Environmental and Natural Resource Economics 2nd ed. Jonathan M. Harris Updates for 2012 Chapter 11: Agriculture, Food, and Environment Copyright © 2012 Jonathan M. Harris

The steadily increasing trend of world cereal production seems to tell a story of increasing abundance, but the per capita figures indicate that per capita cereal production peaked in the mid-1980s at around 375 kg/cap, and is now a bit lower, around 350 kg/cap. Source: Food and Agriculture Organization of the United Nations (FAO), 2011 at http://faostat.fao.org/site/567/DesktopDefault.aspx?PageID=567#ancor Population data from World Bank at http://data.worldbank.org/indicator/SP.POP.TOTL

Figure 11.2 (a): Total World Arable & Permanent Cropland (million Ha), 1961-2008 Cropland expansion was an important contributor to increasing world food output in the period 1960-1990, but total cropland area has remained about level since 1990, with additions to cropland being approximately balanced by losses. Source: FAO, 2011 at http://faostat.fao.org/site/377/default.aspx#ancor; Population from World Bank 2011 at http://data.worldbank.org/indicator/SP.POP.TOTL

As a result of increasing population and decreasing opportunities for cropland expansion, arable land per person has declined steadily, and continues to decline. This places the entire burden for feeding an expanding population on increasing yields. Source: FAO, 2011 at http://faostat.fao.org/site/377/default.aspx#ancor ; Population from World Bank at http://data.worldbank.org/indicator/SP.POP.TOTL

Figure 11.3: Elastic and Inelastic Food Supply Food Price Quantity of Food P1 P2 Q1 Q2 Q3 Supply Demand (D1) D2 D3 Economists look to food prices as a key indicator of supply/demand balance. If supply is elastic a demand increase (D1-D2) will not result in increasing prices. If there are significant supply constraints, a similar demand increase (D2-D3) will lead to rising prices. The absence of rising prices over most of the period 1960-2000 led many economists to conclude that there was no problem with global food shortage.

Recently, the food price picture has altered Recently, the food price picture has altered. The long-term price trend of stable or declining prices (generally declining in real terms after correcting for inflation) reversed in 2006-8 with a sharp price spike, causing significant hardship to poorer global consumers. Source: FAO Price STAT at : http://faostat.fao.org/site/570/default.aspx#ancor

The global food price crisis has not gone away, despite a partial price fall in 2009-2010. Prices in 2011 have hit record highs. This may indicate that, rather than being a temporary “spike”, similar to those seen in the 1970s, the current higher prices represent a new and tighter world food supply/demand balance. Growing demand for feed cereals based on more meat consumption in China and other rapidly developing countries is helping to drive this trend. Demand for food crops for biofuels such as ethanol is another major contributor to rising prices. Source: FAO, 2011 http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/

Cereal production per capita has increased only slowly in areas of the developing world such as South America, and has actually declined over five decades in sub-Saharan Africa. Source: FAO, 2011 at http://faostat.fao.org/site/567/default.aspx#ancor , US Census 2011 at http://www.census.gov/population/international/data/idb/informationGateway.php

Figure 11.6: Land Quality, Crop Value, and Land Use Broccoli and strawberries crop value with increased export Demand (E2) Value (E1) Crop Value Index Land A B Corn and beans crop value (D1) High Quality Low Quality An additional problem for the world’s poor is that with expansion of production for export, subsistence crops are forced onto poorer-quality land. (The graph above is a crop value index, not a demand curve, showing how the value of crop output is related to land quality). As export crops take more land, subsistence farmers are pushed to land of quality lower than point “B”, which also tends to increase environmental damage from slash-and-burn, cultivation on erosive hillsides, and degradation of poorer-quality soils.

Table 11-1: Population and Cereal Consumption Projections for 2025 REGION 1. Population 2008 (millions) 2. Cereal Production 2007-2009 Average (MMT) 3. Cereal Yields 2007-2009 Average (Kg/Ha)   4. Projected Population 2025 5. Projected Cereal Requirements in 2025 (MMT) 6. Projected Yield Requirements for Self-Sufficiency in 2025 (Kg/Ha) World 6,715 2,457 3,500 7,989 2,931 3,967 Developed Nations 1,225 963 4,358 1,272 783 3,421 Developing Nations 5,489 1,506 3,119 6,717 2,149 4,214 Developing Nations (Excluding China) 4,172 1,033 2,608 5,323 1,570 3,703 Africa 980 149 1,446 1,431 315 2,942 Latin America and Caribbean 576 178 3,513 682 222 4,262 Asia 4,051 1,178 3,583 4,715 1,626 5,052 Asia (excluding China) 2,734 705 2,915 3,321 1,032 4,376 China 1,317 473 5,439 1,394 570 6,629 U.S. and Canada 337 464 6,089 388 374 4,407 Europe (excluding Russia) 595 360 4,490 601 328 4,002 Russia 140 94 2,220 128 57 1,157 Oceania 34 32 1,604 41 16 1,258 Comparing columns 3 and 6 in this chart of population and yield projections shows that dramatic yield increases are needed in many areas of the world to keep up with population growth and a modest increase in per capita consumption. Africa would need to more than double yields by 2025 for grain self-sufficiency. China needs a substantial increase in yields, problematical since they have already reached yield levels comparable to the highest in the world, at high environmental cost. And Asia excluding China needs a 50% increase in yields. Not every area needs complete self-sufficiency (U.S./Canada projected yield requirements leave room for exports) , but increased import demand from China and elsewhere will intensify pressure on food prices. Population Source: http://www.census.gov/population/international/data/idb/informationGateway.php Production source: http://faostat.fao.org/site/567/default.aspx#ancor Projections based on Harris, “World Agricultural Futures” (Ecological Economics May 1996). Projections assume an increase in 0.5% in per capita consumption in the developing world.

Source: FAO, 2004. Graphing yields against fertilizer use shows the long-term trend towards more intensive agriculture in all areas of the world. Note the contrast between Sub-Saharan Africa, where fertilizer use and yields have barely increased over four decades, and China, where fertilizer use has more than quadrupled and yields have more than doubled. Fertilizer use serves as a proxy for the Green Revolution package of increased fertilizer, irrigation, mechanization, and high-yield seeds, which has increased output while also bringing environmental problems of fertilizer runoff, water overdraft, and erosion. Source: FAO, 2004

Figure 11.8: United States Conventional Pesticide Usage, 1964-2001 U.S. pesticide use rose sharply through the mid 1980-s, then leveled off. World pesticide use is still rising, thoguh comprehensive figures for global use are not easily available. Source: EPA 2000/2001 Pesticide Market Estimates: Historical Data

Figure 11.9: Increase in Resistant Pest Species in the 20th Century Along with increased pesticide and herbicide use has come a surge in pesticide-resistant species. There are concerns that use of genetically modified plants could accelerate this trend, since plants genetically altered to be herbicide-resistant or to generate their own pesticides create continual environmental pressure for the development of resistant weeds and pests.