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Global Demand for Food Is Rising. Can We Meet It?

Global Demand for Food Is Rising. Can We Meet It? thumbnail

Over the last century, the global population has quadrupled. In 1915, there were 1.8 billion people in the world. Today, according to the most recent estimate by the UN, there are 7.3 billion people — and we may reach 9.7 billion by 2050. This growth, along with rising incomes in developing countries (which cause dietary changes such as eating more protein and meat) are driving up global food demand.

Food demand is expected to increase anywhere between 59% to 98% by 2050. This will shape agricultural markets in ways we have not seen before. Farmers worldwide will need to increase crop production, either by increasing the amount of agricultural land to grow crops or by enhancing productivity on existing agricultural lands through fertilizer and irrigation and adopting new methods like precision farming.

However, the ecological and social trade-offs of clearing more land for agriculture are often high, particularly in the tropics. And right now, crop yields — the amount of crops harvested per unit of land cultivated — are growing too slowly to meet the forecasted demand for food.

Many other factors, from climate change to urbanization to a lack of investment, will also make it challenging to produce enough food. There is strong academic consensus that climate change–driven water scarcity, rising global temperatures, and extreme weather will have severe long-term effects on crop yields. These are expected to impact many major agricultural regions, especially those close to the Equator. For example, the Brazilian state of Mato Grosso, one of the most important agricultural regions worldwide, may face an 18% to 23% reduction in soy and corn output by 2050, due to climate change. The Midwestern U.S. and Eastern Australia — two other globally important regions — may also see a substantial decline in agricultural output due to extreme heat.

Yet some places are expected to (initially) benefit from climate change. Countries stretching over northern latitudes — mainly China, Canada, and Russia — are forecasted to experience longer and warmer growing seasons in certain areas. Russia, which is already a major grain exporter, has huge untapped production potential because of large crop yield gaps (the difference between current and potential yields under current conditions) and widespread abandoned farmland (more than 40 million hectares, an area larger than Germany) following the dissolution of the Soviet Union, in 1991. The country arguably has the most agricultural opportunity in the world, but institutional reform and significant investments in agriculture and rural infrastructure will be needed to realize it.

Advanced logistics, transportation, storage, and processing are also crucial for making sure that food goes from where it grows in abundance to where it doesn’t. This is where soft commodity trading companies, such as Cargill, Louis Dreyfus, or COFCO, come in. While Big Food companies such as General Mills or Unilever have tremendous global influence on what people eat, trading companies have a much greater impact on food security, because they source and distribute our staple foods and the ingredients used by Big Food, from rice, wheat, corn, and sugar to soybean and oil palm. They also store periodically produced grains and oilseeds so that they can be consumed all year, and they process soft commodities so that they can be used further down the value chain. For example, wheat needs to be milled into flour to produce bread or noodles, and soybeans must be crushed to produce oil or feed for livestock.

Nonetheless, even if some regions increase their output and traders reduce the mismatch between supply and demand, doubling food production by 2050 will undeniably be a major challenge. Businesses and governments will have to work together to increase productivity, encourage innovation, and improve integration in supply chains toward a sustainable global food balance.

First and foremost, farmers, trading companies, and other processing groups (Big Food in particular) need to commit to deforestation-free supply chains. Deforestation causes rapid and irreversible losses of biodiversity, is the second largest source of carbon dioxide emissions after fossil fuels, and has contributed greatly to global warming—adding to the negative pressure on agriculture production for which these forests were cleared in the first place.

Farmers must also grow more on the land they currently operate through what is called “sustainable intensification.” This means using precision farming tools, such as GPS fertilizer dispersion, advanced irrigation systems, and environmentally optimized crop rotations. These methods can help produce more crops, especially in parts of  Africa, Latin America, and Eastern Europe with large yield gaps. They can also reduce the negative environmental impacts from over-stressing resources–preventing groundwater depletion and the destruction of fertile lands through over-use of fertilizer.

The agricultural sector also needs significant long-term private investment and public spending. Many large institutional investors, including pension funds and sovereign wealth funds, have already made major commitments to support global agricultural production and trading in recent years—not least because agricultural (land) investments have historically delivered strong returns, increased diversification, and outpaced inflation.

Still, investment in agriculture in most developing countries has declined over the last 30 years and much less is spent on R&D compared to developed countries—resulting in low productivity and stagnant production. And because banking sectors in developing countries give fewer loans to farmers (compared to the share of agriculture in GDP), investments by both farmers and large corporations are still limited. To attract more financing and investment in agriculture, the risks need to be reduced by governments. Regulators need to overhaul policies that limit inclusion of small, rural farmers into the financial system— for example, soft loans (i.e., lending that is more generous than market lending) and interest rate caps discourage bank lending. More supportive policies, laws, and public spending on infrastructure would help create a favorable investment climate for agriculture.

Global policy makers, corporations, and consumers must put the global food balance higher up the agenda. International business leaders who are participating in this supply chain have to better communicate the need for policy changes and for developed countries to incentivize investment in regions where there is the most potential for growth. Our food security will depend on it.

HBR



17 Comments on "Global Demand for Food Is Rising. Can We Meet It?"

  1. Apneaman on Thu, 7th Apr 2016 11:59 am 

    No we can’t, but that won’t stop the breeding.

    How about a real time preview of what’s to come?

    Amid Climate-Fueled Food Crisis, Filipino Forces Open Fire on Starving Farmers
    Police and army forces in the Philippines unleashed bullets on a starving crowd, killing 10, for demonstrating for drought relief

    http://www.commondreams.org/news/2016/04/04/amid-climate-fueled-food-crisis-filipino-forces-open-fire-starving-farmers

    Don’t matter if you live in a rich western country either, for the simple fact that you can’t print water.

  2. bug on Thu, 7th Apr 2016 2:06 pm 

    Apnea, you are just being to pessimistic.
    If you let capitalism and invisible hands and common sense solutions from policy makers and corporations, it will all get figured out. They told me so on the buiness shows.

  3. PracticalMaina on Thu, 7th Apr 2016 2:08 pm 

    That is capitalism at work, it was mostly indigenous farmers who were in the crowd. They don’t realize their water is needed by others, for building skyscrapers and sweat shops and other important shit.

  4. PracticalMaina on Thu, 7th Apr 2016 2:17 pm 

    Lets say, hypothetically, that world wide for the past decade or something, money was spent on water and food infrastructure instead of militarizing the police. What kind of world we would be in currently?
    That is the thing about the government, the cops shoot someone and riots results, the police get an increase in funding so they can keep people in check. The EPA FBI CIA FDA ect screws up, more funding. A school system test poorly, under no child left behind, cut the funding. That is not planning for the future.

  5. HARM on Thu, 7th Apr 2016 3:05 pm 

    What apneaman said.

    We’ll breed until the acre of soil is exhausted. We’ll drill and strip mine until EROEI is 1:1, and probably well beyond that. And then we’ll cut down all the remaining trees, to mine them for edible insects and bark, and be forced to turn over most of that to whatever remains of the 0.01% Mafia and their private merc “security forces”.

    Easter Island’s got nothing on *this* human plague.

  6. GregT on Thu, 7th Apr 2016 5:15 pm 

    “That is not planning for the future.”

    Maybe they are planning for the future………

  7. makati1 on Thu, 7th Apr 2016 8:14 pm 

    Practical, yes and politics was also involved in the event. The island of Mindanao is a hot bed of corruption, foreign intervention, and US military involvement. The “war on terror” in the Ps. I’m glad it is 500 miles and a lot of ocean between them and the farm.

    That is the only such event I can remember in my 8 years of living here. But Mindanao is a land of ‘war lords’ and private armies left over from the Marcos (The Us installed dictator) days. The government is slowly cleaning that up, but it will take time.

    I see the streets of the US having similar events in the years to come as society falls apart and the guns come out. Imagine if the farmers had been armed like Americas are…

    Pass the popcorn.

  8. dooma on Fri, 8th Apr 2016 1:15 am 

    And they love the Pope in the Philippines. Even though population overshoot is going to kill them.

    All because of a couple of words in a book about not wasting seed.

    Crazy world.

  9. makati1 on Fri, 8th Apr 2016 3:39 am 

    dooma, I have to agree on that one. But, religion has been the bane of humans for millenia. Name one that does NOT push big families. Buddhists maybe?

  10. Kenz300 on Fri, 8th Apr 2016 8:25 am 

    If you can not provide for yourself you can not provide for a child.

    Birth Control Permanent Methods: Learn About Effectiveness

    http://www.emedicinehealth.com/birth_control_permanent_methods/article_em.htm

  11. peakyeast on Fri, 8th Apr 2016 5:15 pm 

    Well – if I were world leader I would plan for as sudden death to as many as possible as quickly as possible without ruining the remaining ecosystems and contaminating it with radioactive materials.

    That way at least the few that are able to hide in deep enough holes will have something to come back to.

    With a slow decline we will do exactly what has been predicted by the ape-harm team.

    This can be verified historically – even recent history.

  12. Davy on Fri, 8th Apr 2016 6:50 pm 

    Peaky, are you going to be among those to be killed? A real leader would go down with the ship as an example.

  13. GregT on Fri, 8th Apr 2016 7:10 pm 

    “A real leader would go down with the ship as an example.”

    Not seeing too many ‘real leaders’ Davy. Mostly I see sociopaths, megalomaniacs, and sheep.

    http://www.mcafee.cc/Bin/sb.html

    https://www.vocabulary.com/dictionary/megalomaniac

    http://cdn.images.express.co.uk/img/dynamic/78/590x/sheep-617128.jpg

  14. antaris on Fri, 8th Apr 2016 9:20 pm 

    Davy , Peak said world leader not real leader. Even ships captins these days (schettino) run off and let the customers fend for themselves. I would bet that all ” world leaders” will protect their own ass if the SHTF and screw everybody else.

  15. makati1 on Fri, 8th Apr 2016 10:45 pm 

    antaris, maybe that is why the billionaires are flocking to New Zealand and buying up big ranches with landing strips? All the events I see happening will reach New Zealand long after they decimate the northern attitudes. Even a nuclear exchange. They are already prepping for the coming events and want a bolthole from the angry zombies they created.

    I might have moved to NZ also but the cost of living there is going out of sight, thanks to all of the money flowing into NZ from the north. And who wants to have arrogant, spoiled, psychopaths for neighbors anyway? I left the Us to get away from them.

  16. Kenz300 on Sat, 9th Apr 2016 8:23 am 

    Too many people……….create too much pollution and demand too many resources….

    China made great progress in moving its people out of poverty…….one reason was slowing population growth…..

    If you can not provide for yourself you can not provide for a child.

    CLIMATE CHANGE, declining fish stocks, droughts, floods, air water and land pollution, poverty, water and food shortages all stem from the worlds worst environmental problem……. OVER POPULATION.

    Yet the world adds 80 million more mouths to feed, clothe, house and provide energy and water for every year… this is unsustainable… and is a big part of the Climate Change problem

    Birth Control Permanent Methods: Learn About Effectiveness

    http://www.emedicinehealth.com/birth_control_permanent_methods/article_em.htm

  17. Kenz300 on Sun, 10th Apr 2016 9:17 am 

    Too many people and too few resources…….there are many examples around the world…..having a child you can not provide for is cruel…..

    Poverty in the Philippines –

    https://www.youtube.com/watch?v=XldM4DtlA-Y

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