The Challenges

• World population is projected to grow from 6.5 billion in 2005 to nearly 9.2 billion by 2050. Thus global food production must nearly double by 2050.

• Natural resources scarcity: expand the land basis (4.2 billion ha available for rainfed production ) or tap into yet-unused yield enhancing resources.

• Climate change will cause a decline in yields and a higher occurrence of extreme climate events.

• Rapidly rising energy prices and higher demand for energy: agriculture will become increasingly important as a supplier to the energy market.

Food Prices

  

 

• 2007/2008:- Sharp rise in food prices, thus in food production, mostly in

OECD- Increase in the number of undernourished people (963 million)• Since July 2008:- Decline in food prices: -50% for world grain prices- Is this the end of the food crises?

Financial Crisis

  

 

The current financial crisis will affect agricultural sector in many countries

negatively

- Lower demand for commodities

- Negative expectations may negatively affect demand

- Incentives for investment to ensure greater food security are suppressed

- economic activity slows, employment falls, remittances decrease

- Household income declines, not compensated by lower prices

Demand Side Supply Side

- Cutback of agricultural production

- Decrease in input prices (especially if energy prices decrease)

- The overall effect depends on the relative adjustments of input and output prices

- Restrictions on the availability of credit

The end of the crisis?

  

 

• Cereal stocks need to be replenished• Lower prices will divert more supply to fuel

generating a further decline in agricultural prices• The benefits of higher prices did not accrue to developing countries:- Developed countries increased their cereal output by 11%- The developing countries only scored an increase of 1.1%- Cereal production fell by 0.8% (excluding China, India and

Brazil)

- Dropping prices and economic uncertainty could discourage farmers from investing in means of production

- Less planting next season- Significant fall in output in 2009/10 and steeper price surge- Low prices are driven by lower demand: lower prices may be

associated with more poverty and hunger

• Another food crisis?

Central role of Agriculture

  

 

• Agriculture provides the primary source of livelihood for 36 percent of the world’s total workforce

• In sub-Saharan Africa, two-thirds of the working population make their living from agriculture

• Agriculture is key to poverty reduction: GDP growth generated in agriculture is four times more effective in benefiting the poorest than growth generated outside agriculture

• Increased farm production improves farmers’ incomes thus stimulating demand for the goods and services offered by the small-scale enterprise sector

The Investment Road Map

1. Improve agricultural productivity and enhance livelihoods and food security in poor rural communities.

2. Develop and conserve natural resources.3. Expand and improve rural infrastructure and

broaden market access.4. Strengthen capacity for knowledge generation and

dissemination.5. Ensure access to food for the most-needy through

safety nets and other direct assistance.

FAO has tabled an investment road map to 2015: a annual investment volume of US$ 30 billion in the following five areas would engender an overall annual benefit of US$ 120 billion. 

a number of animals kept, feeding, or traveling together; drove; flock: a herd of cattle; a herd of sheep; a herd of zebras.