Helping Feed the World’s Fast-Growing Population

IMF Blog, January 31, 2017

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Global farm subsidies amount to over $560 billion a year—equivalent to nearly four times the aid given to developing countries by richer ones.
One third of global food production goes to waste.
Food-calorie production will have to expand by 70 percent by 2050 to keep up with a global population that’s forecast to grow to 9.7 billion from last year’s 7.3 billion.
Putting all of the world’s unused land into service, assuming everything else remains unchanged, would only suffice to feed 9 billion people.
Food insecurity remains widespread in developing countries and can lead to violence and conflicts that can spill over borders.

There is substantial scope to increase output on existing agricultural land; in sub-Saharan Africa, yields are currently 50 percent below potential.
Barriers to cross-border investment hinder financing for adoption of productivity-enhancing technologies. Key barriers include inadequate infrastructure, risks of expropriation, and questions of land tenure or opaque property rights.
A surge in cross-border land deals in developing countries following the food crisis of 2007‒08 has since abated, raising questions about the sustainability of such investments.
Despite demand shifts from West to East, advanced economies still account for the lion’s share of exports.

Major emerging-market nations have increased subsidies rapidly, even as rich nations cut theirs drastically.
Tariffs on farm products remain a major point of contention in global trade talks; food makes up just 8 percent of the value of global commerce but frequently stalls negotiations (for example, disagreements over agriculture torpedoed the Doha Round of global trade talks in 2008).
Since 1990, 27 nations have switched from being net exporters of food to being net importers, including Honduras, the Philippines, Zimbabwe, and Vietnam.
Policy responses can exacerbate price spikes: in 2008, rapidly rising prices prompted exporters to impose restrictions on overseas shipments while importers lowered barriers—together these actions worsened the food-price spike.
Especially distorted markets include those for soybeans, sugar, rice, wheat, and beef.

Remove market distortions—dismantle direct and indirect barriers to trade to help low-income nations develop their agricultural sectors.
Low-income countries should raise productivity by removing obstacles to investment to attract foreign capital.
Reduce food-price volatility through:
- ensuring higher agricultural productivity,
- improved supply chains,
- regional coordination to maintain and manage grain reserves.
Recognize that policies aimed at stabilizing domestic prices (export restrictions, unilateral import liberalization) can worsen international price volatility; coordinated and productivity-focused measures are more effective.

Climate change can reduce crop yields and livestock productivity through changes in average temperatures, precipitation patterns, and extreme weather events; in some regions moderate temperature increases could raise yields.
Less-developed countries closer to the equator are the most vulnerable.
Ethiopia’s two main rainy seasons supply more than 80 percent of its agricultural yields and recent droughts produced some of the worst conditions in decades.
Extreme weather events are expected to worsen and increase in frequency.
“Climate-smart’’ agriculture can ease impacts by offering smallholders opportunities to produce more nutritious crops in a sustainable and efficient way, but addressing climate risks increases the urgency of removing trade and investment barriers that restrain productivity gains.

Source: Rabah Arezki, “Helping Feed the World’s Fast-Growing Population,” January 31, 2017.

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