Geni italiani Per una via nazionale alla ricerca e alla nuova genetica in agricoltura

The value to society of innovation in agriculture: World food security, climate protection and natural resource preservation Milan, July 16, 2015 Harald von Witzke Humboldt Forum for Food and Agriculture, Berlin

3 1. The end of the Agricultural Treadmill The Agricultural Treadmill: World agriculture produced ever more food for ever more people at ever decling prices.

4 1. The end of the treadmill This megatrend in world agriculture has come to an end. Since 2000: Upward trend in agricultural prices. Unchanged: Price volatility. Reason for rising prices: Global demand is outpacing the growth in supply.

5 1. The end of the Treadmill Continued rapid growth in global food demand (+120% between 2000 and 2050): – Continued rapid population growth; – Per capita food consumption growth both in developing and newly industrializing countries.

6 1. The end of the Treadmill Limited growth in global food supply: – Limited cropping acreage (+ 7 % between 2000 and 2020); – Production growth predominantely through productivity growth (FAO: 90 %); – Declining annual productivity growth ( : 4 %; presently ≈ 1%; EU: 0.6%);

7 1. The end of the Treadmill Reasons for lagging productivity growth in EU: – Neglect of agricultural research, in particular research focused on generating productivity growth; – Large cutbacks in funding of public agricultural research; – Private research is discouraged; – New technologies with huge potetial such as genomics are outlawed; Consequence: EU is losing researchers and research facilities.

8 1. The end of the Treadmill Additional constraints to productivity growth: – Water is becoming ever scarcer and more expensive; – Increasing energy price (99/00: $ 20/barrel); – Global warming; – Growing non-food crop production (bioenergy, EU Greening, cotton, rubber, bioeconomy goods, etc.); Economic consequence: – Increasing price of agricultural commodities and food.

9 2. Economic and political implications Good news: Increasing price of food generates new employment and income opportunities for farmers, and for upstream and downstream industries: Provided that productivity gains can be realized.

10 2. Economic and political implications Bad news: World food security likely to become a significant political issue (political instability, violence, migration). Lesson learned and

11 3. Prospects for world food security UN objective of cutting in half by 2015 the number of malnourished humans in 1995 is out of reach. To the contrary – the number of malnourished is increasing with rising food price.

12 3. Prospects for world food security International trade flows have changed significantly. The poor countries once were net food exporters. Today they are net food importers. Food deficit is expected to quintuple between 2000 and 2030 (FAO).

13 3. Prospects for world food security Food import gap of the poor countries can only be closed if rich countries (incl. EU) produce and export more food. For the EU much would be gained if the EU would stop being one of the world’s largest net importers in food and agriculture (on the commodity level).

14 4. Climate change Rising food prices increase the incentives for deforestation. Deforestation is a major cause of global warming. Climate effect of deforestation and conversion of pasture into crop land: 18 per cent. This is more than the climate effect of global manufacturing and more than the climate effect of global transportation.

15 5. Conclusions Productivity growth is the key in the fight against - hunger and malnutrition, - global warming, and - for the preservation of biodiversity and natural habitats.

16 The EU and China were the world‘s leading agricultural net importers in 2008 EU net imports in 2008: 45.5 billion US$ China net imports in 2008: 44.5 billion US$

17 EU virtual net land import Net import of virtual land: 34.9 mill. ha. Territory of Germany: Territory of Germany 35.7 mill. ha. Increase in virtual land import, : – 9 million ha.

18 EU Virtual agricultural land import 2008 under alternative scenarios Yield growth at 1.2 rather than 0.6 per cent annually: – Virtual land imports about constant. Organic farming in 2008 at 20 percent of EU acreage: – Doubles the growth in virtual land imports.

19 5. Conclusions EU Import of virtual agricultural land : Million 25 hectares. Reasons for declining imports (in increasing order of importance): – Inceasing yields in the EU, – Increasing efficiency in the food industry, – Yield growth in ROW.

20 5. Conclusions With innovation and productivity growth the EU and the world can afford more of everything: – More food – more feed, – more bioenergy and other non-food crops, – more natural habitats, – more biodiversity, and along with it – reduced CO 2 emissions.

21 5. Conclusions Source: Noleppa, von Witzke, Cartsburg, 2013 Every percentage point of EU productivity growth: – provides food for 10 million people worldwide, – reduces net EU imports of virtual agricultural land by about 1.2 million ha, – preserves 1.2 million ha of natural habitats, – reduces CO 2 emissions from avoided expansions of the global agricultural acreage by 220 million tons (at € 50/t CO 2 : Value to society = € 11 billion), and – preserves global biodiversity, equivalent to up to ha of tropical rainforest, – raises social welfare by € 500 million (market effect).

22 5. Conclusions Productivity growth: Intensificatiom vs. innovation, Germany, Source: Noleppa and von Witzke, 2014 Yield per ha and year (%) Tfp growth per ha and year (%) Wheat1.1 Corn Oilseed rape1.7 Sugar beets1.6 Potatoes2.42.3

23 5. Conclusion In the US: TFP growth exceeded yield growth. US yield growth with declining land use intensity. Reasons: - Precision agriculture is more widespread; - US farmers are permitted to grow GM crops.

24 5. Conclusion GM crops reduce input per hectare: – Lower energy input due to reduced tilling (low till, strip till, no till technologies), – Simplified crop protection. Without GM crops it will be impossible to feed the rapidly growing world population and at he same time to preserve the world’s natural resources and the environment.

25 6. Final comment Constraining the analysis to just the traditional measure of social welfare (market effects) seriously underestimates the value to society of productivity growth in agriculture. The environmental and other benefits to society of modern, highly productive and innovative agriculture far exceed the market effects. With GM crops the benefits to society are even larger.

26 6. Example: Social rate of return to crop breeding in Germany, ( Most conservative scenario) CO2 price €/mt Social rate of return (%)

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