Editorial By John Lovett
GroundCover™ Issue: 15
Canberra recently hosted an informed exercise in crystal-ball gazing called A 2020 vision for Food, Agriculture and the Environment organised by the Crawford Fund for International Agricultural Research. The aim was to offer some level of prediction and insight into the state of world food supplies and particularly the world cereal market by 2020.
Keynote speaker Mark Rosegrant of the International Food Policy Research Institute (IFPRI) made four points that are worth considering: we are entering a period of greater instability in cereal prices which will put significant short-term pressure on poorer developing countries; any return to price supports means the average real price of cereals will soon continue a long-term downward trend; even with declining real prices world hunger and malnutrition will be slow to change; and, reductions in public investment in agricultural research will drive up real food prices and increase hunger and malnutrition.
As you'll learn from our lead story on predictions of a food crisis ahead, there are structural problems underlying fears about the world's ability to feed itself and about the underlying sustainability of the resource base. These are quite apart from questions about theoretical productive capability and the market.
The weather is a big factor in the current price scenario. Other hugely influential factors are politics and economic self-interest which often skew the availability of food supplies and other basic resources around the world. And not everyone agrees with recent United States food policies. One such example comes to us from the Internet. Entitled Who needs mad cows with such crazy farm policies, it links the 'food crisis' of the 1990s with the
'farm crisis' of the 1980s. The critique from the (USA) Institute for Agriculture and Trade Policy lambasts US policies for allowing grain reserves to fall to their lowest level since WWII.
The US government policy, according to this view, is flawed for spending billions on export subsidies to 'hook' other countries on cheap, subsidised US food instead of growing their own. The policy also resulted in artificially lowering grain prices, which in turn encouraged massive livestock feeding factories, drove family farmers out of business and drained the country's grain reserves. If you look at the barley section in this issue's Market Signals, you see one current outcome — an unprecedented shortfall in US feed maize which is drawing feed barley off the world market.
One of the most interesting aspects of the crystal-ball gazing for Australian growers is future demand from China. While some analysts are predicting huge Chinese grain demand (to over 300 million metric tons annually) which would overwhelm world markets and drive prices into the sky, IFPRI believes that with the highest income growth and the worst land degradation, China will import around 114 million metric tons in 2020. Australia (predicted to double wheat and rice exports by 2020 and increase coarse grains exports by onethird) is expected to benefit most, along with the USA and Canada, from increased Chinese demand.