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More on Feeding Nine Billion People by 2050

AgMRC Renewable Energy & Climate Change Newsletter
January 2012

Don Hofstrand
Agricultural Economist
dhof@iastate.edu



Last month we examined several of the issues associated with feeding a global population of nine billion people (two billion more than our current population) by 2050.  This month I will discuss additional issues.  Specifically we will look at rising incomes, urbanization, food waste, agricultural productivity, international trade and hunger.

As discussed last month, world population just passed the seven billion mark.  As shown in Figure 1, population is projected to increase to over nine billion people by 2050, just 40 years into the future.  Most of this increase will occur in developing countries.  Although the annual rate of population increase is slowing, the magnitude of the increase over the next forty year period is still large.
 
Figure 1.  World Population (1965 – 2050)
 
Source: Population Division of the Department of Economic and Social Affairs of the United
Nations Secretariat (2007)

The Food and Agricultural Organization (FAO) projects that food and feed production will need to increase by 70 percent by 2050 to meet the world’s food needs.  Baseline projections of the FAO indicate that the world should be able to meet the food and feed demand in 2050.  It can be done with realistic rates of land use, water use and yield increases although there will be challenges along the way.  However, researchers at the University of Minnesota project that food demand will double by 2050. 

Rising incomes

In addition to population growth, food needs will rise due to the increasing incomes of people in developing countries as they move from low income into the middle class.  As incomes increase, people tend to eat fewer grains and increase their consumption of meat and high value foods.  This is shown in Figure 2 for selected countries.  As Gross National Income per capita increases, meat consumption also increases.  The relationship is positive for all five countries.  The strongest relationship appears for China, Brazil and the U.S.  The relationship is weaker for India and the U.K.  All countries taken together show a strong relationship. 

Figure 2. Changing consumption of meat in relationship to gross nation income
in China, India, Brazil, UK and USA (1961 – 2007)

 
Source: FAOSTAT; World Bank

This transition requires higher levels of resource use.  It takes multiple pounds of grain to produce a pound of meat.  The pounds of grain to produce a pound of meat vary considerably among livestock species and within species (e.g. corn fed beef versus grass fed beef).  Regardless, as incomes rise, people eat more meat.  So the total pounds of grain consumed per person, directly as grain and indirectly through meat, increases substantially.

The rise in incomes will continue as long as the economies of the world continue to grow.  Although projections of future economic growth are more tenuous than projections of population growth, there is general consensus that the world economy will expand in the long-term in spite of the current financial problems in the developed world.  The World Bank baseline projections indicate that the world’s Gross Domestic Product will grow at an annual rate of 2.9 percent from 2005 to 2050.  High income countries will only grow at 1.6 percent but developing countries will grow at 5.2 percent.  This will tend to narrow the income gap between developed and developing countries.  Developing countries share of global output is expected to increase from 20 percent to 55 percent in 2050. 

Urbanization

Currently, about half of the world’s population lives in rural areas and the other half lives in urban areas.  Over the next forty years there will be a large movement from rural to urban.  By 2050 over 70 percent of the world’s population is expected to live in urban areas.  This increase in urbanization will mean a change in lifestyles and consumption patterns for a large number of people.  When urbanization is combined with rising incomes, there will be a further diversification of diets resulting in less consumption of grains and other staples and more consumption of meat, dairy products, vegetables, fruits and fish.  There will also be an increase in the demand for semi-processed and ready to eat foods.

Seventy five percent of the poor in developing countries live in rural areas and are directly or indirectly tied to agriculture.  Despite the large movement from rural to urban over the next 40 years, population growth in rural areas is expected to increase faster than employment opportunities in primary agriculture.  So, rural areas in many developing countries will need to transition to non-agriculture employment.

Food Waste

A considerable amount of food is wasted along the food chain from growing to consumption.  Estimates vary as to the amount that is wasted but 30 percent appears to be a reasonable estimate.  In low-income countries there is waste along the entire food chain but primarily in the storage of the production after harvest.  This is caused by poor post-harvest infrastructure and technology.  Examples include losses from spillage, drying, contamination and consumption by pests.

Food waste in high-income countries is primarily at the point of consumption.  This waste is prevalent at restaurants, buffets and other food service establishments.  Discarding excess food is probably an easy way to help insure food safety.  Food waste is also prevalent in the home. 

The magnitude of this problem should not be underestimated.  For example, a goal of reducing food waste by 50 percent over the next forty years would seem to be a reasonable goal.  Assume we will need to increase agricultural production by 70 percent by 2050 to meet the food needs of nine billion people.  Cutting food waste in half over the next forty years, which seems to be a reasonable goal, means we will only need to increase agricultural production by 45 percent instead of 70 percent.  This is a much easier food production goal to reach and would reduce the negative impact on the world’s resources.

Higher food prices are probably the best way to reduce waste.  Much of the waste in high-income countries stems from the fact that food is cheap when compared to the consumer’s income levels.  However, higher food prices place a burden on consumer’s in low-income countries and low-income consumers in developed countries.

There are other ways in which waste can be reduced.  Food waste can be reduced in low-income countries by utilizing existing technologies to minimize waste from storage and transportation.  In addition, investments in new technology that are appropriate for the food chain in the country would be beneficial.  Also, better use of information technology such as mobile phones could help improve the flow of market information allowing producers to make better decisions.

Reducing consumer and food service waste in high-income countries should start with information campaigns to make people aware of the magnitude of food waste and ways in which food preparation and consumption habits and processes can be changed.  A part of this awareness is to highlight the financial impact of reducing food waste.  Also, new technologies can be implemented to better inform consumers of food quality like sensors that can detect food spoilage.  Also, the development of technologies to extend shelf life would be of value.

Agricultural Productivity

The typical approach to envisioning crop production is to multiply agricultural land area (acres) by yield per unit of area (e.g. bushels per acre).  If we are to increase agricultural production by 2050, either the agricultural land area will need to increase, yield per acre will need to increase, or a combination of both.  The expansion of agricultural land area is not expected to increase significantly in the coming decades.  However, the land expansion that is occurring is mostly in the tropics on land with limited agricultural productivity and the potential for substantial environmental damage.

So, most of the increase in agricultural production is expected to come from increasing yield per acre.  This means applying more fertilizer and other production inputs to increase yields.  This approach also has environmental impacts. 

Researchers at the Economic Research Service of USDA have examined changes in agricultural productivity.  Essentially, productivity means developing new technologies that increase the agricultural output per unit of agricultural input or decrease the amount of agricultural inputs needed to produce a unit of agricultural output.  For example, if the quantity of agricultural output increases by five percent and the quantity of agricultural inputs increase by two percent, then agricultural productivity increased by three percent, the different between the output increase and the input increase.  

Figure 3.  Growth in agricultural total factor productivity, 1961-2007.
 

As shown in Figure 3, Total Factor Productivity (TFP) – the amount of output per unit of total factors (production inputs) used to produce the output – has had a substantial role in increasing agricultural productivity over the last 50 years.  Five factors or inputs were used in the analysis -- land (acres), labor (hours), tractors (number), head of livestock (number) and amount of inorganic fertilizer applied.

The analysis showed that global agricultural output grew by about 2.2 percent per year from 1961 to 2007.  During this period, about half of the growth in output was due to increased use of production inputs and the other half was due to the increased productivity of inputs.  In other words, a substantial amount of the growth in agricultural output was due to the increase in the efficiency of production inputs in producing agricultural outputs.  During the 50 year period, the rate of increase in the utilization of agricultural inputs declined but output growth stayed at or above two percent as TFP increased to take up the slack. 

The rate of TFP has not been even across the world during this time period.  The breakup of the Soviet Union caused substantial amounts of resources to be withdrawn from agriculture during the 1990s.  In developing countries, China and Brazil had high rates of TFP while Sub-Saharan Africa’s rate has been slow.

An important ingredient in meeting the world’s food demand in 2050, while minimizing the impact on the world’s resources, will be maintaining or increasing TFP.  The key to high levels of TFP requires sufficient investments in agricultural research and extension across the world. There is a long lag time from initiating research to the actual application of new technologies.  So, these investments need to be made soon for the impact on productivity to emerge by 2050.

International Trade

Countries with large areas of arable land relative to the size of their population tend to have the most food security.  As shown in Table 1, the amount of arable land per person is highest in Oceania, North America and Europe.  However, this is not where population will be increasing over the next forty years.  North Americas’ population is expected to grow by only 4 percent and Europe’s population is expected to actually decrease by 1 percent.  Half of the population growth is expected to occur in Sub-Saharan Africa where arable land per person is currently only three-quarters of an acre.  Assuming arable land area does not change, the land area per capita will drop to half of an acre by 2050.  Asia’s population is expected to grow by 41 percent with arable land currently only one-third of an acre.  The larger population will decrease per capita land area to less than a quarter of an acre by 2050.  So countries in these regions will need to either substantially increase their agricultural productivity or import a larger portion of their food needs. 

Table 1. Where people live vs. where food is grown
(acres per person)

  Arable Land Per Person
Oceania 3.85
North America 1.68
Europe .96
South America .77
Sub-Saharan Africa .77
Middle East & North Africa .62
Central America & Caribbean .49
Asia .32

Source: 2011 GAP Report, Global Harvest Initiative

FAO projects that developing countries will be able to meet most of their consumption growth by increasing domestic production.  Regardless, the net imports of cereal grains are expected to increase from 135 million metric tons in 2008/09 to 300 million metric tons by 2050.

Although unknown in this country in recent years, it is not uncommon for countries to impose restrictions like export taxes or export embargoes on agricultural commodities sold to other countries. Restrictions become increasingly common when world shortages and high prices appear. These policies are meant to discourage exports and keep food within the country for domestic consumers. Essentially, the restriction means that our citizens eat first.  If there is anything left over, your citizens can have some.

A prominent example is Argentina, a large producer of agricultural commodities such as soybeans. Argentina imposed a significant increase in their export tax in 2008.  The decision led to riots and demonstrations by Argentina’s farmers while limiting inputs to other countries.

The long-term implications of export restrictions are negative to the world’s consumers and world agriculture. It distorts trade in agriculture commodities at the precise time when there should be no distortion. It greatly increases the vulnerability of poor countries that are net food importers. It penalizes long-term agricultural development and growth in exporting countries.

Hunger Amidst Plenty

Currently there are over one billion chronically undernourished and malnourished people in the world.  FAO expects this number to decline by 2050 but hunger will still exist for a large number of people.  This will exist even if there are ample supplies of food in the world.  Although notable exceptions exist, most hunger situations are not caused by an actual shortage of food. Rather hunger is caused by the financial inability to buy food. About 20 percent of the world’s population lives on less than $1.25 per day.  So this problem is more a sign of poor worldwide income distribution rather than a world-wide shortage of food. 

The situation is exacerbated if there is a shock to the food system and commodity prices escalate.  Volatile prices can lead to disruptions of international trade and have a significant impact on food distribution and prices, especially during periods of low reserves. Low-income food deficit countries need to reduce their vulnerability to international agricultural market shocks such as happened in 2008 when the price of commodities rose rapidly. 

So how do high food prices impact the food consumers in low-income, food deficit countries?  The average U.S. consumer spends only 10 percent of his/her disposable income on food (although food expenditures for low-income consumers are substantially higher). And the food the consumer buys is highly processed, packaged and often ready to eat. So, of the money spent on food, only 20 percent goes to farmers for producing basic commodities like wheat, milk, meat, etc.

Table 2. Impact of Higher Commodity Prices on Food Budgets *

  High-income Countries Low-income Food-deficit Countries
Income $40,000 $800
Expenditures on Food $4,000 $400
    Food Cost as % of Income
10% 50%
Staples as % of Total Food Spending 20% 70%
Expenditures on Staples $800 $280
Increase in Cost of Staples (50%) $1,200 $420
New Total Food Costs $4,400 $540
     Food Cost as % of Income 11% 67.5%
     Percent Increase in Food Cost 10% 35%

 * These are illustrative food budgets that characterize the situations for consumers in high- and low-income countries.

Source: Economic Research Service, USDA.

The situation is much different for consumers living in low-income, food-deficit countries. An illustrative example is shown in Table 2. Half of a consumer’s disposable income may be spent on food. And this is primarily for staples (basic commodities). People in poor countries tend to buy basic staples and prepare them rather than buying processed/prepared food. In our example, 70 percent of their food expenditures are for staples compared to 20 percent in high income countries. If the prices of staples increase by 50 percent, the amount of disposable income spent by consumers in high income countries will only increase by one percentage point, or a 10 percent increase ((11 – 10)/10). However, the amount spent by consumers in low income countries increases from 50 percent to 67.5 percent, or a 35% increase ((67.5 – 50)/50). So, people in low income countries, who already spend a disproportionately large amount on food, are the hardest hit by increased commodity prices.

Conclusions

There are many moving parts in determining our ability to feed over nine billion people by 2050.  How these parts unfold will determine whether we are successful in meeting the needs of a growing population.  However, we are not helpless bystanders of this unfolding story.  We have the ability to influence the outcome.  We can start by championing the worldwide funding of agricultural research and extension programs to increase productivity, minimize international trade distortions, improve rural education and job creation in developing countries, reduce food waste and find ways to meet the food needs of the world’s chronically undernourished and malnourished population.

References

1.    “How to Feed the World in 2050”, Food and Agriculture Organization of the United Nations. 

2.    Mette Wik, Prabhu Pingali, and Sumiter Broca, ”Background Paper for the World Development Report 2008 -- Global Agriculture Performance: Past Trends and Future Prospects”

3.    “Foresight. The Future of Food and Farming (2011), Final Project Report”. The Government Office for Science, London. 

4.    “2011 GAP Report”, Global Harvest Initiative 

5.    Douglas Southgate, “Population Growth, Increases in Agricultural Production and Trends in Food Prices”, Electronic Journal of Sustainable Development,

6.    Keith O. Fuglie, “Accelerated Productivity Growth Offsets Decline in Resource Expansion in Global Agriculture”, Amber Waves, ERS, USDA, September 2010. 

7.    Jonathan A. Foley, et al., “Solutions for a Cultivated Planet”, Nature, October, 2011.  

8.    “Global Agricultural Supply and Demand: Factors Contributing to the Recent Increase in Food Commodity Prices” /WFS-0801, Economic Research Service, USDA, July, 2008.

9.    Don Hofstrand, “International Perspective on Food and Fuel”, Renewable Energy and Climate Change Newsletter, Agricultural Marketing Resource Center, August, 2008.



 

 

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