Woman filling a jerry can with water, Tanzania
Woman filling a jerry can with water, Tanzania

Day 6: Growing a More Food-Secure World

16 December, 2012 | Future of Agriculture: Online Discussion

An agriculture that is resilient and sustainable, and provides sufficient safe, affordable food for all, will be built on four cornerstones: comparative advantage, open trade, markets that work for both producers and consumers, and an African continent that contributes positively to food production.

By Harold Poelma, Managing Director of Cargill Refined Oils Europe

There are about 870 million undernourished people in the world today. There will be two billion more people on the planet by mid-century. Most believe feeding this more urban and more affluent population will require increasing food production by an estimated 70 percent. 

Such a production increase is not out of reach. Farmers are smart and determined people – they have roughly doubled the amount of grains, rice and oilseeds they produce since 1975. Most of that increase has come from yield gains enabled by a combination of improved genetics, new technologies, better agronomics and increased intensification – producing more on essentially the same amount of land. 

This is reason for optimism. Cargill believes there is no doubt we can feed the world. Our analysis is not just a theoretical desk-top view but one based on our practical experience working with farmers in our operations around the world. It is demonstrably true that with current technology the world’s farmers today harness the power of photosynthesis to produce all the calories a world of 9 billion people will require. 

“With current technology the world’s farmers today harness the power of photosynthesis to produce all the calories a world of 9 billion people will require.”

Despite these facts, food insecurity persists. The calories the world’s farmers produce are unevenly distributed. Rising food prices, primarily the results of issues of supply and demand – and this year in part due to shortages caused by droughts in key grain-producing areas – threaten to undermine recent reductions in hunger. 

What must agriculture look like at midcentury to overcome obstacles to global food security? At Cargill, we believe the model that will meet the objectives of being resilient, sustainable and providing sufficient safe, affordable food for all will be built on four cornerstones: comparative advantage, open trade, markets that work for both producers and consumers, and an African continent that contributes positively to food production. 

Producing enough food to feed the world starts with honouring the principle of comparative advantage. Midcentury agriculture will produce the most food in the most economical and environmentally sustainable way if all farmers plant the crops best suited for their growing conditions. This recognizes a simple fact: fertile soil, abundant rain and plentiful sunshine are not equally available across the planet. Rather, nature has endowed certain geographies with the natural resources necessary to produce a surplus of calories in the form of, for example, wheat from the plains of North America, rice from paddies in Southeast Asia or soybeans from Brazil. 

“Producing enough food to feed the world starts with honouring the principle of comparative advantage.”

The alternative – the pursuit of food self-sufficiency at a national or regional level – undermines the increases in output a growing global population will require, inefficiently uses scarce natural resources and can cause significant environmental harm. We must continue to improve productivity and importantly bring best practices and technologies to those areas of the world, such as Africa, that currently are not fulfilling their agricultural potential.  

 A resilient, sustainable mid-century agricultural system will also require an open, trust-based trading system to move surpluses to places of food deficit. Today, only about 15 percent of all the food produced in the world crosses international borders. That percentage will increase. Global population growth is skewing toward areas that are not blessed with the natural resources required to produce food. Growing crops where the soils and climate are best suited for them and allowing open trade will provide the food that is needed, while minimizing overall environmental impacts by reducing the resources and inputs required.

Consider what has occurred to food flows in roughly the last fifty years. Increased food production in North and South America and lately Eastern Europe is providing the food required to feed the growing populations in Asia, the Middle East and Africa. To feed 9 billion people by 2050, we will need another strong food producer like Brazil, as well as open trade so the surpluses flow readily to areas of food deficit. Open and trust-based trade is also a primary means to help offset inevitable but unpredictable crop failures. The global supply of food varies less year-over-year than the local supply.  

A third cornerstone will be efficient, transparent and well-regulated markets. The combination of open trade and efficient markets results in prices that signal farmers about what and how much to produce. A price that adequately rewards farmers for their efforts and provides enough money to motivate them to produce again next year is the fundamental ingredient of sustainable agriculture – arguably more important than any other crop input. 

“A third cornerstone will be efficient, transparent and well-regulated markets”

By contrast, interfering with the behavior-changing power of price can have unintended consequences. When governments impose price controls on commodities, ostensibly to protect the urban poor, they inadvertently send a signal to their farmers to produce less. Other means to protect consumers from food price increases, such as direct payments from governments, would be less damaging to agricultural interests. While acknowledging the burden of rising food prices on the world’s poor, we must also recognize the energizing power of price to motivate the world’s producers to plant more crops. 

The fourth cornerstone that will enable a more food-secure world is an African continent able to exploit its agricultural potential. Africa represents about 60 percent of the potentially available cropland in the world. It has land well suited for agriculture, with fertile soil, adequate rains, plentiful sun. Yet Africa is a net importer of food and has experienced very low agricultural productivity gains over the last forty years. 

It doesn’t have to be this way. Changes in policies, improvements in infrastructure and the institution of property rights will be required to overcome the challenges. Clarity about property rights is particularly crucial. Farmers in Africa – and everywhere, for that matter – must have clear rights over the land they cultivate before they can be expected to reinvest in their operations and improve their productivity. Similarly, resolving property rights issues is critical to attracting private sector investment in African agriculture. 

Enabling smallholder farmers to fulfill their potential is crucial to the continuing development of agriculture and to global food production. These small-scale farmers need access to better crop inputs, from seed and fertilizer to tractors and other technology, and training in how to use them. Such practical support will increase their productivity in support of our growing worldwide food needs and it will also provide them with means to raise their own living standards. This is no more evident than today in Africa. 

“A resilient, sustainable agricultural system that produces enough food for all at a price that can be borne by all is within reach.”

There is more momentum than ever to tackle policy, infrastructure, crop input and property rights issues in Africa. With the support and involvement of the G8’s New Alliance for Food and Nutrition Security and the Grow Africa partnership, the private sector, nongovernmental organizations and African governments are working to develop sustainable markets for food grown on the continent. 

In May 2012, Cargill was among 30 multinational companies announcing support for these initiatives, which we believe will foster policy discussions and commitments to accelerate investment and transformative change in African agriculture. The collective intent is to work with governments and nongovernmental organizations to develop public/private partnerships to make change happen. 

A resilient, sustainable agricultural system that produces enough food for all at a price that can be borne by all is within reach. This does not mean there is room for complacency. We believe it remains essential that organizations, both public and private, continue to work together to provide the structure, support and investment that will contribute to agricultural development that can meet the challenge of feeding a world on its way to 9 billion people.

Download: Growing a More Food-Secure World 

Comments

Risk, Aspirations and the Goodness of Agriculture

It was most appropriate to begin this exploration of the future of agriculture with a four letter word: RISK.  An element of risk – more precisely, the need for risk management – lurked somewhere in each of the essays, and it looms large in the lives of all farmers, particularly smallholder farmers.

In my reporting, I have seen how smallholder farmers, especially those in sub-Saharan Africa, have been left to bear 100% of the risk of this inherently risky business.  And in these essays we’ve read about the risk connections to climate, markets, prices, politics, soil health, youth, sustainability and energy.

Risk management is vital if smallholder farmers are to confidently improve their livelihoods and adopt new practices.  Access to financing and insurance, better storage facilities, more efficient markets, reliable infrastructure, stress-tolerant seeds, information sharing are all essential elements in reducing risk and giving farmers incentive to produce surplus harvests and diversify their crops to better their nutrition, income and resilience.  This confidence and incentive fosters a willingness to invest in their farms, to commit to sustainable practices, to embrace land ownership, to raise their voices.

It is the foundation of a fundamental shift, moving from farming to live to farming to make a living.  This is a transition that so many young people in rural areas are looking for, Susan Godwin’s daughter among them.  Instead of just seeing the images of desperate struggle -- their mothers bending over in the fields working the soil, the deprivation of the hunger season – the youth want to see that farming gives them a reasonable future, that farming, as one essayist put it, can be an aspirational occupation.

While reading these essays, I’ve been thinking back to the smallholder families I met while reporting my new book, The Last Hunger Season.  One young man, Gideon, told me when we first met that he wanted to be a lawyer.  But at the end of the year, as he saw his mother’s efforts to produce a surplus pay off, he began thinking that studying agriculture and becoming a farm advisor and innovator would be the best way to help his community.  “I want to make sure no one suffers from hunger and poverty,” he said.  “I will make known to them the goodness of agriculture.”

Food sovereignty, business and land rights

After a full first week with dense essays and critical comments on fossil fuels, agriculture, technology and innovation, the debate continues. Comments on all essays of the first week are still possible and very welcome.

The authors of today spend considerable portions of their essays on the importance of clear property rights and secure access to land by small-scale farmers and indigenous peoples Niasse argues that increasing better and more secure access to land by women could increase productivity from twenty to thirty percent. But will this alone sufficiently assist in creating the markets, infrastructure, and technological support for small-scale agriculture?

Poelma (above) recognizes the need for clearly defined land tenure rules, as well as for increased education, and modern farming techniques. But does he take sufficient reconnaissance of the incremental steps necessary in the future to move toward these goals, or the niche that agricultural diversification can serve for nutrition, risk management, and soil health within smaller agrarian communities?

Rivera proposes a future for Peruvian indigenous peoples that she aligns with the concept of food sovereignty, based on indigenous knowledge, and gives control to indigenous peoples to produce and market. What do you think?

 It's a great opportunity to

 It's a great opportunity to discuss this viewpoint because we can understand better why the TNC do not see the problem, or don’t want to see it. We have to be thankful to have them in a discussion that they know is not favorable. This honors them. 

I have these differences with Harold's arguments: 

1, the comparative advantage. It is true that there is comparative advantage. The problem of poverty, which is mostly rural, is what to do with those who have no comparative advantage. There are the poor away from the markets, in arid lands, steep slopes or 3000 m high. They have no comparative advantage. What to do with them? They won’t  be competitive. Only to give them unconditional support if they want to stay on their land, trying to get them as close as a possible to reach their maximum productivity. But this not will be enough to bring them to the comparative advantage side. 

2, free trade. You can always produce cheaper elsewhere. But countries have the right and obligation to defend its own agriculture against cheaper food, because one's ability to produce food is strategic. Hunger is always a political weapon, and maintain productive capacity-albeit more expensive-is a matter of sovereignty. As with anything, you have to be able to maintain a middle point  and combine imports with domestic production, I’m not advocating for autarky. 

3rd transparent Markets: welcome Cargill to transparency. Does it mean that Cargill will make available to the AMIS its figures on their reserves? Will we know finally the best kept secret after Coca Cola, how much grain Cargill has in their silos and where is it? This would do much to prevent the next food crisis, because we would know if inventories are sufficient or not. The AMIS would keep the secrecy (hopefully), and hopefully colleagues ADM, Bunge and Dreyfus would join their desire for transparency. 

4 On the fourth point, property rights in Africa, so good, just wishing that foreign investment does not mean the expulsion of its rightful owners, as often happens.

Thanks, Harold, for participating in this debate.

engaging Muti- stakeholders’s approach

  @ Harold, You have touched upon the multiples issues and suggested the strategies concisely. I enjoyed reading  your arguments  .

Just to emphasise your arguments:

To overcome multiple barriers of current agriculture production and marketing system , requires effective and meaningful coordination among governments support structure, agriculture knowledge institutions, non-governmental organisation ( both local and International) ,  the private sector, and producers in order to ensure the provision of most needed services and infrastructure, take advantage of economies of scale wherever possible, and decrease transaction costs (at the moment which is one the key barriers in Africa).  For example, in spite of all available suitable climate condition, water and productive land, rice produced in remote part of Zambia cannot compete (price) with the rice imported from Asia. Therefore, engaging Muti- stakeholders’s approach is a key for the future agriculture growth in Africa. I hope the G8,s New Alliance for food and Nutrition Security and the Grow Africa Partnership Model  will play a critical  role to develop  sustainable and competitive  markets for the agriculture commodity produced in Africa.

It's the economy, stupid

After the very interesting discussions at the end of last week on the role of fossil fuels in agriculture, the use of different farming systems and the incredible challenges that women in farming face, it is appropriate at this point that we discuss the economic fundamentals of the future of agriculture. Food security is often not solely a problem of too little production, but it is a question of uneven distribution; both of food and of money. In other words, it is not enough that food is available, but people need to be able to buy it and provide themselves and their families with a safe and healthy diet.

 

The distribution of food and money is of course a question of economics. As Harold Poelma rightly points out, if we are to ensure that everybody has access to sufficient, safe, nutritious and affordable food, we need to take a good look at food markets. Like any other product, each part of the food chain, both nationally as well as internationally, is governed by market forces that balance supply and demand. However, agriculture and food markets are often also heavily influenced by government policies.  

 

Many governments in developing countries use strategic policies for controlling food markets, often for political reasons, but with  distortive effects that are adverse to food security. Examples are the use of food subsidies, controlling food prices, or the compulsory distribution of food through national food boards. At first glance, these measures may seem sympathetic, but they might have an inhibitive effect on investments in production, distribution and storage. The same applies for  export bans that not only prevent the produce from getting from the farmer to the consumer (consumer hungry), but also deprives the farmer of a reasonable payment for his or her efforts, which prohibits further investments (farmer hungry).

Furthermore, agricultural trade often has to deal with different rules and regulations across borders. While rules on food safety and phytosanitary and veterinary standards are indispensible, they are often different across countries. International rules and standards on these issues are important to ensure the smooth flow of agricultural products across borders. And along with these rules, we need to invest in capacity building and technical assistance to ensure the implementation of these rules is done in an efficient and effective way.

 

Rules and standards on food safety are of course only one example of the legal and regulatory issues governing agricultural trade. However, they are illustrative of the reasons why good policies to create an enabling environment for agricultural entrepreneurs is crucial. Trade in food touches on economic, social and political issues that have to be reconciled one way or the other. For the Netherlands, we believe that a focus on creating effective markets and a good business environment will be key to secure a resilient and stable agricultural system for the future. A market-based approach is needed that ensures farmers can run profitable businesses. Farmers and agricultural businesses need proper protection of land rights and they need to be able to reap the benefits of their innovations. The role of governments is to facilitate this as well as they can. That is why we are working with our partners in the public and the private sector to support good policy-making for the agricultural sector worldwide, to invest in training and skills-development of people involved in agricultural trade, and to promote open and transparent regional food markets.

 

Marcel Beukeboom,

Head of Food Security and Financial Sector, Netherlands Ministry of Foreign Affairs

 

Marcel Vernooij,

Head of Food Security and Agrocommodities, Netherlands Ministry of Economic Affairs

African agricultural potential

 

The African agricultural potential

 

Harold Poelma is right, where on the one hand worlds’ comparative agricultural advantages have to be exploited, on the other hand one cannot leave most of the African Continent in dependence of food production elsewhere. I agree also that land use rights, policy and infrastructural development are key conditions for increased agricultural growth. Besides adding decreasing differences related to gender, I like to stress the need to understand the African agricultural potential and its weaknesses for effective acceleration of development.

 

In fact, one should not overestimate the potential. Take a good book of soils of the world, and it becomes clear that most of African soils are amongst the poorest of this world. Take a book about climates, and it appears that poor soils are often combined with difficult climates. Most of West Africa, for example, has worldwide the highest potential evapotranspiration at a certain rainfall; it is not sufficient that it rains, rain should also be effective. Most soils are so poor that soil nutrient deficiency is much more limiting than water, while nowhere else the fertilizer market is so poorly developed.

 

The combination of poor soils and difficult climates is a reason why the green revolution bypassed (most of) Africa. Africa is overpopulated at extremely low absolute population density, explaining the limited infrastructural development. Poor roads and transport systems imply high prices for external inputs at low farm gate prices for agricultural products; intensifying agriculture is a headache under such conditions.

 

Other parts of the world intensified their agriculture when the “world village” did not yet exist; nations could protect their markets against the competition of others. During the transition from extensive to intensive agriculture, African smallholder farmers should be protected against the cheap food (products) produced at the very low costs per kg of intensive agriculture elsewhere. During the transition period, both African farmers and African input and output markets should learn to become competitive. In the meantime, through effective integrated soil fertility management (ISFM), combining inorganic fertilizer with soil amendments, the soil organic matter status should be improved. In the early stage of intensification, crops and soil organisms compete for added nutrients. The fertilizer use efficiency is low, making it difficult to produce in a competitive way.

 

The use of ISFM helps also improving the resilience of agriculture, which is of utmost importance in view of the difficult climates that risk becoming more difficult under climate change. In years of drought, for example, inorganic fertilizer stays effective when applied in an ISFM context.

 

Henk Breman

about economic theory and lessons from reality

More open trade based on a country’s comparative advantage that’s  (half of ) the recipe that Harold Poelman, managing director of Cargill Refined Oils Europe proposes as the way to reach food security  on a global scale. Although we at Vredeseilanden share Harolds optimism about the ingenuity of farmers and their capability to feed the world, the solutions proposed are somewhat outdated by what’s happening in reality.

First of all, one can wonder how realistic the plea of Harold Poelman is. The WTO negotiations are since the Doha round at a stalemate… so a purely liberal approach to food security does (luckily) not seem very likely to take off in the near future. This is not without reason.

Reality (and yesterday’s history) have clearly demonstrated some of the flaws in neoclassical economic theory. Let’s have a closer look at what happened the last couple of years in Western-Africa for instance. Since the early 1990s, most West African countries have adopted food security policies based on regional and international trade patterns based on comparative advantage. Thus many West-African countries imported (cheap) grains from the international market and paid for the imports with devices gained in a cash crop export sector. In this way West-Africa became one of the biggest rice importers (importing one third of the export from Asia ) and produces  itself only 60% of its needs for rice.

In 2008 a food crisis struck. Rice prices skyrocketed and export bans from some Asean countries threatened the availability of rice, which drove prices up even more. The unavailability of rice in the cities of Dakar and other capitals led to food riots, some threatening the stability of the régime. Thus West-African countries learned the hard way that trade based food security policy is very risky indeed. In reaction to the food price crisis of 2008, West-African governments understandably decided to rely no longer on the international market for basic food crops and they launched ambitious plans for self-sufficiency for several staples, with a focus on rice.

So what does this experience tell us? It seriously undermines the comparative advantage and open trade arguments pushing for more global trade. Sometimes self-sufficiency strategies can make a lot of (economic) sense, especially for strategic sectors such as food. Moreover Harold seems to forget that comparative advantage is not something static. Vietnam is currently exporting quite a lot of rice to Western Africa, but how long will it remain an exporter given the challenges with area’s of production and salination? With rising transport costs and world food prices, rice from West-Africa might also become competitive on the world market even without a high protection tariff. In conclusion: comparative advantage is a useful concept and countries should probably not deviate too much from it. However, when taking a long-term perspective, governments may want to defy their comparative advantage and install some degree of protection from the international market in order to give their local agriculture a chance to blossom. Border protection measures such as import taxes could give West-African governments the much needed funds to invest in their domestic agriculture. Since agriculture is the main provider of employment and source of income for the majority of people in the region, policies for self sufficiency can promote overall development and lift millions of people out of poverty.

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