Global Food Security Challenges and Opportunities: the new role of agriculture

Global Food Security Challenges and opportunities: The New Role of Agriculture

Shenggen FanDirector General

International Food Policy Research Institute

USAID Agriculture Core Course, Washington, DC, June 6, 2011

Shenggen Fan, May 2011

Key messages

Global food security challenges remain large and complex

A comprehensive strategy is needed to address challenges, harness opportunities, and protect poor people

The new role of agriculture, especially small-scale farming, must be leveraged for achieving broad development outcomes


Global food security challenges remain large and complex


Challenges to global food security include

Food price volatility

Energy/Biofuels

Population growth and demographic changes

Land and water constraints

Climate change

Conflicts


Global food price hikes and volatility

May

-05

Nov-0

5

May

-06

Nov-0

6

May

-07

Nov-0

7

May

-08

Nov-0

8

May

-09

Nov-0

9

May

-10

Nov-1

0

May

-11

0

200

400

600

800

Maize

Wheat

Rice

US

$/m

etr

ic t

on

Source: Data from FAO 2011

Global hikes since June 2010

• Maize: 100%• Wheat: 98%


Domestic prices are also rising rapidly

Mar-09 Sep-09 Mar-10 Sep-10 Mar-116,000

7,000

8,000

9,000

10,000Rice

Ru

pia

h '0

00s/

Kg

Mar-09 Sep-09 Mar-10 Sep-10 Mar-114,000

6,000

8,000

10,000Rice (20% broken milled)

Rice (25% broken milled)

Don

g '0

00s/

Kg

Retail prices in Vietnam, Dong Thap

Feb-09 Aug-09 Feb-10 Aug-10 Feb-112

3

4

5

6Wheat (flour)

Rice (Japonica second quality)

Yu

an R

enm

inb

i/Kg

Retail prices in China, national average

Source: Data from FAO 2011

Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-110

200

400

600

800

Maize

Wheat (white)

Eth

iopi

an B

irr/k

g

Wholesale prices in Ethiopia, Addis Ababa

Retail prices in Indonesia, national average


High and volatile food prices affect food security, but outcomes vary

Source: Headey 2011

Self-reported food insecurity in select countries

China

India

Indonesia

Brazil

Pakista

n

Bangladesh

Nigeria

Mexic

o

Vietn

am

0

10

20

30

40

50

60

2005/06 2007/08 2008/09

Pre

va

len

ce

of

se

lf-r

ep

ort

ed

fo

od

in-

se

cu

rity

(%

)


Stronger link between oil and food prices influence food security

Rising oil prices make biofuels more profitable, and agricultural production more expensive

Correlation between oil and food prices have increased overtime (correlation coefficient 0.93 since 2000)

Source: Data from IMF 2011

Note: Oil = Average crude oil price of U.K. Brent, Dubai, and West Texas Intermediate

Apr-0

5

Oct

-05

Apr-0

6

Oct

-06

Apr-0

7

Oct

-07

Apr-0

8

Oct

-08

Apr-0

9

Oct

-09

Apr-1

0

Oct

-10

Apr-1

10

50

100

150

200

250

Food

Oil

2005

= 1

00


Rapidly growing population and demographic change

World population reaches 9 billion by 2050

All growth to come from urban areas

Most growth to come from developing countries

Source: FAO 2009

Larger and more urban population will demand more and better food


NCAR A2a

Climate change will affect average crop yields

Source: Nelson et al. 2009.


Conflicts affect food security and development

Source: World Bank 2011

Incidence ratio of undernourishment, poverty and other ills for fragile, recovering, and non-fragile developing countries


A comprehensive strategy is needed to address challenges, harness

opportunities, and protect poor people


Actions needed to reduce food price volatility and protect the poor

1 Invest in social safety nets

2Establish global and regional strategic grain reserves

3 Support transparent, fair, and open global trade

4 Promote smallholder agricultural growth


Bangladesh Vulnerable Group Development program

Increased per capita food consumption by 45-66 kcal per taka transfer (Ahmed et al. 2009)

Ethiopia Productive Safety Nets Program (PSNP)

With access to both safety nets and agric. support, beneficiaries are more food secure and productive (Gilligan, Hoddinott, and Taffesse 2009)

Nigeria Fadama II Development Project

Increased the value of individual productive assets by about 50% (Nkonya et al. 2008)

1. Invest in productive social safety nets


2. Establish global and regional strategic grain reserves

Global emergency reserve:• created with grain donations from large food exporters and

producers, e.g. US, France, China, India

• located also in poor food importing countries, e.g. Horn of Africa

• owned and managed by an institution such as WFP

Some regional initiatives are emerging e.g. Asean+3 Emergency Rice Reserve, Sahel and West Africa Regional Food Stocks (RESOGEST) etc.

Properly managed reserves can address food crises, but operating costs must be low and challenges must be

overcome


3. Support transparent, fair, and open global trade

Eliminate harmful trade restrictions and prevent new ones to:• increase market efficiency• reduce price fluctuations

Potential costs of a failed Doha Round could be high (Bouet and Laborde 2009):

11.5% loss of developing country exports US$353 billion loss in world welfare

Quick completion of the Doha Round is crucial


4. Promote smallholder productivity Invest in agricultural R&D and infrastructure

• Agricultural research and new technologies tailored to smallholders

• Access to high-quality seeds and fertilizer• Rural infrastructure (electricity and feeder roads in

particular)

Promote innovations for smallholders • Financial services e.g. community banking

• Risk-management mechanisms e.g. weather-based index insurance

• Institutional arrangements e.g. producer cooperatives


The new role of agriculture, especially small-scale farming, must be leveraged


Agric-led growth is still important for poverty reduction…

Agric-led growth scenario

Non-agric-led growth scenario

Ethiopia (2003-15) -1.7 -0.7

Ghana (2003-15) -1.8 -1.3

Kenya (2003-15) -1.3 -0.6

Rwanda (2003-15) -1.4 -0.8

Uganda (1999-2015) -1.6 -1.1

Zambia (2001-15) -0.6 -0.4Source: Diao et al. 2010

Poverty-growth elasticities


…agric-led growth is still important for hunger reduction

Calorie-growth elasticity

Maize -1.9Sorghum & millet -1.5Pulses & oilseeds -1.8Roots -1.1Horticulture -1.0Livestock -0.7Export crops -0.8

Source: Pauw and Thurlow 2010

Poverty-growth and calorie-growth elasticities, Tanzania (2000-07)


…but a new role of agriculture is emerging

Smallholder agriculture can, especially, be leveraged for:

improving nutrition and health

promoting climate change adaptation and mitigation

building conflict resilience

narrowing gender gaps


Improving nutrition and health

Improved productivity and competitiveness of small farmers can lead to:

more nutritious, less expensive food, and increased incomes

improved nutritional content of main staple foods

production of more diverse foods of higher nutritional content

improved agricultural practices to decrease the risks of agriculture-associated diseases


Promoting climate change adaptation and mitigation

By 2030 the cost of adaptation has been projected to be US$40 - 170 billion (UNFCC, 2007)

Adaptation-driven actions can have positive mitigation consequences -> residue returned to fields to improve water-holding capacity also sequester carbon

Mitigation potential in agriculture is estimated to be worth US$32 - 420 billion* (IFPRI, 2009)

Mitigation-driven actions in agriculture can have positive adaptation consequences -> carbon sequestration projects with positive drought preparedness aspects

* at carbon prices between US$20 and US$100 (t CO2-eq.-1)


Building conflict resilience

Agriculture, especially small-scale farming, is the largest source of jobs in many conflict-prone countries (World Bank, 2011)

Agriculture has the potential to reduce the main causes of conflict e.g. poverty, underemployment, and inequalities in natural resources (Collier et al. 2003)

Agriculture can help to re-establish livelihoods and build resilience in conflict-prone countries (World Bank, 2011)


Narrowing gender gaps

Women make up a majority of small farmers

Lower productivity persists in female-owned plots and female-headed households (Peterman et al. 2010)

If women had the same access to productive resources as men (FAO 2011)

→ total agricultural output could increase by 2.5 to 4%

→ global number of undernourished people could reduce by 12 to 17%


Investments and policies must leverage the new role of smallholder agriculture

for development

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Global Food Security Challenges and Opportunities: the new role of agriculture

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