A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Pierre Pagesse.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
Focus on issues

Agriculture in high-growth markets
Securing global food supplies

The Economist Intelligence Unit
Sponsored by Passion Céréales

According to the FAO, in order to feed the world in 2050, agriculture will have to increase its production by 70%. This aim cannot be achieved without increasing the areas to be cultivated, but also and above all the yields. While in recent years these have reached their limits in Europe and North America, emerging markets, such as Brazil and, to a lesser extent, India, China or Russia are making rapid progress. Thus, yields for cereals increased by over 40% in Brazil between 2005 and 2010. As noted in a report1 by the Economist Intelligence Unit2 with the support of Passion Céréales3, this success is the direct result of a political will to support their agriculture through the establishment of regulatory mechanisms and market support but also through active measures to promote innovation. All world agricultures will be necessary to achieve the ambitious goal of increasing production. It is therefore essential that current agricultural policies in different countries of the world, including Europe, do not lose sight of these two priorities in the context of ongoing reform.

momagri Editorial Board

The world is at the start of a new agricultural era, in which boosting yields and reducing harvest losses will be essential to feeding the world’s growing populations. Emerging markets—and in particular the most advanced developing economies—are at the forefront of this movement. In recent years Brazil, Russia, India and China, among others, have had a major influence on changing global food production and consumption patterns. They have also been some of the world’s most successful food producers over the last two decades. As their influence on global food markets rises, it is worth investigating these countries’ success factors in the field of agricultural production. […]

Addressing the challenge of rising food demand

Food demand is on the rise. Drivers of accelerating consumption include growth in the world population, which the UN expects will reach 9bn by 2050, from 7bn today. By some estimates, 90% of this increase in population will take place in developing countries. Economic expansion in populous high-growth countries is leading to rising per-head calorie consumption. […]

Yet, if the world’s swelling population is to count on continued access to food at reasonable prices, policymakers across the globe must address fundamental issues relating to agricultural production. Ramesh Chand, the director of the National Centre for Agricultural Economics and Policy Research in India, calculates that, to secure global food supplies, agricultural production must expand as much as 3% annually in the years to 2030, in contrast to annual growth of just over 2% between 1990 and 2007. More than ever before, rising food output will depend on increasing productivity, rather than on expanding the area under cultivation.

Against this background, there is some cause for concern that the growth rate of agricultural productivity in industrialised nations is falling. “We are seeing a declining trend of growth intotal factor productivity in agriculture and infood production, in the US and in Europe,”says Shenggen Fan, the director general of the International Food Policy Research Institute in the US. “The developed markets, like the US and Europe, have really under-invested in their agriculture,” Dr Fan adds. […].

As policymakers address the challenge of rising food demand, they face a number of obstacles. Chief among these, perhaps, is the physical limitation of resources. The availability of agricultural land is on a downward trend, in part through rising levels of urbanisation, industrialisation and infrastructure, as well as degradation through salinisation or waterlogging. […] La A further obstacle that policymakers face is the volatility of food prices. […]Price volatility makes it more difficult for households to plan their consumption, and it increases risks for agricultural producers too.

In response to the challenge of securing global food supplies, experts agree that new approaches are needed. Professor Huang, for one, believes that “challenges on the demand side and on the market side are really calling for a new agricultural revolution.” The focus of these new approaches looks certain to be in the highgrowth markets, in particular the populous BRIC countries—Brazil, Russia, India, and China—in which the largest share of growth in demand for food will take place. Nevertheless, increases in agricultural productivity in developed regions, including North America and western Europe, are also vital to secure global food supplies. […]

Boosting agricultural productivity in high-growth markets

To secure food supplies, high-growth countries have stepped up public investment in agriculture. In China, for instance, agricultural investment rose to more than 10% of government expenditure in 2011 , from 8% in 2005, according to Professor Huang. Experts remark that governments in high-growth markets have tended to increase their commitment to productive investments such as agricultural research, technology and rural infrastructure—rather than committing cash to direct farm subsidy initiatives. Private investments have grown, too. In India, for example, Professor Chand points out that private investment in agriculture by farmers has increased from 12% of agricultural GDP to 17% of agricultural GDP in the past six years alone.

As part of these investments, high-growth nations are investing heavily in agricultural research. In China, for example, average annual growth in public agricultural research and development expenditure increased in real terms to more than 20% in 2010-11, from 16% in 2000-09, according to Professor Huang. Furthermore, some governments are investing in rural structures to ensure that innovations reach farmers. […]

In some cases, policy frameworks include financial support measures. In Brazil, for example, banks are required to lend one-quarter of deposits to the agricultural sector at rates determined by the government. Furthermore, Brazil is beginning a programme of weatherrelated rural insurance, for instance, against drought or hail, according to Mendes Ribeiro Filho, the country’s minister of agriculture, livestock and food supply. The Brazilian government will subsidise part of the insurance premium, he says. In Russia, meanwhile, the government offers farmers interest rate subsidies for loans to expand working capital or to invest in plant and equipment. It has also established a fund to stabilise prices of selected commodities.

Investments such as these have led to productivity gains through developments in agricultural practice. […]Behind successful practices such as these lie coherent policy frameworks and agricultural strategies put in place by national governments. Far from being isolated, one-off initiatives, these are part of wide-ranging, long-term agricultural programmes. Says Dr Lopes, for example: “What we had in Brazil was really a mix of solutions, technologies, public policy, infrastructure—lots of things combined. It was a co-ordinated action to bring a lot of things together in order to bring in the changes that were needed.”

1 http://www.managementthinking.eiu.com/agriculture-high-growth-markets.html
2 http://www.eiu.com/
3 http://www.passioncereales.fr/
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Paris, 16 April 2014