CGIAR Annual General Meeting, Beijing December 3, 2007

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