GLOBAL FOOD & AGRICULTURAL

TRENDS: THE PRODUCTION, ENVIRONMENTAL, AND

TRADE CHALLENGES.

PRESENTED AT ABIC 2 -13,

CALGARY, ALBERTA, CANADA

SEPTEMBER 15, 2013

By Alex F. McCalla, Professor Emeritus,

University of California, Davis

Conference is Focused on Food, Water & Energy for a

Hungry World -What is The Food Challenge?

World Population Most Recently Has Been Projected to Reach 9.6 Billion People in 2050 .

This is 2.4 Billion More Than We Have Now.

It is more than Triple the Number of People We Had in 1960 (3 Billion),Tripling Occurred in Just 53 Years.

The Vast Majority of These People Will Live In Now Developing Countries, More Than Half of Them in Huge Mega Cities,

Cereals Will Still Provide the Majority of Their Caloric Intake. The big three Rice, Wheat and Maize >50%

That’s the Short Version of the Challenge.

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How Easy/Difficult Will It Be??

Lets Start by Looking at the Time-line of How We Got to Here -2013 and 7+ Billion People? and

How We Have Fed Them to Date?

Then We Can Ask --How Will We Feed the Next 2+ Billion?

What will be the Science, Production, Distribution, Policy and Trade Issues?

Then We Can Ask –What Are the Challenges and Opportunities For Canada and the Biotechnology Industry in Particular ?

That’s My Road Map & I Will Try To Stick With It.

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World Population Growth-Here’s Where We Have Been and Where We Are Going

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Past Population Growth & How Were

They Fed?

It took from the origins of human life to circa 1825 to add

the first billion; more than 10,000 years after the

beginnings of sedentary agriculture;

The second billion arrived in 102 years (1927)

Virtually all of the increased food production needed to feed

the first 2 billion came from expanded area under

production. Evans, Feeding the Ten Billion (1998).

The third billion arrived in just 33 years as the worlds

population reached 3 Billion in 1960- Just 53 years ago.

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Past Population Growth & How Were

They Fed? -2

Despite pockets of scientific agriculture in Western Europe, China and Japan in the 19th century, the third billion also was primarily fed by area expansion:

a 40% increase in area; and

the mechanical revolution which freed up 130 million hectares -- previously producing fuel for horses -- for food grain production.

But something had to change- we were running out of new land.

Therefore it is only after 1960 that increasing yields per hectare became the major source of increases in food supply.

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Past Population Growth & How Were

They Fed? -3

And They Came Just in Time!!

Adding the fourth billion took just 15 years

(1960-1975),

the fifth billion arrived in 11 years (1975-

1986),

And the sixth in 13 years (1986-1999).

World Population Had Doubled in Just 39

years from 3 to 6 Billion.

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Past Population Growth & How Were

They Fed? -4 The vast majority of the increase in food production needed to feed

this doubling of world population in less than 40 years (1960-1999) came from increased productivity.

Modest increases in area since 1975 e.g. Brazil, SS Africa and Thailand were more than offset by loses of productive land to other uses, and to soil degradation.

Clearly the application of science to agriculture had research roots dating back at least to von Liebig in the mid 19th century,

But it was increasing investments in applied research in developed countries in the first half of the 20th century that led to the genetic and chemical revolution that drove agriculture in the second half of the 20th century.

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A Remarkable Record- Humans on Av.

Better Fed in 2000 Than in 1960

It was truly an incredible accomplishment.

Cereal Yields More than Doubled helped by quantum jumps in

wheat and rice yields from semi-dwarfs bred by CIMMYT and IRRI

GLOBALLY IMPORTANT CEREALS -YIELDS 1950 -54 to 2008- 12 YIELDS Metric Tons Per Hectare

CROP: WHEAT CORN RICE YEARS:

1950-54 1.12 1.76 1.85

1980-84 2.1 3.4 3.1

1996-2000 2.7 4.4 3.9

2008-12 3.01 5.1 4.3

INCREASE 2.5 X 2.9 X 2.3 X

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Now A Look At Future Challenges-

World Population To 2050 10

World Population reached 7 Billion October 31, 2011 (and is currently 7.2 Billion).

Just 12 years after reaching 6 Bil;

Using UN Medium Projections it is Projected to reach over 8 Billion in 2025 - (in 14 years); and

9.6 Billion by 2050.

(And is projected to continue growing, at a slowing rate, to just under 11 Billion in 2100 driven by African Pop. Growth - increasing from 2.4 Bil to 4.2 Bil.).

World Population will have tripled in 90 years

1/3 rd of the World’s Pop will be in 2 Countries-

India 1.572 Billion

China 1.462 Billion 9/17/2013

Population Growth Rates to 2100

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THE TOP 10 1950 2000 2015 2025 2050

World 2,519,495 6,056,715 7,207,361 7,936,741 9,322,251

India 357,561 1,008,937 1,230,484 1,351,801 1,572,055

China 554,760 1,275,133 1,410,217 1,470,787 1,462,058

United States of America 157,813 283,230 321,225 346,822 397,063

Pakistan 39,659 141,256 204,267 250,981 344,170

Indonesia 79,538 212,092 250,068 272,911 311,335

Nigeria 29,790 113,862 165,313 202,957 278,788

Bangladesh 41,783 137,439 183,159 210,823 265,432

Brazil 53,975 170,406 201,393 218,980 247,244

Dem. Rep. of the Congo 12,184 50,948 84,045 114,876 203,527

Ethiopia 18,434 62,908 89,765 113,418 186,452

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World map weighted by population in 1960 and by

estimated population in 2050 13

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FAO Report -How to Feed the World in

2050? (dated Oct 2009)

“By 2050 the world’s population will reach 9.1 billion, 34 percent higher than today. Nearly all of this population increase will occur in developing countries.

Urbanization will continue at an accelerated pace, and about 70 percent of the world’s population will be urban (compared to 49 percent today).

Income levels will be many multiples of what they are now.

to feed this larger, more urban and richer population, food production (net of food used for biofuels) must increase by 70 percent.

Annual cereal production will need to rise to about 3 billion tonnes from 2.1 billion today;

Annual meat production will need to rise by over 200 million tonnes to reach 470 million tonnes.” Page 2

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Real Gross Domestic Product (GDP),

with projections

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World map weighted by GDP in 1960 and by

estimated GDP in 2015 16

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But It is More Than Just Numbers & Income -

Also Poverty & Under-nutrition

World Bank says 1.345 Billion people live on

< $1.25/day, while down from 1.910 Bil. in 1990, it still represents 22.4% of world population.

Forecast to be still over 1 Billion in 2015.

2.6 Billion live on < $US2.00/ day ,a number that is quite steady.

# living with chronic hunger 925 million in 2010,-varies with food prices –below 800 million in mid 90’s to high of 1,025 million in 2009.

Given food prices still remain high, probably the number is still well above 1Billion

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Food Prices Still High FAO 8/8/13

FAO Report -How to Feed the World in

2050? - 2

The report argues that >80% of the increase must come from improved yields as possible expansion of area is limited and potentially available land is found in only a few countries.

This is a larger challenge in the face of recent declines in productivity growth rates.

It will have to be produced with less water;

“…An increasing number of countries are reaching alarming levels of water

scarcity and 1.4 billion people live in areas with sinking ground water levels. Water

scarcity is particularly pronounced in the Near East/North Africa and the South Asia

regions and is likely to worsen as a result of climate change in many regions.” Ibid

P. 9

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FAO Report -How to Feed the World in

2050? - 3

Major threats identified are:

competing demands for land for energy production;

climate change, which will most negatively impact those closest to the equator;

the loss of biodiversity.

What will be required are very large increases in investment in international

agricultural development and agricultural R&D to develop new varieties/hybrids and

improved crop and livestock production systems.

Even under optimistic assumptions about improved production in developing

countries, their food imports will more than double.

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The Challenges in Summary 21

To feed yet another 2+ Billion people

In a world that is richer and more urban;

On basically the land area we now have, and with less water;

Increase food production 70%;--grain production by 43%, and meat production by 75%; (these 2009 FAO estimates are now probably to small).

Made more difficult by:

With competing demands for bio energy;

The negative impacts of climate change;

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Immense Implications: 22

The increases are all going to have to come from productivity improvement;-not just in terms of land productivity but also water productivity; But productivity growth is slowing

And input prices have risen and there are additional non-food demands for Agricultural Production e.g. Biofuels

The increases are going to have to come from basically the current spatial distribution of production;

Which means trade in agricultural and food products must expand more rapidly than demand;-trade liberalization becomes central;

And in world markets likely to be more unstable.

Lets look at a few slides that illustrate these implications

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Productivity Growth is Declining 23

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Yield Growth Rates Decline1961-2010

(percent per year)

1961- 1990

Maize 2.33

Wheat 2.73

Rice (paddy) 2.14

Source: Pardey, Alston and Chan-Kang, 2012

1990 – 2010

1.82

1.03

1.09

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World Crop Yields Annual Average Growth Rate

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1970-1990 (FAO) 1990-2010 (FAO) 2010-2030 (IMPACT Baseline)

Source: IFPRI IMPACT Model

DAP Prices July 2003 – July 2013

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Development of the World Ethanol

Market (OECD/FAO Outlook 2012)

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World ethanol production World ethanol trade

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

World biodiesel production World biodiesel trade

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Development of the World Biodiesel

Market (OECD/FAO Outlook 2012) 28

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Agricultural Trade Issues:

Agricultural trade is important but growing less rapidly

than total trade;

Rich Countries are major exporters- developing

countries major importers;

Trade is a relatively small share of total food grain

consumption;

Wheat < 18% of Consumption is imported;

Corn – 12.4 %

Rice – 6.5 %

To Meet Future Needs From Current Locations of

Production, Trade Would Have to Grow Rapidly.

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The Washington Post - April 27, 2008

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Emergence of China as Major Importer

e.g. Soybeans 31

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MARKETS REMAIN VOLATILE

Recent Price Behavior

Wheat prices more than tripled in the spike of 2008 and then dropped sharply to about 50% above previous levels-BUT in last 2 years have been very unstable averaging more than double pre-spike prices;

Corn prices increased almost 3X, dropped sharply but then moved sharply up in 2011 when they exceeded 2008 peak and went even higher in 2012 >3X; but recently have dropped sharply.

Similar pattern with soybeans and canola; Current Rice prices are almost double pre spike levels:>$15.66-

9/5/13 vs < $8.00 2005-06. Wheat prices and Corn prices are well above OECD/FAO and

FAPRI Projections; 9/5/13 Wheat $US 233/mt, Corn $US 190/mt. Let’s look a few slides to get a picture of market behavior.

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Wheat: Near Future July 2004- Aug 30,

2013. CBOT $US/bu 33

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Corn: Near Future July 2004 – Aug 30,

2013 CBOT $US/bu 34

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Canola-Canadian Near Future- July

2004- Aug 30, 2013 CDN $/tonne 35

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Soybeans: Near Future July 2004 -

Aug 30, 2013(CBOT) Cents/Bu

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Rough Rice: Near Future July 2004 - Aug

30, 2013, (CBOT, $ /100 lbs)

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Monthly Commodity Futures Price Chart

Rough Rice (CBOT)

TFC Commodity Charts

Where Are Prices Going?

Prices have been unusually volatile since the 2008

spike almost five years ago;

They remain well above pre 2008 levels;

They show no sign of returning to previous LT

downward trend in real prices;

And projections by OECD suggest most price will

remain high through 2021;

That’s good for supply response, bad for managing

food security.

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Real Prices: Rice, Wheat, Maize 1950-

2012- Source Alston, Martin & Pardey 2013

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All ag. commodity prices to average higher in 2012-

2021 relative to the previous decade

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% 2009-11 2002-2011

NOMINAL

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Percent Change in World Prices of Cereals between 2010 and 2030

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Source: IFPRI IMPACT Model

What Will be The Future Sources?

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42

We Will look at 4 Possibilities:

New Land;

New Water Developments;

Improved Biological and Agronomic

Productivity

Policy Reform

Future Sources: Land ? 43

New Land into production? Limited potential in only a few countries – Brazil, Savannahs of Africa, Ukraine, Russia and not many more.

Would in many cases require new technology e.g. cerrados in Brazil; -----or further loss of forests.

Offsetting challenge is land loss to urbanization, degradation, desertification, and salinization,

In recent years loss has exceeded new land brought into production. FAO sees modest increases in developing countries

BOTTOM LINE- new land not the answer -most must come from productivity improvement.

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Arable land and land under permanent crops, past

and future (OECD/FAO Outlook 2012)

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1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

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Future Sources: Water ? 45

Adding to a small base of old systems of irrigation in Egypt, the Middle East and East Asia, irrigated acreage doubled in the period 1850-1950;

Acreage took off in the 1960’s, peaking at a growth rate of 2.7%/yr in the 1970’s but rate declined to 0.4%/yr by the 1990’s and has stayed low.

Big Damns are out –WB focus now small scale catchment basins, system rehabilitation and improving efficiency of water use.

Current focus more on hydro e.g Ethiopia on Nile.

BOTTOM LINE: New expansion limited if at all.

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Future Sources: Water ? -2 46

Bigger Challenge is to maintain the capacity and efficiency of existing systems;

Losses of productivity due to salinity, siltation, and water logging are mounting;

Expanded use of ground water has seriously depleted aquifers e.g. Ogallala, Punjab and China;

Increasing competition from urban and industrial users;

Expanded concerns about safe drinking water puts pressure on agriculture to be less of a polluter

BOTTOM LINE: bigger issue may be decline in available water for Ag.-must improve productivity.

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Future Sources- Biological &

Agronomic Productivity 47

Therefore comes down basically to: - can we double yields in major crops again?

Commercial wheat and rice yields more than doubled, and US corn yields quadrupled, in the 2nd half of 20th century. Can we do it again when productivity growth has slowed?

Semi-dwarf wheats and rices, which allowed greatly increased fertilizer use without lodging, was combined with expanded irrigated area to, for example, quadruple wheat production in India between 1970 & 2000 - India has become an exporter in some years;

How often and where can this be repeated??

Critical then to use best of modern science.

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Future Sources-Biological &

Agronomic Productivity- 2 48

Biotechnology, in the minds of many, offers enormous potential for yield increases and managing biotic and abiotic stresses;

To date you claim to have only scratched the surface, and yet it has fostered improved yields by better management of pests and weeds; e.g.--Round-Up Ready corn, BT cotton

One result is no-till or low till agriculture which has reduced erosion and decreased pesticide use. e.g. BT cotton.

And yet biotech is highly controversial, especially trans-species genetic transfers (GMO’s).

Is further complicated by widespread use intellectual property protection by large private firms that dominate developed country ag research; raises question for some of--who will control the food supply?

Growth in public investment in Ag research and agricultural development plunged in the 1990’s and 2000’s

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Slowdown in Public Ag R&D Spending Growth

Source: Pardey, Beintema Dehmer and Wood (2006) 9/17/2013

Future Sources- Biological &

Agronomic Productivity- 3 50

European resistance to biotech is spilling over to Africa via trade threats, (see Paarlberg Starved for Science);

Yet Africa has the lowest, and the slowest growing, yields in the world and has the highest population growth projections;

So where will increased output come from?

Until now the vast majority of food consumed has been indigenously produced – huge challenge for Africa. Africa is a growing net importer of food

While trade has grown, we noted it still represents a small share of the consumption of basic staples-rice 6%, corn 12% and wheat 18%;

And these percentages have changed little over the last 50 years.

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Future Sources –Policy Reform? 51

Many Policies Will Have Major Impacts:-Positive or Negative- the list seems endless.

R & D Investments –domestic and international e.g. CGIAR;

Investments in agricultural development/poverty reduction;

A Substantive WTO agreement which liberalizes ag trade; Elimination of export controls and taxes;

International/Regional policies for food security in poor countries- regional stocks? Collective use of futures markets?

Domestic policy reform, particularly in Developed Countries- get rid of amber box subsidies e.g. supply management;

Policies to manage climate change and its impacts on agriculture- mitigation and adaptation.

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Future Sources-Policy Reform? Need to Go

Beyond Traditional Ag Policies-2 52

Development of alternative energy sources so can reduce use of food crops??

Better management of natural resources; more efficient use of water especially in agriculture;

Better management of wastes- agriculture is not immune here;

Effective policies for food security, nutrition and health security;

Investments in Human Capital, Education, Schools;

Macro-Economic Stability and Growth;

And on and on

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Future Sources-Policy Reform? Need to Go

Beyond Traditional Ag Policies-2 53

Development of alternative energy sources so can reduce use of food crops??

Better management of natural resources; more efficient use of water especially in agriculture;

Better management of wastes- agriculture is not immune here

Effective policies for food security, nutrition and health security;

Investments in Human Capital, Education, Schools;

Macro-Economic Stability and Growth;

And on and on

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Global Potential vs Indigenous Capacity-not a

choice of either/or-- REQUIRES BOTH 54

Food Security is much broader than self-sufficiency- is also an issue of access. This means improving access has a big impact of poverty reduction.

Some see a world of rich countries –a smaller and smaller share of world’s pop.- producing surplus food;

Many more countries remaining poor with limited capacity to increase food production- food deficit countries;

A world of haves vs have-nots. But is trade the full answer?

Simply making world markets work better is not enough – need to address improving agricultural profitability in poor countries- win-win –poverty reduction and food security.

BOTTOM LINE: Productivity driven agricultural development must be an especially high priority.

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A Really Tough Row to Hoe 55

Feeding 2.4 Billion more in a world growing more urban and with an expanding middle class is a huge challenge, made more so by:

Potential negative impacts of climate change;

Resource degradation accelerated by a growing population and expanded urban foot print;

Loss of biodiversity, deforestation, declining per capita water availability and fisheries decline;

Where production could expand is not where expanded need will be.

Will Require Combination of Productivity Growth and Policy Improvements.

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Therefore Challenges for World, &

Canada are Enormous. 56

For the World, Food Security in my view will become an even more critical issue for Global peace and stability.

Global Productivity Enhancement has to be Top Priority focusing on investments in Ag Development and R & D.

It will require an international effort by national governments, international organizations and the global private sector.

Public/private partnerships will be critical, particularly for agricultural R & D.

Global accords on for e.g. Climate Change, Trade Liberalization, IPR, Management of the Global Commons-pollution, river basins, international fisheries etc. are crucial

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Therefore Challenges for World, &

Canada are Enormous.-2

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57

For Canada, as a major exporter of agricultural products, continued growth in global demand should be positive;

Recall those two maps of Population and Income Growth –Both are shifting to Africa and Asia whose diversified food needs will grow;

In these rapidly growing, emerging economies the most rapid growth in demand will occur for commodities whose demand increases as people’s incomes grow- livestock products, pulses, fruits and vegetables;

This also bodes well for Canadian and especially Prairie agriculture.

The Challenge is to be cutting edge in R&D, production efficiency, processing and distribution innovation and have policies that encourage public/ private sector partnerships.

Globally Canada is a big country physically but is a middle player economically.

Needs to be a global leader in innovation and international cooperation to play the critical role she is capable of.