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Symposium 2010

Proposal - Meeting the Rising Global Demand for Food

The Challenge

It is becoming increasingly difficult to satisfy the rising global demand for food in a sustainable manner. A number of factors contribute to uncertainty about the world’s ability to meet the food ...

It is becoming increasingly difficult to satisfy the rising global demand for food in a sustainable manner. A number of factors contribute to uncertainty about the world’s ability to meet the food demand of an increasing population: average living standards are rising; land use is shifting from agriculture to urban and industrial uses; the production of nonfood crops for biofuels is on the rise; investments in increasing agricultural productivity are growing slowly; water and arable land are increasingly becoming scarce; and global warming is making it more difficult to produce food in some poor countries. Moreover, the food price crisis of 2008 added fuel to the fire and put food security on top of the policy agenda.

There is a lot of pessimism nowadays about the world’s future ability to feed itself. But if science and sensible policies prevail, strategic investments are made, and markets function properly, the rising global demand for food can be sustainably met.

The world has successfully risen to the challenge of meeting increasing food demands in the past. We can accomplish the feat again, even though the task is now complicated by the need to conserve natural resources and address climate change. There is vast potential to cut inefficiencies and waste in agriculture and to raise yields sustainably by growing more with less.

I focus on production and post-harvest issues in this note: growing and conserving enough food to meet global economic demand. I realize that food security is not solely determined by production and the availability of food, but also by access and a host of other factors that affect nutrition and food use. Access is a function of income and purchasing power; it is not directly linked to production except where production and income coincide in smallholder farming.

Economic demand evolves with population and income growth. The global population growth rate is slowing and is expected to stabilize around the replacement level by 2050. On the other hand, income growth is projected to accelerate. The effects of income growth on the demand for food are mitigated by Engel’s and shaped by Bennett’s law: the tendency, respectively, for the proportion of income spent on food and the starchy staple ratio in the diet to decline as income grows.

The demand for food in 2050 is estimated to be twice today’s level. Nobody knows what the exact figure will be, but it is clear that significantly more food will be needed. Not surprisingly, agriculture and related activities like food storage and processing are in the news. Agriculture must be intensified to stop the further destruction of forests for cropland and pastures, arrest the loss of biodiversity, and discontinue the mining and overuse of water and soils. Post-harvest technology and food processing must evolve to reduce losses, increase food safety, and improve supply chains from primary production through to retail.

Farmers must be given a chance to earn a reasonable living from their labors. Cheap food is great for consumers, but farmers’ income and their related ability to operate sustainably and invest in their land should not be forgotten. The fact that most of the food eaten in developing countries comes from small farms, and will continue to for some time, must be accepted and the policy implications understood. Yields on resource-poor small farms are unnecessarily low, particularly in Sub-Saharan Africa and South Asia, and unsustainable farming practices abound. The reason is not farm size per se but poverty and the absence of support.

In many instances, the difference between realized productivity and the best that can be achieved with current genetic material and available technologies and management is huge. These ‘yield gaps’ imply the presence of unused productive capacity on existing agricultural land. Three things are needed to close the gaps: technology, services and access to markets. Small farmers often miss out on all three. To increase their productivity, farmers need improved, adapted high-yielding seeds with relevant traits such as pest and disease tolerance. They need agronomic knowledge and such boosters as fertilizer, credit, and risk transfer tools. Farmers need to make better use of locally available resources in the context of improved cultural practices and put purchased inputs and services to work in line with their economic and managerial ‘absorption capacity’. That is what intensification is all about, but external inputs cannot be justified unless there is the strong possibility of making money from harvest sales. Hence, markets are essential along with roads and other infrastructure, including information highways and the tools to access them, to link farmers to markets. Arrangements such as the organization of farmers into cooperatives raise their ability to deal with buyers on more equal terms.

A problem that tends not to get the attention it deserves is the dearth of input and service delivery systems actually reaching small farmers. Public programs in agricultural R&D have been successful but are notoriously ineffective in most countries when it comes to actually delivering products such as improved varieties of seed all the way to the farmer. It is in the nature of the private sector to bring products to the market and deliver value, including to small farmers. But the private sector goes where there is a commercial incentive. Farmers too remote or too poor to purchase inputs are not helped, and the technologies they need may not get developed.

This is a public policy and societal challenge that cannot be solved by the public or the private sector alone. It requires public-private cooperation that, in addition to the farm population, must include nonprofits such as foundations, NGOs, farmer organizations and self-help groups. Cooperation offers the prospect of overcoming each sector’s limitations: the business sector’s inability to operate where there is no market; the non-profit sector’s instruments and interventions that tend to take the form of projects that reach relatively small numbers of farmers and operate only as long as there are funds; and the public sector’s limited ability to market research outputs.

‘Taking it to the farmer’, therefore, is a challenge. Business partnerships between private and public / nonprofit actors could offer effective routes to small farmers. Technologies, services and inputs tend not to reach ‘pre-commercial’ smallholder farmers or only after years of delay. Delivery paths to this category of producers are few and far between, and this failure has significantly reduced the impact of agricultural R&D. The private sector is often more results oriented than the public sector; years of investment in R&D are meaningless if you cannot sell your seed, crop protection technology, cell phones, fertilizer, machinery or tools. However, if operating on purely profit motives, as mentioned, companies may lack the incentive to go where purchasing power is low. Public-private partnerships to combine the research and product delivery strengths of the private sector with the public sector’s research strength on, for example, ‘orphan crops’, could build viable pathways for reaching smallholder farmers.

Successful public-private partnerships in agricultural R&D leverage relative assets, create synergies and offer wins all round, but they are not easy to craft. Trust may be an issue, as are considerations like how to evolve towards a unified strategy of sustainably enhanced agricultural productivity, share risks, and deliver effectively for the benefit of all involved. Open innovation and intellectual property commons, potentially involving royalty-free licensing for certain markets, hold promise. The Syngenta Foundation for Sustainable Agriculture has brokered a number of partnerships between public and for-profit entities that set the stage for developing and marketing smallholder-relevant traits that could not be produced by either the public or the private organization on their own. This is a field that deserves further attention.

The prospect of disseminating agricultural technology is enhanced if the ground is prepared on the demand side. Knowledge regarding agronomic options and market prospects, and risk management tools (in particular agricultural index insurance, as we shall see), are singled out for comment here as priorities to help prepare the ground. Knowledge is a binding constraint in all farm operations, and the purpose of agricultural extension is precisely to disseminate knowledge regarding improved farming and post-harvest practices. Mobile applications in agriculture can boost the dissemination of knowledge. Farming is a business with great information and communication needs. ‘E-agriculture’, the delivery of agriculturerelated information and services via information and communications technologies, offers potentially game-changing opportunities for timely communication of relevant information on a massive scale. Connectivity is not the constraint that it used to be; the issue now is content and applications in clusters that include (i) agricultural knowledge and decision support (‘extension’), (ii) marketing-related applications (price discovery and trading opportunities), (iii) support services such as quality control, logistics, process management and financial services, and (iv) the use of mobile applications in data collection and the management of customer interfaces.

‘M-agriculture’ (a subset of ‘e-agriculture’ that relies on mobile devices ranging from basic mobile phones to smart phones, PDAs and tablets) offers opportunities that are increasingly being exploited at different levels of complexity. Low-complexity systems push one-way information that is generated automatically, such as prices, weather forecasts and information stored in databases. Medium-complexity applications include location-based services (for example, localized and crop-specific disease warning and other decision support linked to local data such as weather and soil quality). High-complexity applications include individual feedback and advice, for example in response to remote diagnosis. ‘High complexity’ might include the administration of business processes and individual transactions such as the registration of policies and account management, including user-generated content. The index insurance product discussed below is an example of a high-complexity mobile application. Mobile applications are evolving rapidly, their viability and sustainability being debated in increasingly sophisticated fashion from both a user and a supplier and value chain perspective.

Farmers need insurance to be able to invest. Farming is almost synonymous with managing risk – on the farm, where technology and farm management play key roles, and through community risk pooling. Weather risks define the lives of smallholder farmers. Agricultural micro-insurance can effectively reduce the harmful impact of severe weather as well as support increased investment in farm productivity. Insured farmers are more willing to purchase certified seeds and invest in fertilizer when they can be confident that they will be able to recover their investment in the event of crop failure. In years following drought, insured farmers are able to continue farming as before the drought, while their uninsured neighbors may feel the impact of the calamity for years. Agricultural micro-insurance can have a real impact on food security. Developing affordable and relevant agricultural micro-insurance that can be managed by the private sector is a priority.

The Syngenta Foundation is facilitating the development of an agricultural micro-insurance product based on a weather index. This offers a method to insure farms as small as one acre by replacing costly farm visits with measurements from local weather stations as the indicator of drought. The weather stations measure the rainfall and these measurements are compared to an agronomic model that specifies crop rainfall (or moisture) needs. If the needs are not met, all farmers insured under that station receive a payout, the size of which corresponds to the timing and severity of the drought. If the needs are met, none of the farmers are compensated.

The product enables farmers to insure their outlay on eligible purchased inputs such as seed, fertilizer and crop protection products. Partnerships with the private sector and paperless registration and administration based on an advanced mobile platform keep costs down and premiums affordable. The product is now offered commercially in Kenya and has been bought by some 12,000 farmers so far in 2010. It is a promising prototype that is being monitored closely as efforts to roll it out much more widely are scaled up.

Partnerships-based routes to farmers, mobile applications and index insurance are but three action domains that are relevant to the quest for meeting the rising global demand for food. They are singled out here as ‘solutions’ in the tradition of the Global Economic Symposium as an action-minded community, to stimulate discussion. They are not sufficient in and of themselves but, together with the reduction of postharvest losses, can go a long way towards addressing the ‘availability’ dimension of the food security challenge by enabling farmers to invest and close yield gaps.

Solutions to reduce agricultural waste and post-harvest losses also must be implemented to ensure a safe and reliable supply of food. Losses from some crops in some countries may approach 50% and safety issues such as those deriving from mycotoxins, especially aflatoxins, cause serious health problems in many countries. Anger over wastage and spoilage of grain in storage facilities such as the ‘godowns’ ofthe public distribution system in India is frequently vented in the press. There is room for improvement with storage facilities, but note that a recent study of this issue in India found that this by itself will not bring down the price of food (Kaushik Basu, The Economics of Food Grain Management in India, September 2010. Available at http://finmin.nic.in/WorkingPaper/Foodgrain.pdf)

Storage solutions at the farm level or applied by communities and farmer organizations are important for food security and to time sales. Solutions such as low-cost metal silos to conserve grains and pulses have made a difference in many rural settings, and could be expanded through purposeful social marketing and commercial channels. Cooling technology and cold storage facilities are relevant for perishables including fruits, vegetables, milk and such crops as potatoes in the tropics. All of these are cash crops and thus important as income sources for farmers. Storage infrastructure and technology are significant both for preservation and as a price hedge because of the ability to schedule sales in accordance with seasonal movements of price.

If agriculture is given the priority it needs and deserves, and solutions of the kind suggested in this note come to pass together with other necessary support, there is no reason why the rising global demand for food cannot be met. But ‘farming first’ must prevail lest the food doomsayers and pessimists turn out to be correct.

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