Business & Policy
Agriculture needs a great leap forward
By Globe and Mail
A story in the Globe and Mail acknowledges agriculture's place in the current economic structure in Canada and abroad, but urges greater policy reformation to address deepening shortages in poorer countries.
March 3, 2009
Many people, particularly in the world's poorest regions, were gripped by food shortages and price spikes in 2007 and 2008. There were many reasons for this: Global grain stocks had been dropping for years; prices of some commodities (such as rice) had been rising; global demographics had increased pressure on both stocks and prices; and economic success in much of the developing world, including China and India, was altering eating habits. The stampede into biofuels to supplement international oil reserves also handicapped food production.
Food – and oil – prices subsided late in 2008. The temptation now is to forget all about earlier developments. But this would be deeply unwise.
Canada is closely associated with agriculture internationally, having contributed over many decades to significant research that supports agricultural productivity growth worldwide. So, looking ahead, what should we be worrying about?
We have all the basic food we need, and we export a good deal, too. Other rich countries will always be able to amass whatever food supplies they need by outbidding poorer countries on international markets. Thus, we need to focus on poor consumers in poor countries.
Alex McCalla of the University of California at Davis scans global agriculture and food production for trends. These are not reassuring.
Demand-side factors exerting pressure on stocks and (eventually) prices include: (a) rapid growth and rising incomes in developing countries (China and India together account for 32 percent of the share of growth in grain consumption from 2005 to 2008); (b) recent enthusiasm for biofuels; and (c) urbanization and globally rising incomes, which increase demand and changes the mix of food people can afford.
Supply-side constraints include: (a) slower agricultural productivity growth and increased competition for land and water; (b) petroleum costs that affect agricultural costs of production; (c) global stocks at their lowest levels since the early 1970s, as global consumption increased much faster than global production; (d) population growth; and (e) fertilizer costs that tripled in 2007 alone.
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