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
Shenggen Fan, May 2011
Global food security challenges remain large and complex
Shenggen Fan, May 2011
Challenges to global food security include
Food price volatility
Energy/Biofuels
Population growth and demographic changes
Land and water constraints
Climate change
Conflicts
Shenggen Fan, May 2011
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%
Shenggen Fan, May 2011
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
Shenggen Fan, May 2011
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
(%
)
Shenggen Fan, May 2011
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
Shenggen Fan, May 2011
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
Shenggen Fan, May 2011
NCAR A2a
Climate change will affect average crop yields
Source: Nelson et al. 2009.
Shenggen Fan, May 2011
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
Shenggen Fan, May 2011
A comprehensive strategy is needed to address challenges, harness
opportunities, and protect poor people
Shenggen Fan, May 2011
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
Shenggen Fan, May 2011
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
Shenggen Fan, May 2011
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
Shenggen Fan, May 2011
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
Shenggen Fan, May 2011
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
Shenggen Fan, May 2011
The new role of agriculture, especially small-scale farming, must be leveraged
Shenggen Fan, May 2011
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
Shenggen Fan, May 2011
…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)
Shenggen Fan, May 2011
…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
Shenggen Fan, May 2011
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
Shenggen Fan, May 2011
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)
Shenggen Fan, May 2011
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)
Shenggen Fan, May 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%
Shenggen Fan, May 2011
Investments and policies must leverage the new role of smallholder agriculture
for development