Kenya
Kiambu man defiles pregnant cow
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Crop Crisis: Why Global Grain Demand Will Outstrip Supply
To meet global demand, grain production needs to double by 2050. It’s not going to make it. International Maize and Wheat Improvement Center Since the time of Malthus, humanity has worried whether there would be enough food to feed the growing population. Such fears were always overcome and doomsayers all proven wrong: there was always more land to grow our crops when existing croplands failed to deliver, and new ways to get more yield from old crops. Today our planet appears very finite, and the only places to expand agriculture are in our remnant natural grasslands and tropical forests. And the demand for more agricultural crops is relentless, due to not only our rising population, but more importantly, our rising prosperity. The expected 4 billion new members of the middle class who will join the rest of us by 2050 will likely demand more dairy and meat. These require an enormous amount of grains to produce. Add to these the demands biofuel places on agriculture, and we need to boost global agricultural production by 60% to 110% by 2050. To put this challenge in a time perspective, that kind of increase took our ancestors 10,000 years to achieve. So how are we doing? My research team recently published an analysis in PLOS ONE of the local to global scale performance of maize, rice, wheat and soybeans. These are the top four global crops, collectively responsible for nearly two-thirds of all agricultural calorie production. We found that current rates of productivity improvements are nowhere near the rates of productivity gains (2.4% per year) required for growing demand. Instead of the required doubling of crop production by 2050, at this rate the yield increase will be only 38% to 67%, with the problem more acute for rice and wheat. Australia, is the ninth largest global producer of wheat and a major exporter. Its wheat yields have declined at 0.7% per year. In fact, we observed negative yield trends in around 80% of Australia’s wheat cropland areas. Productivity was rising in only a few of the important wheat cropland areas: the South Eastern statistical division in New South Wales; Darling Downs in Queensland; Goulburn, Western district and Central Highlands in Victoria; south eastern region in Western Australia; and outer Adelaide, Murray Lands, and Eyre in South Australia. Even in these regions the rates of wheat productivity improvements were below the 2.4% rate required to double wheat production, except for south eastern region of New South Wales, where we estimated the rate to be 3.4% per year. Does this mean Australians won’t be able to feed themselves, much less feed others, with wheat? It seems very unlikely at only 0.7% per yearly declines. This decline however may worsen as Australian agriculture matures. Australian wheat yields are limited by lack of nutrients and of water, with the latter being a bigger factor as we reported in a paper published in Nature last year. In some areas of Australia wheat productivity was already at the maximum possible value. Looking beyond Australia, we found many countries where the gains in crop productivity are less than those required to keep pace with their population growth. In several countries – such as Guatemala and Kenya – productivity of maize, a significant source of daily dietary energy, is declining and population is growing. In Indonesia – the third largest rice-producing nation on Earth where rice provides about 49% of daily dietary energy – productivity gain is too low to keep pace with population growth. In India, China, Philippines and Nepal, productivity improvement rates in rice are just about enough to maintain per capita production at current levels. Although supply will not meet demand by 2050, all is not lost. We can close the demand–supply gap in one of many ways. We can invest more to boost crop productivity in the faltering regions that we identified. We can bring more of our remaining natural lands under production (but wheat alone would require 95 million additional hectares, more than the total area of New South Wales). We can reduce food waste, which already accounts for nearly half of global crop production (unfortunately, waste sometimes is difficult and expensive to reduce, as in developing nations where it occurs between farm and table due to lack of storage and transportation). Perhaps most controversially, we can change to more plant-based diets. Nobody really knows what members of the new middle class will choose to eat. History shows time and again that as people join the middle class, they look for more dairy and meat. But if they go against previous trends and decide to keep consumption of animal products low – if those of us already in the middle class reduce our meat consumption – we may all have enough to eat after all. 20 June 2013 Continue reading
GCC Investors Eye African Farmland
22 April 2013, 9:26 GMT | By Paul Melly Africa’s fertile soil can provide food security and investment opportunities In the capital-rich countries of the GCC, the chronic shortage of rainfall limits the prospects for food production. On the other hand, the African continent has vast agricultural potential but suffers from a shortage of investment. The complementarity of interests between the Gulf and its economic partners south of the Sahara seems clear, and has been recognised since the late 1990s as governments on both sides explore the scope for deals that could make African land available to Arab investors. However, translating this vision into a mutually beneficial reality has proved a complex challenge. For GCC states, the key concern has been to ensure security of food supply. Populations in the GCC states are growing fast and traditional local oasis agriculture cannot satisfy the consumption demands of booming societies in the modern era. GCC constraints To mitigate the problem, Gulf governments have encouraged domestic irrigated production. But the potential for this practice is limited by environmental and financial constraints. Natural aquifers in the region are becoming depleted, while using desalinated water is hugely expensive. The method might be viable for some high-value horticultural crops, but makes little sense for cereals. Saudi Arabia eventually concluded that the large-scale irrigated production of wheat was not a sensible use of limited and highly subsidised water supplies, and the practice is now being phased out. High oil prices have enabled GCC states to maintain security of food supply despite rising world prices. But most have felt uncomfortable relying so heavily on the open world market. Over the past 15 years they have explored the scope to invest in land in other regions that have more reliable agricultural potential. But it has not always been possible to buy or lease land in countries that are major global grain exporters; big rice producers such as Thailand, for example, impose tight restrictions. This has led GCC governments to look to Africa, where fertile land and rainfall are in more ample supply than on the Arabian peninsula. Since the 1990s, there has been a steady trickle of announcements about major investments in the continent’s land, often from Saudi Arabia. In 2009, the Jenat consortium of Saudi agricultural firms announced plans for a $40m investment in food production in Sudan and Ethiopia, while another Saudi group, Hadco, is reported to have acquired 25,000 hectares of Sudanese cropland. Last year, Sheikh Mohammed al-Amoudi’s Saudi Star group launched a programme to develop 500,000 hectares of land in Ethiopia, and a small area of this is already in production. Governments have also been important actors in this process. Qatar agreed a deal to take over large tracts of the Tana River delta in Kenya, in return for building a new port at Lamu. The Abu Dhabi Fund for Development is said to be funding a 28,000-hectare project in Sudan to grow alfalfa, maize, beans and potatoes for export to the UAE. Riyadh leads Once again it is Saudi Arabia that has led the field, with government support for agricultural partnerships with Africa, notably through the state’s King Abdullah Initiative for Saudi Agricultural Investment Abroad (KAISAIA). In 2012, the kingdom’s Agriculture Minister, Fahd Balghunaim, announced that the task of agricultural investment abroad would be transferred to a KAISAIA offshoot, the Saudi Company for Agricultural Investment and Animal Production (SCAIAP). The firm has capital of SR3bn ($800m), although it is not thought to have disbursed funds yet. Many of the announced GCC agricultural investments have never been implemented, or even started, on the ground in Africa, says Eckhart Woertz, author of Oil for Food: The Global Food Crisis and the Middle East, a new book examining these issues. “There is a huge discrepancy between amounts projected and amounts actually implemented,” he says. Moreover, he points out that concrete schemes have been confined to a relatively small number of countries. “Sudan is certainly top of the list, followed by Ethiopia, Tanzania, West Africa, Senegal and Mali,” he says. “Sudan is the most popular country for announcements, but most of the projects have either not started or, if they have started, are at a very early stage of implementation.” There are several reasons for the gap between ambition and reality. Other than livestock from the Horn of Africa, GCC countries have little track record of importing food from the continent. The GCC’s plans to invest in sub-Saharan agriculture as a source of food crops for home markets have been hindered by the fact that many of the targeted African countries have a tropical climate that is not well suited to the cultivation of some of the products most heavily consumed in the Arab world, such as wheat and barley. These temperate-climate cereals are mainly imported from Canada, the US, Australia, Russia, Ukraine and EU states such as France. Rice is widely grown in Africa and is a crop that is also heavily consumed in the GCC. At present, most Gulf imports of basmati rice come from Pakistan and India, although Arab investors have now developed some pilot projects in Senegal and Mali for export to the Gulf. Local challenges A further major hurdle is that local social and political conditions are not always welcoming. Land-lease agreements between Gulf investors or governments and central governments in sub-Saharan Africa are often seen as attempted land grabs by wealthy outsiders. These deals can be hugely controversial in countries that are poor and where much of the indigenous local population is undernourished. They can spark protests among local populations, local and international media, and non-governmental organisations. Woertz cites the example of Qatar’s agreement with Kenya to take over land in the Tana River valley. “The locals started complaining; there was a lot of resistance by land groups,” he says. “Originally, the scheme was tied to the construction of a port at Lamu, but now the Chinese have got the contract to build the port.” Land deals with Gulf investors – and other outsiders, including the Koreans – have provoked fears that existing local users such as pastoralists or smallholders will be pushed out to make way for big, foreign commercial investors. Still, Woertz says Arab investors have become more sensitive to these issues. “There is a certain readiness to take these things into consideration,” he says. “So, perhaps you may see other types of projects taking place: to share equity or have outgrower schemes.” Gulf governments and investors have held talks with the UN’s Food & Agriculture Organisation (FAO), which could act as an honest broker in identifying opportunities for agricultural partnerships between the GCC and Africa that would respect the interests of communities on both sides. But the realisation of such an approach presents complex challenges. Woertz points out that Saudi Arabia’s strategic goal remains the production of food for its domestic consumption. Indeed, those Saudi agricultural firms that have been looking at investment in Africa expect to enjoy substantial subsidies from the kingdom’s authorities. This is because their role would be to produce food to replace the output of the domestic cereals programme that is now being wound up for environmental reasons. The cereals scheme was massively subsidised, says Woertz. “The direct costs of subsidies for the Saudi wheat program were $85bn between 1984 and 2000. This was equivalent to 18 per cent of Saudi Arabia’s $485bn in oil revenues during that period.” Rethinking strategy Another option is to treat African agriculture as essentially an investment; a business proposition focused on the world market rather than a means of satisfying Gulf demand for food imports. This is a strategy being pursued by Hassad Foods, an arm of Qatar Holding, which is part of the emirate’s sovereign wealth fund, Qatar Investment Authority. Hassad’s publicity material says: “While all investments are there to generate profits, they also exist to fulfil certain needs to support the food security programme when required.” But such an approach can pose tough challenges for GCC investors, who mostly lack experience in producing or marketing tropical cash crops and risk finding themselves in direct competition with long-established sub-Saharan and Western players. They will often need to recruit foreign sector specialists to actually establish and run the projects for them. Even so, some have taken on the challenge. In 2011, Saudi-based Menafea Holdings revealed plans to invest $125m in a new pineapple farm and processing plant in Zambia. The GCC is short on food, but rich in cash. African nations are fertile and need money. As ties between the Gulf and Africa strengthen, investment in agriculture is likely to grow. Continue reading
