The Future of FoodUpdated on 8 Oct 08

Aug 07 TodayDec 07 Mar 08 Jun 08

Food headlines in The Economist so far

Overview of the Food Crisis

Who’s producing, who’s buying

Global warming will undo some traditional exporters

India tips over to become importer

Australia will import more

Former Soviet Union will export moreN America will

export more

• Most production is kept for domestic use, only a small amount is traded. E.g. only 6.5% of rice is traded.

• Any tightening in supply e.g. crop failure in Australia from drought would lead to a supply shock and lead to food price inflation.

Vulnerable to supply shocks

Higher grain prices are passed down the chain

Food price rises hurt unevenly

Populations are expanding fastest where it is most difficult to grow food

Farming accounts for 70% of water use. Water shortages mean food shortages.

• The new middle classes want more meat, dairy, eggs.• China’s consumption will approximate the USA near 2031. Grain

consumption is projected to be two-thirds of current grain harvest and four fifths of current world meat production.

Asia’s new middle classes move up the food chain

Changing Eating HabitsMeat consumption in China per capita

20kg

1980

125kg

2031*

50kg

2007

Pressure on resources

10,000 – 13,000 liters of water is needed to produce 1kg of beef

1,000 – 2,000 liters of water are needed to

produce 1kg of wheat

5 kg of grain is needed to produce 1kg of beef

*Approx US consumption today

Biofuels and Grain Prices• Corn based ethanol is viable with high oil prices.• This triggered a substitution effect, raising grain prices.• International Food Policy Research Institute has shown that increased

biofuel demand is estimated to have accounted for 30 percent of the increase in weighted average grain prices.

Simulated Real Grain Prices, 2000-2007 (US$/metric ton). IFPRI May 2008

30%

The next Green Revolution?

Is the crisis over?• The Food and Agriculture Organization reports that commodity prices

have started to fall, but they are not likely to drop to the low levels of previous years.

• Food production needs to rise by 50% by 2030, and double by 2050, to meet the needs of rising population and new middle classes.

• Ag yields need to rise to avoid future turbulence.

Underinvestment in Ag leads to falling yields• The original green revolution was based on better seeds, irrigation

and fertilizers. Grain production increased by 250%. • Underinvestment in Ag due to rapid urbanization and industrialization

has led to falling yields.• In the next phase of the green revolution, new solutions will have to

increase yields through better seeds while addressing resource constraints in rising oil prices, water shortages and less arable land.

USA

57.7m 6% increase

China

3.8m 9%increase

countryHa

planted%

increase2006-7

Brazil

15m 30%increase

India

6.2m 63%increase

Philippines

0.3m 50%increase

S Africa

1.8m 29%increase

Argentina

19.1m 6%increase

Canada

7m 15% increase

Future Seed• GMO has been in the food supply for years and no harm has been

observed.• Food stressed countries have gone big time into R&D and production.• Watch out for future GMO powerhouses Brazil, China and India.

Vertical farming is a popular idea for cities• Proposed by Columbia Uni. No prototypes yet. • Estimate for 150 30-storey vertical farms to feed NYC (pop: 8 mil)/year. • China, Abu Dhabi and Korea exploring vertical farming.

Pasona O2, Tokyo

Stem Cell fast food • Currently costing $100,000 per kg! More than Kobe beef …. • Meat processing companies hope to start selling affordable factory

grown pork within a decade.

• Genetic diversity is being eroded, making the need for genebanks urgent.

• There are 1,400 around the world now, but many are in unstable locations.

• The World’s Seed Bank - Svalbard Global Seed Vault – is built in Norway to house staple food crops. IRRI (Manila) is working in partnership with them to conserve rice varieties.

Doomsday Vault for diversity preservation

IDEAS

New Agriculture is about IP, not land or labour.

Fertilizers

Seeds

PesticidesHerbicideFungicide

CropProduction

FoodProcessing

AnimalFeed

BioenergyFeed Lots

Sales Logistics

FeedAdditives

Retail Consumer

PulpFiberGrainCrops

Adapted from ICAC Commodity Profile, IFPRI

IngredientsAdditives

DryingMilling

HuskingConversion

StorageBlending

ModificatnEnd Use

Equipment

Land

Higher yield rice

Rice, Pulp and Paper

Drought-resistant rice

Salinity-resistant rice

Temasek Life Sciences Laboratory (www.tll.org.sg)DNA markers

selective breedingBollworm resistant cotton strains

Yaoming trees for pulp

Dr Stephen Cohen, Executive Director of TLL, elected as Fellow of the Royal Society

Temasek Life Sciences Laboratory (www.tll.org.sg)

• Aquaculture is expanding while marine capture fisheries have reached a ceiling.

• The new Asian middle classes will demand more high-value fish as incomes rise. Demand for hatchery-reared fingerlings will grow.

ST Oct 5, 2007 S'pore's very own super sea bass Hatched in AVA's research tanks..

Aquaculture is promising

Fish farms provide half of world supplies in 2015

• Technologies to help food-stressed economies like China, India expand the use of existing farmland, or rehabilitate degraded farmland will be in great demand.

• What does it take to be a hub for R&D and reselling solutions. E.g. Sell China’s drought/salt-resistant trees to ME.

PRC Coastal protection program requires 100 mil salt resistant trees in next 10 years

..salt tolerant poplar tree soaks up salt in China’s saline wastelands (30 mil ha) ..the land is arable after 10 years.Bloomberg News 12 Sept ‘07

Rehabilitate degraded farmland

• In a bio economy, gene diversity is the raw material for future wealth, and a reliable gene bank is the most important resource for climate- ready crops.

• A tropical gene-diversity bank can be a source of IP, R&D for agri- asset and new material companies to develop new agricultural products.

A tropical gene bank in Singapore

Rice Gene bank, IRRI, Manila

• Agricultural fields will assume the same significance as oil fields. Basic raw materials will be genes.… Plants will be the raw materials for new fuels, materials and medicines.

• Geopolitical power may well shift from desert-bare oil countries towards tropical regions richly endowed with biodiversity.

• What does it take to be the world center for tropical bio-economic development?

The EU has invested large sums of money and manpower on becoming a knowledge-based Bio-Economy by year 2025.

Future: Laying the foundation for the bio economy

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