Feeding a hungry planet will require even more private investment
If you take a map of agricultural production worldwide and lay it over another map of where the population is going to live in 2050, they simply don’t align. Agriculture is failing the developing countries of Africa and Asia, and, as a result, the number of hungry people in the world is more than 1 billion.
"We have to double food output. That is a compelling charge, especially when we think the world doesn’t have much more arable land," said Samuel Allen, chairman and CEO of Deere & Co., who spoke during a panel discussion at the Norman E. Borlaug International Symposium, held in conjunction with the World Food Prize this past month in Des Moines, Iowa.
Deere is one of four companies that in 2009 helped establish the Global Harvest Initiative (GHI) to measure agricultural productivity and progress globally. The other founding members of GHI are Archer Daniels Midland, DuPont and Monsanto Company.
GHI has released its second annual Global Agricultural Productivity (GAP) Report. While the report showed increased worldwide ag output, it also highlighted the immense challenges and deficiencies in sub-Saharan Africa, where the vast majority of global population growth will occur.
The region is projected to grow its population by 49%—an increase of 1 billion people—by 2050.
The U.S. alone cannot meet the global need to reduce hunger and promote food security. Foreign assistance alone will not end hunger or eliminate undernutrition. We must draw on significant investments from other donors, the private sector, partner countries and citizens themselves, said William Lesher, chairman of the board of GHI.
"We can be cautiously optimistic about the new evidence of faster productivity growth, but the long-term solutions to hunger and food security remain daunting," Lesher said. "We must continue to pursue key policies with proven results in improving global agricultural productivity, such as investing in agricultural research, removing trade barriers and enhancing the role of the private sector."
A Big Gap. The GAP Index measures the difference between the current rate of agricultural productivity growth and the pace required to meet future needs. A twofold increase in agricultural output by 2050 will require total factor productivity to grow at an annual global rate of 1.75%, for example.
In 2010, GHI reported that the global productivity growth rate stood at 1.4% annually and that a 25% increase in the rate of growth was needed to close the gap. This year’s GAP Index shows that the growth rate is now increasing at a 1.74% annual rate.
Yet the pace of agricultural development in parts of the world where much of the population increase occurs is not fast enough, said Neil Conklin, president of the Farm Foundation, NFP. Currently, the productivity growth for sub-Saharan Africa averages approximately 0.85%, in sharp contrast to growth rates above 2% in Brazil and China.
Think of it this way: If sub-Saharan Africa had to meet its food needs independently, a twofold increase in productivity growth would be needed. While some of the region’s demand for food might be met by input intensification and reduction in postharvest loss, the challenge remains daunting.
Ghana’s Example. The GAP Report includes a case study of Ghana, a country that reflects the conditions in many African nations where agricultural production is central to the lives of its citizens. (The World Bank reports that up to 80% of Africa’s poor live in rural areas and nearly all work in agriculture.) Agriculture accounts for roughly one-third of Ghana’s gross domestic product.
Like other countries, Ghana has benefited from the adoption of improved crop technologies, mainly from the international agricultural research system. However, the nation is still struggling to realize all of the benefits of those practices. A 2010 survey found that approximately 80% of the farmers in Ghana’s Eastern Region have adopted improved maize, but less than half of them received commercial fertilizer.
The country’s yield gaps remain substantial. An average maize yield of 25 bu. per acre is reported to be 40% short of the achievable yield. National officials suggest the country lacks the resources to increase R&D spending or fertilizer use—key determinants of productivity growth.
Former Ghanaian president John Kufuor pushed for public- and private-sector initiatives to end
hunger in his country during his two-term presidency and implemented major economic and educational policies that increased the quality and quantity of food to Ghanaians. As a result, Kufuor was the recipient of the 2011 World Food Prize, along with former Brazilian president
Luiz Inácio Lula da Silva.
Under Kufuor’s leadership, Ghana became the first sub-Saharan African country to cut in half the proportion of its people who suffer from hunger and the proportion of people living on less than a dollar per day.
Ghana continues to face many of the same constraints as the rest of the subcontinent, including poor food infrastructure. More public and private investment—including investment in storage, processing and distribution—is necessary to close the system’s gaps.
"About 40% of our crops go to waste because farmers don’t have a way to store them and get them to market," said Ayim Poakwah of the Ghana Food Aid Network. "Families eat some of the food they grow and sell some of it, but they leave the rest in the fields unharvested. There’s nothing they can do with it."
Doubling agricultural output in the next 40 years will only increase the need for storage, processing and distribution capacity, and require a significant amount of capital investment to
create the appropriate infrastructure. There is a great need for investment in infrastructure, especially roads, which serve as a vital part of improved food efficiency in developing countries, said Kenneth Quinn, president of the World Food Prize Foundation.
Without sufficiently maintained roads, producers become isolated, which leads to high agricultural costs and low returns. As Quinn noted: "Poverty begins where the roads end."
A Call for Investment. GHI estimates the annual investment necessary to support agricultural development in all developing countries to be $90 billion. This gap will be closed only if the environment is suitable for both public and private investment, explained Patricia Woertz, chairman of Archer Daniels Midland.
The impediments to private-sector investment are less now than they were, noted Hugh Grant, president and CEO of Monsanto. "The trendline is improving, just too slowly," he said. "The impediments that still exist today, as I look at investment, are long-term: ag policy and regulation architecture. Particularly in new areas of biotech, determining what those regulations are up front makes the investment model much easier."
The good news is that GHI’s GAP Index shows evidence of an increased rate of agricultural productivity growth. The critical challenge will be maintaining this rate for each of the next 40 years.