Highlights from a new report indicate that the world is about five years into a chronic global food crisis that is not expected to abate for many decades. Despite improvements in agricultural technologies, the global industry faces too many uphill battles to overcome significantly as world population continues to increase, according to the report, “Welcome to Dystopia! Entering a long-term and politically dangerous food crisis,” by Jeremy Grantham, GMO, a global investment management firm.
The quarterly report points out the biggest challenges the agriculture industry faces. The report points out problems from water scarcity, little increase in yields from the increased use of fertilizer, rapidly rising food and resource prices and bad farming practices.
Here are the top highlights directly from the report.
1. Last year we reported the data that showed that we are 10 years into a paradigm shift or phase change from falling resource prices into quite rapidly rising real prices.
2. It now appears that we are also about five years into a chronic global food crisis that is unlikely to fade for many decades, at least until the global population has considerably declined from its likely peak of over nine billion in 2050.
3. The general assumption is that we need to increase food production by 60% to 100% by 2050 to feed at least a modest sufficiency of calories to all 9 billion+ people plus to deliver much more meat to the rapidly increasing middle classes of the developing world.
4. It is also widely assumed that at least the lower end of this target will be achieved. I believe that this is substantially optimistic. At very best, if we reach that level we will not be able to hold it. Much more likely, we will not come close because there are too many factors that will make growth in food output increasingly difficult where it used to be easy:
• Grain productivity has fallen decade by decade since 1970 from 3.5% to 1.5%. Quite probably, the most efficient grain producers are approaching a “glass ceiling” where further increases in productivity per acre approach zero at the grain species’ limit (just as race horses do not run materially faster now than in the 1920s). Remarkably, investment in agricultural research has steadily fallen globally, as a percent of GDP.
• Water problems will increase to a point where gains from increased irrigation will be offset by the loss of underground water and the salination of the soil.
• Persistent bad farming practices perpetuate land degradation, which will continue to undermine our long-term sustainable productive capacity.