This document discusses economic implications of global food security in the 21st century. It begins with definitions of food security and indicators used to measure it. Current challenges to food security in sub-Saharan Africa are outlined, including low productivity, incomes, and nutrition. Future challenges from population growth, climate change, and resource constraints are also examined. The role of economics in enhancing food security through frameworks analyzing supply and demand is explored. Science and technology are seen as critical to increasing agricultural productivity according to Boserup's view. Initiatives like Africa's Green Revolution are proposed to develop new innovations to meet Africa's growing food needs.

1. Economic Implications of Food Security in the 21st Century Jeffrey Vitale

2. Presentation Outline What is food security? Food security: Current status Global challenges for food security Role of economics in enhancing food security Opportunities Next steps

3. What is Food Security? “When all people at all times have access to sufficient, safe, nutritious food to maintain a healthy and active life”. The World Food Summit of 1996. Economists like this definition since it is strong and comprehensive, especially this last part. By removing constraints on nutrition, food security enables societies to fully develop their human capital. This definition goes far beyond a “survival” definition of food security. However, this is a general definition and it’s vague on how to quantify achievement.

5. Market prices

6. Disposable income

8. Food safety

11. Critical Needs for Sub-Saharan Africa Virtually all of the food security indicators are underperforming in SSA: Direct access to food is weakened by low productivity, i.e. low crop yields Indirect access to food is weakened by low disposable incomes, high transportation costs, and global price shocks Food consumption inadequate for even basic energy requirements, let alone improved nutrition SSA diet remains starch-based, lacking in nutrition.

12. Direct Access of Food: East Africa Current performance is weak. Typically need 212 kg per person of cereals per year. This leaves a significant gap ...

13. Maize Imports Gaps in domestic production are made-up through food imports that are risky when prices rise ...

14. World Maize Price ($ per MT) As the world witnessed in 2008 and perhaps may see again soon $2.25 per bu Price shocks leading to social and political unrest

15. World Food Prices

16. Here’s an illustration of how different food access and disposable income vary “North to South” Territory size shows the proportion of all people living on PPP US$ 100-200 a day worldwide that reside there.

17. Distribution & Marketing Graph illustrates shipping cost from port of entry to destination. Entry point is either Dar es Salaam or Mombasa, whichever has lowest cost. Oklahoma: transportation costs $0.20 per ton mile In East Africa, the red areas are about $2.40 per ton mile Compare with previous slide and see that transportation costs are more than the world price of maize. Source: Stan Woods, IFPRI

18. Critical Needs for Sub-Saharan Africa Virtually all of the food security indicators are underperforming in SSA: Direct access to food is weakened by low productivity, i.e. low crop yields Indirect access to food is weakened by low disposable incomes, high transportation costs, and global price shocks Food consumption inadequate for even basic energy requirements, let alone improved nutrition SSA diet remains starch-based, lacking in nutrition. Barb Stoecker will be discussing this. Unfortunately, achieving food security milestones will become increasingly difficult over the coming decades

19. Future Challenges & Constraints: Has Malthus Returned?? Feeding the world over the next few decades is going to be a major challenge Some even expect that food security could be a “North country” problem as well World will need to produce substantially more food over the coming decades to feed increased population (9 billion by 2050) as well increased demand from higher incomes, including large increases in demand for meat (primarily from Asia) Numerous constraints and challenges will limit the capacity to increase food supply in the future Can the world, as Malthus doubted, feed itself over the coming decades?

20. Constraints & Challenges to Global Food Security Shrinking land supply from urban encroachment Environmental degradation Global climate change Water scarcity Rising energy prices and its effect on fertilizer and other input prices (high fertilizer use in food on quiz) Competing uses of agricultural land from energy crops and “neo-colonial” enterprises Urbanization and decline of farm population Pest damage

21. Rising Energy Prices ($ per barrel) What happens if/when oil reaches $250 per barrel and stays there??

22. High energy prices result in higher production costs and ultimately impact grain prices when ending stocks are low… Fertilizer prices explode: phosphates up from $390/ton in 2006 to $1,727/ton in April 2008

23. Climate Change 2004 study I was involved with at Texas A&M Forecasts of what is expected to happen to agriculture over next 50 years in SSA, including Kenya

24. Global Climate Change Change in Rainfall

25. KENYA Changes in Crop Yield (%) (Under Canadian GCM projection out to 2050)

26. Cereal Production Changes in Cereal Production (%)

27. Cereal Import Changes in Cereal Import (%)

28. Price Index Price Index (Base = 100)

29. Role of Economics in Food Security Allocate scarce resources under competing uses to meet societies needs and wants Guide policy makers towards making optimal use of resources under scarcity and imposed constraints Identify agricultural alternatives and policies that generate highest social rate-of-return

30. Economic Framework Economic implications and policy outcomes are assessed in a supply-demand framework Demand: How much food needs to be produced given population, economic growth, and food security goals (policy) Supply: How much food can actually be produced given the availability of inputs (land, water, labor, etc.), the condition of the natural resource base, and climatic factors

31. Economic Framework Think of demand as our goals and objectives: determines how much food do we need to produce Demand Think of supply as how much food the world can produce Both supply and demand will depend on price, but do so in opposing ways. Demand decreases when prices rise but supply increases. Supply

32. Economic Framework Market outcomes are determined where supply and demand meet. Demand The market outcomes tell us how much food is produced and what price consumers paid. Both market price and quantity are highly important indicators and measures of food security. We need to have affordable food for consumers so they can satisfy their requirements while giving producers ability to produce at low costs. Supply Policies have traditionally been biased towards keeping food prices low but as we will see that is difficult unless supply is strengthened.

33. Economic Framework Economic implications and policy outcomes are assessed in a supply-demand framework Best to think of demand as what and how much we need to do and the supply as how we go about meeting our needs The economic framework paints either a gloomy or hopeful picture depending on whether you believe Malthus or Boserup

34. Demand: How much food needs to be grown? Higher incomes in merging and emerged countries means increased demand for food Population growth will be an issue in many parts of the world, including SSA. More diverse diets (i.e. red meat) at least in Asia This means that demand will increase significantly over the coming decades

35. Food Demand: Future Forecasts Demand is projected to increase Think of demand as our goals and objectives: determines how much food do we need to produce Demand Think of supply as how much food the world can produce Supply

36. Income and population growth will continue to be key drivers of increased food consumption Where would Kenya and Uganda be located on the graph??

38. Meat consumption to increase from 50 kg per capita to 56kg between 2005 and 2015

39. Poultry continues to take share from beef, albeit at a reduced rate. Pork gains due to China

40. ~ 20% more feed grains will be needed to meet this demandSource: FAO, FAPRI, OCED

41. Economic Framework: Inc Demand Virtually all projections have global food demand increasingly significantly over the coming decades. Demand For economists, we have to rework our modeling framework to account for the growth in demand. Demand curves shift outward, indicating that the quantity demanded by consumers is increasing. The effect is an increase in food prices. We can’t say how much prices will increase until we consider how supply will change over time, which we’ll look at in some upcoming slides. Supply

42. Supply Considerations For sake of discussion, we can consider two opposing view points: Malthus vs. Boserup. Malthus argued that the world would run out of food since the supply of land is fixed. We’ll look at his supply curve on next slide. Boserup argued that through science and technology, societies are able to overcome limits on land supply by increasing ag productivity. We’ll also look at her supply on the next slide.

43. Econ Framework: Malthus vs. Boserup Malthus believed that because land has a fixed supply, there is only so much food that can be produced once land supply is exhausted. So his supply curve bends up. Demand In Malthus’ world, prices would skyrocket as demand increases over time. World won’t be able to feed itself once land has been used up. Increasing Global Demand for Food Supply

44. Econ Framework: Malthus vs. Boserup Science & Technology Boserup believed that with science and technology supply can be increased. Boserup’s supply curve is to the right, meaning that it produces more food at cheaper prices. Demand In Boserup’s world, prices would only increase modestly with increasing demand. Consumers would pay a premium for more intensive production. World should still be able to feed itself. Increasing Global Demand for Food Supply

45. Economic Framework: Malthus Malthus believed that because land has a fixed supply, there is only so much food that can be produced. Demand Malthus didn’t have a framework, but if he did he would have predicted higher and higher food prices as demand increased. This is illustrated by the demand curves moving to the right. Eventually, according to Malthus, a growing population will run out of food. Supply

46. Economic Framework: Boserup Boserup believes that with science and technology, agriculture can increase productivity and feed even fast growing populations. In her framework, supply is able to increase with scientific advances as shown by the supply curve moving to the right. Quantity of food produced in her model increases and prices have only a minimal increase

47. Lessons Learned Nearly all development economists believe Boserup: with science and technology agricultural production can be increased and prices kept loweven when land supply has been exhausted. Evidence from the science-led agricultural development of the US in 20th century and the Green Revolutions in Mexico, Brazil, and Asia make it hard to dispute Boserup’s viewpoint For SSA, lesson is clear. As population grows, there is a need for a science based agricultural revolution to increase productivity. However, as we discussed earlier, the constraints to future growth are a source of concern for even strong believers in Boserup.

48. Achievements of a Science-Based Agriculture

49. How can we grow more food: Is Boserup correct? To satisfy demand, most estimates suggest that crop yields will need to increase by an average of 2% per year over the coming decades to satisfy world food needs. Daunting challenge since developed countries such as US averaged only a 2.1% yield increase since World War II

50. Africa’s Green Revolution (AGRA) Nearly all agree that the needs are so large that they cannot be met with the status quo. Clear need for a Green Revolution in Africa Asian revolution not transferred to Africa Need new innovations to meet challenges

51. What Might Africa’s Green Revolution Look Like? Biotechnology Irrigation African led, science-based research and development Address “orphan crops” that have been ignored by developed countries Energy efficient Water efficient Better policy Better physical infrastructure Reinforce existing capacities Extension Research and development (inc gdp share) Increased commercialization Public-private partnerships Continued support from foundations (Gates, Buffet, etc)

52. Alternatives Put in a nice table of alternatives

53. Empirical Evidence Bt cotton in West Africa Bt maize in Kenya Striga in maize

54. Bt Cotton in Burkina Faso An initial glimpse of what the Green Revolution could look like Bt cotton in West Africa Private firm, Monsanto, assisting in transferring technology Cooperation between technology provider and government, public research institutues, and smallholder prodcuers.

55. Benefits to Producers An initial glimpse of what the Green Revolution could look like Bt cotton in West Africa Private firm, Monsanto, assisting in transferring technology Cooperation between technology provider and government, public research institutues, and smallholder prodcuers.

56. Summary Without more investments in agriculture in agriculture, including in science-based R&D, it’s difficult to be optimistic about future food security in SSA Develop your own definition of food security and QUANTIFY even though it’s not easy Identify food security indicators Assess future food needs (demand) in your region Identify policy alternatives and new technology options Get farmers involved and strengthen extension Assess and rank constraints to production, including climate change Quantify whenever possible Everyone needs to think globally

57. Next Steps Surveys

58. The End

59. Global protein consumption per capita is highly correlated to the change in GDP per capita

60. China (along with India) has become a major global economic force…with much more to come over the next 30 years Global GDP Growth

61. High energy prices result in higher production costs and ultimately impact grain prices when ending stocks are low… Fertilizer prices explode: phosphates up from $390/ton in 2006 to $1,727/ton in April 2008

62. Higher per capita income Lower per capita income The protein value chain... Impact of raising commodity prices?

63. Developing countries and the poor disproportionably feel the impact of food inflation- When food prices raise by 33% living standards are reduced 3% in rich countries and over 20% in poor countries – G. Becker Nobel economics laureate Univ. of Chicago Source: USDA Economic Research Service, 2004 Data – Household final expenditures spent on food at home. Represented as fraction of household expenditures on goods and services.

64. Value Chain

65. Food insecure regions and countries at risk by climate event