2030 Vision for the Global Food System

Implications for India

Juergen Voegele

Senior Director, Agriculture Global Practice, World Bank

Plenary Presentation to 12th Agricultural Science Congress, Karnal, India. February 4, 2015

1

Essential for Ending Poverty & Shared Prosperity

Shared Prosperity

Increased supply chain efficiency helps lower consumer food prices thereby raising real

incomes of the poor, who spend a large share of their income on food

More and better jobs (farm, non-farm rural, agro-processing)

Improved food security (food shocks increase poverty, civil unrest, and can impair human

capital development)

World India

Number of rural poor (2010) (millions) ~900 ~285

Number of rural poor that could migrate to cities by 2030 (2010) (millions) ~200 ~40

Number of poor people remaining in rural areas to be lifted out of

poverty from 2010 to 2030 (millions)~700 ~240

Ending Poverty

2

3

• Able to feed every person, every day, in every country with a safe, nutritious and affordable diet (+35% more food - FAO)

• Jobs and income gains in the food system to meet poverty reduction targets

Improved health outcomes

End of hunger & reduced child stunting (to 5%)

Reduced food related NCDsNo net increase in obesity

Improved sustainability

Reduced GHG emissions Improved land & water mgtProtected local communities & biodiversity

2030 Vision for the Global Food System

SDG Goal 2: End Hunger, achieve food security, and improved nutrition, and promote

sustainable agriculture

World food demand is projected to increase by 20% by 2030

with a shift in consumption towards non-cereal products

Dev = Developed countries, Devg = Developing countries, SSA = Sub-Saharan Africa, NE/NA = Near East and North Africa, LAC = Latin America

and the Caribbean, SA = South Asia, EAP = East Asia and the Pacific

Source: Derived from Alexandratos and Bruinesma (2012).

Percentage change in projected demand for food products between 2015 and 2030 (%)

Food, jobs, incomes

World Dev Devg SSA MENA LAC SA EAP

Cereals, food 16 3 18 56 22 14 19 7

Cereals, all uses 18 12 20 - - - - -

Roots and tubers 20 0 24 47 26 12 37 4

Sugar and sugar crops (raw sugar eq.) 21 1 27 62 25 12 32 22

Pulses, dry 21 5 20 60 15 10 11 4

Vegetable oils, oilseeds & products (oil eq.) 26 6 36 64 30 21 41 30

Meat (carcass weight) 25 8 35 63 45 26 76 30

Milk and dairy, excl. butter (fresh milk eq.) 23 7 34 50 31 22 37 35

Other foods (kcal) 20 7 24 48 26 19 31 17

Total foods (kcal) 20 4 23 55 25 16 25 14

4

Shift in composition of food demand in India by 2030

Food, jobs, incomes

-8 -56 10 11

18

37

52 56

78 81

100110

Projected Increase in Food Demand in India by 2030 (% change relative to 2011)

5

Requires some form of post-harvest processing/management

Average incomes of the poor in developing countries will

need to increase by 45% by 2030 − in India by 30%

Average Incomes of the poor will need to increase at a faster rate to end poverty by 2030

Source: Derived from Olinto, P. Beegle, K., Sobrado, C., and Uematsu, H. (2013). The State of the Poor

Food, jobs, incomes

6

0.84

0.96

0.67

0.82

0.95

0.74

0.84

0.87

0.65

0.75

0.85

0.95

1.05

1.15

1.25

1980 1990 2000 2010 2020 2030

Ave

rag

e D

aily

Inco

me

of

the

Po

or

IndiaChinaDeveloping World

Povert Line PPP$1.25

Food prices still relatively high, some recent weakness with oil

price declines

7Source: World Bank data

0

20

40

60

80

100

120

140

160

0

20

40

60

80

100

120

140

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

World Oil PricesWorld Grain Prices

Food, jobs, incomes

Redouble the focus on productivity in India as price

improvements have been the main source of recent changes

in the real value of agricultural output

8

-100

-50

0

50

100

150

1981

-82

1982

-83

1983

-84

1984

-85

1985

-86

1986

-87

1987

-88

1988

-89

1989

-90

1990

-91

1991

-92

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

Mill

ion

s

Area Yield Price Diversification Interaction

Source: World Bank (2014) Republic of India: Accelerating Agricultural Productivity Growth

Food, jobs, incomesA

nnua

l cha

nge

in r

eal v

alue

of a

gric

ultu

ral o

utpu

t

(Rs

mill

ion)

Structural transformation underway, but agriculture

remains a significant employer

• Agriculture remains a significant employer– Globally: 30 percent of all workers employed in agriculture

– India: 49 percent of adult work force engaged in agriculture • 64 percent of rural employment (59% of males but 75 % of females)

• Rural non-farm employment also a major source of jobs– Rural non-farm employment rises with agricultural productivity

(strong correlation across countries, and within India across states)

– India: Rural non-farm employment accounts more than all urban employment (295 million, 28% of workers)

• Potential for agribusiness/agro-processing potential– Agribusiness share of GDP increases with per capita incomes

– India: 10% growth of organized food processing output, results in employment growth of 5%

Food, jobs, incomes

9

Higher agricultural productivity is good for poverty reduction

0

5

10

15

20

25

30

35

40

45

50

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

Rur

al P

over

ty (

%)

Agr

icul

tura

l Pro

duct

ivity

(R

s. P

er H

a)

Ag Productivity (Rs. per Ha, TE 2007) Rural Poverty HCR (2011/12)

10

Food, jobs, incomes

Source: World Bank estimates using ICRASAT district level database, and NSSO poverty estimates 2011-12

Agricultural productivity in India needs to be more

climate-smart

11

Food, jobs, incomes

-30

-20

-10

01

02

0

Pe

rce

nt D

evia

tio

n (

%)

1970 1980 1990 2000 2010Year

Aggregate Rainfall Anomaly (%) Trend-Deviation in Real Ag. Production

Trend-Deviation in Cropped Area Trend-Deviation in Real Ag. Productivity

Source: World Bank (2014) Republic of India: Accelerating Agricultural Productivity Growth

Climate change estimated to reduce world crop yields by 5% for each 1OC

increase in atmospheric temperature, with large regional variation

Source: World Resources Institute

Sustainability

12

+2OC world

+4OC world

Dry season Wet season

- Greater seasonal variance

- Increased intensity and variability of monsoons

- Higher frequency of extremes

- Slower wheat growth at higher temperatures

Climate change projected to increase weather variability in India

Source: Turn Down the Heat: Climate extremes, Regional Impacts, and the Case for Resilience

Sustainability

13

Agriculture emissions need to decline by 25% by 2030 and 50% by 2050

to proportionally contribute to limiting temperature rises to 2OC

Sustainability

14Source: World Resources Institute (2013): Creating a Sustainable Food Future.

Land and water are becoming more constraining

Water stress

Source: World Resources Institute

Land Constraints

Sustainability

15

57 50 34 66 61

183152

50

140 175

5149

400

314

37

4

94

0

100

200

300

400

500

600

700

Sub-SaharanAfrica

Latin America NearEast/North

Africa

South Asia East Asia

Millions hectares

Unused balance 2050 (prime & good)

Change of "in use" to 2050

In use - prime & good

In use - marginal (incl. irrigated desert)

Source: Alexandratos and Bruinesma (2012).

Monsoon fluctuations pose greater risk with falling groundwater

Pre-Monsoon groundwater levels

2012 relative to 2002-11 average

Red = decline

Blue = increase

16Source: Ground Water Year Book, India 2012-13. Central Ground Water Board, Ministry of Water Resources, GOI, May 2013.

Need Improved Nutritional Outcomes

Health Outcomes

Developing World India

Children under 5 moderately or severely underweight (%) 16 44

Population undernourished (%) 12 15

Share of Men > 20 overweight and obese (%) - 20

Share of Women > 20 overweight and obese (%) - 21

17

Share of population undernourished (%)

Developing World India

1990-1992 20 23

2006-2008 16 20

2012-2014 12 15

2030 (projection) 8

Source: Derived from Alexandratos and Bruinesma (2012).

Source: UN MDG data, The Lancet

We need a food system that:

• Provides food to meet higher and shifting composition of

demand

• Raises incomes of the poor (farm labor productivity and

access to markets), and increases jobs in agri-businesses

• Improves nutritional outcomes

• These have to be achieved with the existing natural

resource base, in a more climate-smart way

… especially in India given its importance to the global food system

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What this means for India

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Increased resource use efficiency

Getting more from what you have

Modernizing agriculture to provide food for increasingly

sophisticated consumers

• Remove policies biases against production of higher value crops– Remove disincentive for farmers to respond to market signals

– Could fulfil the PM’s desire to double farmer incomes with current technology

• Closing yield gaps to maintain food staple security– Reducing rice yield gaps in other states (50-70%) by half would eliminate the need to produce any rice

in the major water stressed states (Punjab, Haryana or Maharashtra)

• Priorities – refocus research, use skills and private sector for more

knowledge intensive and resilient agriculture– Research for Sustainable Development: Central to the CSA agenda

• Refocus research agenda on lagging states; biotic & abiotic stresses

• Adaptation to climate risks: water, drought, heat tolerance, shifting production cycles

• Better breeds/feeds to reduce livestock GHG footprint

– Smallholder focus: delivering services and integration higher value chains

– Private sector engagement in technology (seed systems a key area)

– Human resource base: Skilled, technologically savvy youth for sophisticated high-tech,

precision agriculture – revival of once illustrious agricultural university system 20

To create jobs for rural transformation - Agribusiness for

transformative change

• Falling farm size with population increase on finite land, need to

increase productivity of smallholders

– 0.6 ha per household; 75% marginal farm size – less than 1 ha

– Likely to get smaller: rural population projected to grow till 2028 (UN projections)

– Sustainable intensification of smallholder livestock production and horticulture

• Huge potential for post-harvest food management

– Explosive urban & rural non-farm demand: different, convenient, safer and nutritious foods

– Create good non-farm jobs: entry into manufacturing for low income/agricultural states

• Priorities – remove regulatory and structural barriers, food safety – Policy and regulatory regimes:

• create a competitive & efficient single national market; improve business environment for private

investment (e.g. remove movement restrictions, increasing competition in wholesales markets,

streamline/reduce multiple taxes/fees)

• Promote MSME’s and agri-business: business regulatory reforms, labor laws and regulations.

Recent important steps by new government will go a long way

– Address structural barriers: rural roads, power, specialized value chain infrastructure

– Food safety and health standards for a modern food system 21

To improve nutritional outcomes

• Not just about food, but food of course is central to better nutrition– Multi-sector approaches: health, agriculture, water and sanitation, education,

economic growth (e.g. “Swacch Bharat Abhiyan”)

– Productivity and diversification on-farm – providing a wider diversity of foods

• Safer and more nutritious foods– Availability of diverse high-nutrition foods

– Tackle the malnutrition of the urban/affluent society (obesity)

• Important for Climate-smart agriculture, incomes and jobs agendas– High value agriculture creates more jobs, higher value/incomes, benefits women and

small-holders disproportionately

• Priorities – women’s empowerment, education & awareness, technology, and policy environment– Mainstream key principles in public actions: women’s empowerment, education and

awareness

– Private sector role in on-farm technology (seed sector development), PH technology (fortification) and logistics (public investment and business environment)

– Agriculture policy framework conducive to dietary and production diversity

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Policy framework for macro-transformation of agriculture

• Government objectives – legitimate with past success– Food security, support for farmers, protect consumers: Legitimate objectives for a responsible government

in a large country

– Also a global responsibility: an agricultural powerhouse (world’s top 1-3 producer of major crops)

– Laudable past success: national food security compared to the dire situation in 1960s

• Now a costly approach: financially, and for sustainability and growth– Effects of price and input policies well known: diversification; economic inefficiency

– Less appreciated: compromising productivity and resilience: water & soil problems; GHG

• Are there options to achieve these objectives more efficiently?– 2010-11: agricultural subsidies estimated at $56 billion (food, fertilizer, power, irrigation, other)

– 2015 budgeted subsidies: for food alone $26 billion and fertilizers another $16 billion

• Massive opportunity for impact: realign expenditures for greater and more sustainable

impact on core objectives

– Broad principle: shift from supply side subsidies to demand side support (transfers) – less distortionary

– Important debates in country: technology for efficient delivery, reduce leakages, transfers, shift from

supply side to demand side subsidies (income vs price)

– E.g. storage: Great initiative by government to explore alternatives: HLC report on options

• Private storage – cheaper, market friendly, less distortionary 23

Options to realign subsidies to improve resource use efficiency

• Direct income

transfer (in place of

physical quantity)

• Exception in remote

non-banked areas

Resource use

(water, land)

• Income transfers

equivalent to

fertilizer and power

subsidy (in place of

price distortions)

• Subsidies for CSA practices e.g.– Water saving technologies/

more crop per drop

– Land reclamation

– Alternative wetting & drying rice

– Substitute for rice production in water stressed areas

– Landscape approaches: watershed management, water harvesting, soil health

Pro- Climate-Smart Agriculture

Indicative size: $26

billion FY15

Indicative size:

$16 billion FY15

New technologies (cell phones, biometic cards, etc) have lowered the costs of transfer

programs, and the Government initiative to ensure everyone has a bank account makes these

options more feasible.24

To improve efficiency of agricultural support

Food

(social protection)