abundance”
World net agricultural production
1,800
1,600
1,400
1,200
billion dollars
1,000
800
600
400
200
0
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006
World Developed countries Developing countries

8. 1950-2000: “The Age of Abundance”
Real Price of Soybeans, Wheat, and Corn

9. Questions for the next half-century:
•What will be the growth rate in demand
for agricultural output?
UNL is working on this
•Can that growth rate in supply be
sustained while protecting the
environment?
UNL is working on this

10. At what rate will demand increase through 2050?
Source of demand growth LDC’s DC’s World
population - annual growth rate 0.8% 0.08% 0.7%
income - annual growth rate 5.2% 1.6% 2.9%
(0.6%)
biofuels – annual growth rate from 36 3.8%
' m ha in 2009 (2.5% of arable land) (0.001%)
total rate of increase ~1.3 %
Annual growth rate Increase by 2050
0.7% 32%
1.0% 49%
1.3% 68%
1.5% 81%

11. The Sources of Increased Food Supply:
• More inputs:
more land
more water
more labor, chemicals, machinery
• More productivity from inputs:
land productivity = yield = output ÷ acres
total factor productivity = output index ÷ input index

12. What are the prospects for more inputs?
Labor, chemicals, machinery:
supplies are elastic
distribution may be an issue
Land, water:
supplies are inelastic

13. Reasons for caution
about land and water expansion
• Ecological impacts of land conversions
– biodiversity
– fragile ecosystems
• Land use and climate change (IPCC)
– Conversion of forests and savannas release CO2
~10 % of anthropogenic GHG emissions
• Water problems (IWMI)
– many river basins poorly managed, and overcommitted
– Groundwater levels are declining rapidly in densely populated areas
of North Africa, North China, India, and Mexico
– Water management institutions have been slow to build or change
capacity and adapt to new issues and conditions
– Climate is changing

14. Given this caution …
to grow output by 1.3% per year, we must
continue to rely on what brought the age of
abundance:
PRODUCTIVITY GAINS
the other source of growth in agricultural output
What is the rate relative to the 1.3% need?

15. Single Factor Productivity – Output per hectare
World Yield Growth Rate in Cereal Crops
(10-yr moving average)
5.0%
4.5% Maize
4.0% Rice, paddy
Wheat
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

16. Multifactor Productivity Measures (MFP or TFP)
TFP growth is the difference:
GTFP = GOutputs - GInputs
Productivity Growth = (actual production growth) -
(production growth if no change in
technology or efficiency)

17. United States Agriculture

18. Agricultural Productivity Growth in Western Europe
1973-2003 (11 country aggregate)
60% increase vs. 75% increase for US
350
300
Labor productivity
Total factor productivity
250
200
150
100
50
1973 1978 1983 1988 1993 1998 2003

19. Agricultural TFP in EU and US
1.2
1
be
dk
0.8 de
gr
es
fr
0.6
ie
it
nl
0.4 se
uk
US
0.2
0

20. TFP Canadian Agriculture, 1940-2003

21. TFP Australian Agriculture, 1978-2007

22. Agricultural Productivity Growth in LDC’s
Research at UNL has examined:
– Sub-Sahara Africa: 46 countries, 1961-2006
– South America: 10 countries, 1972-2006
– Central America: 14 countries, 1980-2006
– China: 30 provinces, 1993-2005

23. Average TFP Growth Rates SSA Regions
1.4 1961-2006 (%)
1.2
1
0.8
0.6
0.4
0.2
0
East Africa Southern Africa West Africa Central Africa
TFP % (1961-1989) TFP % (1989-2006)
Source: Kibonge, A. and L. Fulginiti, “Institutions and Agricultural Productivity Growth in Sub-Sahara Africa?”, Presented at the AAEA meetings,
Pittsburgh, July 2011.

24. TFP growth rate South America 1972-2006 (%)
3.5
3
2.5
2
1.5
1
0.5
0
Argentina Chile Brazil Peru Ecuador Venezuela Uruguay Bolivia Colombia Paraguay
-0.5
1972-1989 1990-2006
Source: Trindade, F and L. Fulginiti, "Is there a Slowdown in Agricultural Productivity Growth in South America?”, Dept. of Agricultural Economics,
University of Nebraska, Lincoln, 2010.

25. TFP Growth Rate Central America and Caribbean
1980-2006 (%)
4
3
2
1
0
-1
-2
-3
-4
1980-1989 1990-2006

26. TFP growth rates Chinese Regions, 1993-2005 (%)
6
5
4
3
2
1
0
EAST CENTRAL WEST
Source: Tong, H., L. Fulginiti and J. Sesmero, “Agricultural Productivity in China: National and Regional Growth Patterns, 1993-2005,” in Fuglie, K. et al.,
editors. Productivity Growth in Agriculture: An International Perspective. Oxfordshire, UK: CAB International (forthcoming).

27. TFP growth rates Chinese Provinces, 1993-2005 (%)
8
7
6
5
4
3
2
1
0
Tibet
Guangxi
Xinjiang
Qinghai
Ningxia
Inner mongolia
Tianjing
National Mean
Hainan
Fujian
Gansu
Hebei
Beijing
Anhui
Jiangxi
Liaoning
Shanghai
Shaanxi
Shanxi
Jilin
Hubei
Jiangsu
Guangdong
Zhejiang
Shandong
Henan
Heilongjiang
Yunnan
Hunan
Sichuan
-1
-2
Source: Tong, H., L. Fulginiti and J. Sesmero, “Agricultural Productivity in China: National and Regional Growth Patterns, 1993-2005,” in Fuglie, K. et al.,
editors. Productivity Growth in Agriculture: An International Perspective. Oxfordshire, UK: CAB International (forthcoming).

28. What factors affect differences in TFP rates?
• Irrigation
• Roads and other infrastructure
• Education and Health Expenditures
• Public Expenditures in Agriculture
• Policies
• Civil Liberties and Political Rights
• Colonial Heritage
• Years since regime change
• Conflicts

29. TFP growth rates 1990 on, compared to 1.3%
US: 1.57 ↓
EU: 1.53 ↓
Canada: 1.4% ↓
Australia: 0.7% ↓
China: 3.2% ↑
South America: 2.5% ↑
CA and the Caribbean: 1.5% ↑
SSA: 1.09% ↑

30. Can the rate of growth of the last 50 years be
sustained?
Evidence of slowdown in DC’s
Room for higher rates of growth in some LDC’s
BUT
more intensive use of resources
INNOVATIONS = R&D

31. ERS, derived from OECD, Eurostat and ASTI data

32. Source: Fuglie et al. (unpublished, in preparation)

33. Internal Rates of Return, US Ag R&D, 1949-1991, %
(straight green line average return S&P500)
40
35
30
25
20
15
10
5
0
GA
NC
TX
NJ
NE
IA
TN
NV
NM
ND
NH
NY
IL
WI
IN
OK
WY
LA
WA
PA
MI
ID
SD
OH
MN
KS
MS
MO
CO
KY
AR
MT
AZ
OR
AL
VA
SC
WV
ME
FL
VT
MD
DE
MA
RI
UT
CA
CT
Source: Plastina, A. and L. Fulginiti, “Internal Rates of Return to Agricultural R&D in 48 US States,” Journal of Productivity Analysis, (forthcoming).

34. USDA Forecast of U.S. Ag Productivity to 2050 -
Based on Research at UNL
Source: USDA Economic Brief 17, July 2011, forecast based on Wang, L., E. Balll, L. Fulginiti, and A. Plastina: “Benefits of Public R&D in U.S. Agriculture:
Spill-ins, Extension, and Roads,” in Fuglie, K. et al., editors. Productivity Growth in Agriculture: An International Perspective. Oxfordshire, UK: CAB
International (forthcoming).

35. • Most TFP growth rates above 1.3%
• Slowdown in productivity growth in DC’s
• Slowdown in agricultural R&D investments
• LDC’s TFP growing but limited R&D capacity
• Spillovers from rich to poor countries?
• Sustainable agricultural productivity growth?