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2013 Risk and Profit ConferenceBreakout Session Presenters
13. World Supply and Demand for Food: An Historical
Perspective and Future Prospects
Nathan Hendricks Nathan Hendricks is an Assistant Professor in
Agricultural Economics atKansas State University. He holds B.S. and
M.S. from KSU and a Ph.D.from University of California, Davis. His
research analyzes agriculturalsupply response and the effect of
agricultural and environmental policies.His previous research has
investigated agricultural supply dynamics, thecost-effectiveness of
alternative water conservation policies, and the
production effects of agricultural domestic support programs. He
teaches anundergraduate course on international and environmental
issues inagriculture, a graduate course on agricultural policy, and
a graduate team-taught course in quantitative methods.
Abstract/SummaryGlobal agricultural productivity growth is
slowing while the world populationis likely to increase from 7
billion to 9 billion by 2050. Meanwhile, meatdemand will continue
increasing due to rapid economic growth in China andIndia. In this
session, we will examine some of these major trends in world
supply and demand for food. We will also place these future
prospects inperspective by looking at world supply and demand from
1960-2000, aperiod where world population doubled from 3 billion to
6 billion and yetsupply actually increased faster than demand. An
understanding of theseglobal trends in agricultural markets is an
important perspective forproducers and agribusiness leaders as they
make long-run decisions.
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World Supply and Demand for Food: An
Historical Perspective and Future Prospects
Nathan P. Hendricks
2013 Risk and Profit Conference
Wh think about world su l and demand?
Soybean Trade Flows 2010
P
D
What will be the price of agricultural commodities in15-30
years?
Q
Bad uestion: Can we feed the world b 2050?
Better question: What will be the price of food in
2050 and will ever bod be able to afford it?
HISTORICAL PERSPECTIVE
Predicted o ulation rowth would
exceed ability of land to produce
Population Food
Production
Late 1960s earl 1970s
Proposals for population control
Predictions of massive famines
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a appene
-
7000
8000
s)
5000
6000
n(million
3000
4000
opulatio
New Malthusians
1000
2000
World
Malthus
0
0 500 1000 1500 2000
YearSource: United Natio
Trend
1960-2000
Hi h- ieldin varieties of rice and
wheat introduced in Asia and Latin
America
Ex. India
FUTURE PROSPECTS
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Demand
9
10
le)
-
6
7
8
ionPeo
45
ion(Bill
1
2
Populat
0
1950 1970 1990 2010 2030 2050
Year
1960-2000: 3 billion to 6 billion
2011-2050: 7 billion to 9.5 billion
Population growth is slowing, but still a large
Source: World Bank and Penn World Table
Incomes are conver in
Asia is increasing meat consumption -> substantial
increase in demand for rain
Source: USDA, Economic Research Service
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Supply
1. Growth of yields are slowing
2. Growth in R&D expenditures are slowing
Source: The Economist:
Source: Alston (2011)
: , . . . . .
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PERSPECTIVE
Weather
Weather
Consumption in China and India
Index funds creating a bubble
No strong evidence to suggest these were major causes
Biofuels?
Role of biofuels widely debated
.
2. Changes in trade barriers
Shock absorbers of the market
Traders sell-off stocks if prices are high
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Endin Stocks to Use Ratio of Calories from the
Major Grains
Source: Wrig t 2011
In res onse to risin food rices
Food-exporting countries imposed export restrictions
Food-importing countries reduced import tariffs
Primarily developing countries India banned rice and wheat
exports
Russia 40% export tax on wheat
Stron demand rowth to 2050
Concerns that supply growth is slowing
Current market movements may not reflect long-run
ros ects
Nathan P. Hendricks
Email: [email protected]
Website: http://nphendricks.com/
Follow me on Twitter: @nphendricks
