Global agricultural report indicates recent increase in total productivity
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WASHINGTON, Oct. 17, 2012- According to the Global Agricultural Productivity Report® (GAP Report®) released today, global agricultural total factor productivity (TFP) is rising at an average annual rate of 1.84%. In 2010, the inaugural GAP Report® calculated that TFP must grow by an average rate of at least 1.75% annually to double agricultural output by 2050.
The Global Harvest Initiative, a private sector policy voice for agricultural productivity growth, released its 2012 GAP Report® on Wednesday at the World Food Prize in Des Moines.
“If maintained, this rate of growth would be sufficient to more than double agricultural supply by 2050 at current resource levels,” stated the report. “However, maintaining this rate of productivity growth will require the right set of policies and investments.”
GHI described total factor productivity (TFP) as the ratio of agricultural outputs (gross crop and livestock output) per inputs (land, labor, livestock, fertilizer and machinery) used.
However, “the extended 2012 drought in the U.S., the world's largest food-exporting nation, will have a negative impact on global agricultural output and may reduce future TFP growth estimates,” added the report.
The GAP report cited the U.N. Food and Agriculture Organization's (FAO) yield gap, which identifies areas with opportunities to improve regional productivity. Cereals, roots and tubers, pulses, sugar crops, oil crops, and vegetable yields in Sub- Saharan Africa only reach about 25 percent of their potential, while yields in Central America, Central Asia, Eastern Europe, and the Russian Federation reach approximately 40 percent of their potential.
Rising food demand and higher incomes will have a significant impact on food production in the coming years. For developed countries, the increase in total food demand from 2000-2030 is estimated to be only 12 percent, while transition and developing countries will experience a projected increase of almost 38 percent and 115 percent, the report explained.
For example, most of the projected growth in Asia's total food demand will result from rising incomes. By 2030, 75 percent of China's population could enter the middle-income class, compared to only 12 percent today, and India's middle-income population could grow to account for 70 percent. In Indonesia, more than 80 percent of the population could be middle-income by 2050, according to the report.
Following its summary of global production and food demand, the GHI report outlined four recommendations to sustainably increase global productivity.
The first recommendation is to increase public and private sector investment in agriculture. The importance of the private sector as a source of agricultural investment to meet future food demand is rising, according to the report.
“Developing country governments will increasingly need to leverage and coordinate partnerships with private sector investors and bilateral and multilateral development agencies to continue making advances in agricultural productivity,” the report stated. “To increase incomes and reduce hunger, these investments must also directly benefit smallholder farmers.”
GHI noted that investment is increasing. For low- and middle-income countries, international investment flows increased from $475 billion in 2008 to $703 billion in 2010. The largest category increase came from the private sector, nearly doubling since 2008.
The second recommendation is to improve agricultural research funding, structure and collaboration. “More investments in public agricultural research and development are needed to sustain productivity growth,” GHI noted. “As the global population and dietary diversity increase, farmers and pastoralists will be called upon to produce more food with little or no increase in arable land and water.”
As a percentage of agricultural gross domestic product (GDP), agricultural R&D spending in developing countries remains much lower than in high income countries, the report stated. However, even in the United States, failure to maintain on-farm productivity is a sign of underinvestment in agricultural R&D, the report emphasized.
According to GHI data, the United States has maintained agricultural TFP growth at an average rate of 1.5 percent per year for the last 50 years, but growth in spending on public R&D stagnated in the 1980s and then turned negative from 1990 to 2009.
“If this trend continues, agricultural productivity growth is likely to also decline,” GHI stated.
In China, the trend is the opposite: the average annual growth rate in agricultural R&D was around 4-5% from 1986 to 2000, and then accelerated between 2001 and 2007 to about 10% per year. This correlates to a strong TFP of 2.8% per year, well above the global average, according to the report.
“Agricultural R&D accounted for 45 percent of China's agricultural growth from 1995 to 2000 and has played a significant role in improving food security and alleviating poverty in China,” the report stated.
The third recommendation is to embrace science- and information-based technologies. For example, global output of meat, milk, and eggs per farm animal grew by an average annual rate of 1.24% from 1961 to 2009, the report explained.
“Increases in output per head of livestock held on farms reflect a number of technological advances in production efficiency, including improved animal breeds, better healthcare and nutrition, and improved animal housing and management,” according to GHI.
The report noted that greater feed conversion efficiency contributed to productivity. For example, the average amount of feed required to produce one kilogram of meat or liter of milk has fallen dramatically, especially in poultry, swine, and dairy production.
“These are important advances because animal protein consumption is expected to double across the globe over the next 40 years,” the report stated. “Some three billion people will diversify their diets with the addition of protein.”
GHI emphasized that adopting technologies to increase egg production is vital, because the global productivity of eggs has been declining by one egg per hen per year.
“If continued, this trend will require three times more hens, 17.7 billion, to meet the estimated egg demand in 2050,” the report stated.
Hens need to produce 1.5 more eggs per year to restore overall productivity, which would require 10.4 billion additional hens to meet egg demand in 2050 - or approximately 7 billion fewer birds.
The report also highlighted biotechnology as an important factor increasing incomes, productivity and environmental benefits. In 2010, the direct global farm income benefit from biotech crops was $14 billion: $7.7 billion for developing countries and $6.3 billion for developed countries, according to GHI's data.
“It has helped reduce pesticide use by 443 million kilograms of active ingredient between 1996 and 2010,” the report stated. “Biotechnology is improving productivity, increasing the income of farmers, and reducing harmful impacts to the environment.”
The report's fourth recommendation is to remove barriers to global and regional trade. Agricultural trade totals $800 billion today, and is expected to exceed $1 trillion by 2020, GHI explained.
GHI emphasized the importance of the proposed Trans Pacific Partnership (TPP), an ongoing trade negotiation that began between 10 countries, which now account for 27 percent of world GDP and more than half of the world's population.
Current tariff levels in all TPP members but two have rates higher than 18%, with Malaysia's the highest at 67.6%, the report explained.
“Current expectations are that most tariffs on agricultural products will be reduced sharply and possibly phased out over 10 years,” according to the report. “The TPP agreement has strong potential to open up new avenues for growth and trade.”
There are currently 231 regional trade agreements in force, the report noted, the majority of which were ratified after 2003.
“Further trade liberalization through multi-lateral, regional, or bilateral trade agreements can be a major contributor to economic growth by expanding market access, improving efficiency, and increasing investment in the food and agriculture sectors,” the GAP report stated.
To view the entire report, click here.
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