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Presentation by Mark W. Rosegrant at the event, “2013 AAEA & CAES Joint Annual Meeting” which took place on August 4-6, 2013 in Washington, DC. It offers AAEA members, CAES members, and other applied economists a chance to interact and learn over the course of the three day meeting.
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Rising Food Prices? The Role of Agricultural R&D
Mark W. Rosegrant, Director Environment and Production Technology Division
2013 AAEA & CAES Joint Annual Meeting Session 1019: Whither Global Food Prices?Marriott Wardman Park, August 4‐6, 2013
Outline
Drivers of agricultural growth and food security Model description Baseline projections of supply, demand and food security Scenario of increased investments in agriculture R&D Conclusions and policy implications
Drivers of Agricultural Growth, Prices, and Food
Security
Supply and demand pressures affect agricultural growth and food security
Demand pressures Supply pressures
▪ Population growth – direct– Increased domestic /
urban use– Increased food demand
▪ Economic growth –– Increased urban water
use– Increased industrial
water use– More resource-intensive
diets ▪ Biofuels/Bioenergy
▪ Climate mitigation
▪ Conservation and biodiversity
▪ Land and water scarcity
▪ Climate change
▪ Investments in agricultural research
▪ Science and technology policy
▪ Management and governance reform
Higher food prices
More variable food prices
Pressures on ecosystems (quantity and quality impacts)
Increased competition and higher prices for natural resources
Economic / political conflict
Food security at risk
Model Description
The IMPACT Model
IMPACT – “International Model for Policy Analysis of Agricultural Commodities and Trade” Global partial equilibrium model Global
• 115 countries • 281 food production units (countries x river basins)
• 46 agricultural commodities
Flow Chart of IMPACT Model
IMPACT Model Structure Crop area is a function of crop prices, irrigation investment,
water input, climate change Yield is a function of crop price, input price, irrigation
investment, water inputs, exogenous yield growth Yield growth is a function of investment in agricultural
research, irrigation, and rural roads Food demand is a function of commodity prices, income,
and population Feed demand is a function of livestock production, feed
prices, and feeding efficiency Biofuel demand is computed based on policy mandates and
targets Crush demand is a function of crush profit margins
Baseline Projections of Supply, Demand and Food Security
Annual Average Growth in Per Capita GDP between 2010 and 2030 – Baseline Projections
0
1
2
3
4
5
6
Percen
t Growth Rate pe
r Year
Source: IFPRI IMPACT Model
Annual Average Growth in Population between 2010 and 2030 – Baseline Projections
0
0.5
1
1.5
2
2.5
Percen
t Growth Rate pe
r Year
Source: IFPRI IMPACT Model
World Crop Yields Annual Average Growth Rate
0
0.5
1
1.5
2
2.5
3
3.5
Maize Rice Soybeans Wheat
Percen
t Growth Rater per Year
1970‐1990 (FAO) 1990‐2010 (FAO) 2010‐2030 (IMPACT Baseline)
Source: IFPRI IMPACT Model
World Crop Area‐Baseline Projections
0
50
100
150
200
250
300
Rice Wheat Maize Millet Sorghum Other Grains
Million Hectares
2010 2030
Source: IFPRI IMPACT Model
Source of Cereal Production Growth, 2010 ‐ 2030
‐10010203040506070
Percen
t Cha
nge
Area Expansion Yield Improvement
Source: IFPRI IMPACT Model
Percent Change in World Prices of Cereals between 2010 and 2030
0
5
10
15
20
25
Rice Wheat Maize Millet Sorghum Other grains
Percen
t Cha
nge
Source: IFPRI IMPACT Model
Percent Change in World Prices of Meats between 2010 and 2030
0
5
10
15
20
25
30
Beef Pork Lamb Poultry
Percen
t Cha
nge
Source: IFPRI IMPACT Model
Per Capita Cereal Demand‐Baseline Projections
020406080100120140160180
Developed Developing South Asia Sub SaharanAfrica
Kg per Cap
ita
2010 2030
Source: IFPRI IMPACT Model
Per Capita Meat Demand‐Baseline Projections
0102030405060708090100
Developed Developing South Asia Sub SaharanAfrica
Kg per Cap
ita
2010 2030
Source: IFPRI IMPACT Model
Number of Malnourished Children
0
20
40
60
80
100
120
140
160
Developing South Asia Sub Saharan Africa
Millions
2010 2030
Source: IFPRI IMPACT Model
Population at Risk of Hunger
01002003004005006007008009001000
Developing South Asia Sub Saharan Africa
Millions
2010 2030
Source: IFPRI IMPACT Model
Scenarios of Increased Investments in Agricultural R&D
Investment in Ag R&D – CGIAR
CGIAR (million 2005 US$)
Region 1992 2000 2010
Sub Saharan Africa 171 157 278
Asia Pacific 145 124 171
Latin America & Caribbean 65 63 70
Central and West Asia and North Africa 45 35 46
Source: Agricultural Science and Technology Indicators, IFPRI
‐4‐3‐2‐101234567
Sub SaharanAfrica
Asia Pacific Latin America &Caribbean
Central andWest Asia andNorth Africa
% Rate of Growth
1992‐2000 2000‐2010
Source: Agricultural Science and Technology Indicators, IFPRI
Investment in Ag R&D –Rate of Growth CGIAR
Investment in R&D – NARS
CGIAR (million 2005 US$)
Region 1990 2000 2008
East Asia Pacific 909 1405 2450
South Asia 368 615 834
Sub Saharan Africa 527 628 803
Latin America Caribbean 1373 1577 1819
West Asia and North Africa n.a. 698 824
Source: Agricultural Science and Technology Indicators, IFPRI
0
1
2
3
4
5
6
7
8
East AsiaPacific
South Asia Sub SaharanAfrica
Latin AmericaCaribbean
West Asia andNorth Africa
% Rate of Growth
1990‐2000 2000‐2008
Source: Agricultural Science and Technology Indicators, IFPRI
Investment in R&D –Rate of Growth NARS
Increased Investment Scenario Compared to Baseline
Increased Investment in Agricultural R&D• Baseline assumes continuation of trend growth, 2000‐2008, in CGIAR and NARS agricultural R&D.
• Increased investment scenario: Level of CGIAR and NARS investment in agricultural R&D is doubled by 2020 compared to the baseline, then baseline trend to 2030
Changes in World Prices of Crops Relative to Baseline, 2030
Commodity/Scenario Increased Investment
Rice ‐23.7%
Wheat ‐13.5%
Maize ‐9.4%
Millet ‐20.9%
Sorghum ‐15.6%
Other Grains ‐7.7%
Source: IFPRI IMPACT Model
Commodity/Scenario Increased Investment
Beef ‐14.6%
Pork ‐12.6%
Poultry ‐14.0%
Sheep & Goat ‐16.7%
Source: IFPRI IMPACT Model
Changes in World Prices of Meat Relative to Baseline, 2030
Commodity/Scenario Increased InvestmentsEast Asia and Pacific 22.0%
Europe and Central Asia 5.1%
Latin America and Caribbean 8.6%
Middle East and North Africa 21.6%
South Asia 21.4%
Sub‐Saharan Africa 20.2%
Developed ‐0.9%
Developing 16.9%
World 11.2%
Source: IFPRI IMPACT Model
Changes in Cereal YieldRelative to Baseline, 2030
Commodity/Scenario Increased InvestmentsEast Asia and Pacific ‐4.9%
Europe and Central Asia ‐5.1%
Latin America and Caribbean ‐5.7%
Middle East and North Africa ‐3.4%
South Asia ‐5.7%
Sub‐Saharan Africa ‐7.6%
Developed ‐5.6%
Developing ‐5.6%
World ‐5.6%
Source: IFPRI IMPACT Model
Changes in Cereal Crop AreaRelative to Baseline, 2030
Commodity/Scenario Increased InvestmentEast Asia and Pacific 16%
Europe and Central Asia ‐0.3%
Latin America and Caribbean 2.4%
Middle East and North Africa 17.5%
South Asia 14.5%
Sub‐Saharan Africa 11.0%
Developed ‐6.5%
Developing 10.4%
World 4.9%
Source: IFPRI IMPACT Model
Changes in Production of CerealsRelative to Baseline, 2030
Commodity/Scenario Increased InvestmentEast Asia and Pacific 9.8%
Europe and Central Asia 10.5%
Latin America and Caribbean 8.6%
Middle East and North Africa 9.2%
South Asia 8.9%
Sub‐Saharan Africa 9.1%
Developed ‐2.0%
Developing 9.4%
World 6.0%
Source: IFPRI IMPACT Model
Changes in Production of MeatRelative to Baseline, 2030
Commodity/Scenario Increased InvestmentEast Asia and Pacific 5.0%
Europe and Central Asia 3.0%
Latin America and Caribbean 3.1%
Middle East and North Africa 2.8%
South Asia 5.4%
Sub‐Saharan Africa 6.0%
Developed 4.0%
Developing 4.8%
World 4.7%
Source: IFPRI IMPACT Model
Changes in Consumption of CerealsRelative to Baseline, 2030
Commodity/Scenario Increased InvestmentEast Asia and Pacific 5.4%
Europe and Central Asia 5.8%
Latin America and Caribbean 7.8%
Middle East and North Africa 6.5%
South Asia 7.8%
Sub‐Saharan Africa 8.9%
Developed 5.0%
Developing 6.4%
World 6.0%
Source: IFPRI IMPACT Model
Changes in Consumption of MeatRelative to Baseline, 2030
Commodity/Scenario Increased InvestmentsEast Asia and Pacific ‐16.5%
Europe and Central Asia ‐8.8%
Latin America and Caribbean ‐10.2%
Middle East and North Africa ‐11.6%
South Asia ‐4.2%
Sub‐Saharan Africa ‐7.8%
Developed ‐5.6%
Developing ‐7.1%
World ‐6.9%
Source: IFPRI IMPACT Model
Impact on Number of Malnourished Children Relative to Baseline, 2030
Commodity/Scenario Increased InvestmentsEast Asia and Pacific ‐13.4%
Europe and Central Asia ‐2.8%
Latin America and Caribbean ‐30.6%
Middle East and North Africa ‐11.7%
South Asia ‐32.2%
Sub‐Saharan Africa ‐27.3%
Developed ‐7.0%
Developing ‐26.0%
World ‐24.9%
Source: IFPRI IMPACT Model
Impact on Population at Risk of Hunger Relative to Baseline, 2030
Conclusions and Policy Implications
Conclusions Doubling of public investment in agricultural R&D by 2020: direct positive effects on crop yields Indirect impacts on prices, crop area, production, food consumption and food security World prices of major commodities decline relative to baseline Significant improvements in food security indicators ‐ number of malnourished children and population at risk of hunger
