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Global Agriculture - An Insight

 
 
Agriculture has played a major role in human history, and agricultural progress have been crucial contributor to socio-economic improvement but its importance has been widely lost from sight since its success lead in most case to a significant decrease of the food share on overall household spending: In 2007, whereas one third of the world's work forces were employed in agriculture, agricultural production accounts for less than five percent of the gross world product (an aggregate of all gross domestic products).

Agriculture has expanded vastly in geographical coverage and yields. Throughout this expansion, new technologies and new crops were developed. Agricultural practices as irrigation, crop rotation, fertilizers, and pesticides were developed long ago for better productivity, but have made great strides in the past century.

Revolution in Agriculture:

A remarkable shift in agricultural practices has occurred over the past century driven by new technologies: Mechanization, synthetic nitrogen, mined rock phosphate, pesticides have greatly contributed to increase yields in the early 20th century in return increased supply of grains and improved breeding led to cheaper livestock and increase milk availability. Further, yield increases were obtained when high-yield varieties of common staple grains such as rice, wheat, and corn (maize) were introduced as a part of the Green Revolution which exported technologies of the developed world to the developing countries and allowed the world to produce food surplus.

With passage of time nevertheless, agriculture productivity gains started diminishing and wider consideration emerged : concept of soil conservation, nutrient management became increasingly recognized .whereas Soil conservation and nutrient management have been important concerns since the 1950s, by the most advanced farmers who took at heart a stewardship role on their land, increasing consumer awareness of agricultural issues led to the rise of community-supported agriculture, local food movement, and commercial organic farming.

Agricultural Output Equilibrium: 

Large supplies and a strong US dollar are keeping international food prices under downward pressure. The outlook for the coming season is unlikely to diverge much from the current situation, but currency movements and macroeconomic developments may have important implications for markets again in 2015/16. Against this backdrop, the world food import bill is forecast to reach a five-year low in 2015.

Rice: A prolonged period of low international rice prices is prompting governments, especially in exporting countries, to shift to less supportive rice production policies, while also trimming public rice inventories, a stance that may dampen global production growth in 2015 and keep world trade in 2015 at near record levels.


Wheat: Overabundance of wheat supply is likely to continue into the 2015/16 season in spite of the forecast decline in 2015 production. Following two consecutive years of record crops, world wheat inventories are at sufficiently large levels. This, coupled with less buoyant growth in demand for feed wheat, could contribute to fairly stable market conditions in the new season.




PRICE VOLATILITY

Prices of agricultural commodities are naturally volatile owing to their dependence on unpredictable factors like the weather. Periods of low volatility pose little threat, which cannot be said of periods of high volatility. Excessive agricultural price volatility can have severe impacts on governments, in terms of financing imports, export earning risks and also terms-of-trade. Large impacts are also felt by farmers and consumers, especially in developing countries, where about 2 billion people live off small farms and spend large shares of their income on food items. Excessive price fluctuations do not allow stabilizing farm income or consumption, especially when coping mechanisms (e.g. storage, savings, access to credit and insurance) are not available. Thus, they can pose a serious threat to food security. What is more, vulnerable households are left with little scope to mitigate unusually high prices other than by lessening the intake of nutritious food, dropping out of school, lowering access to healthcare or distress sales of land and livestock. These responses can result in poverty traps and, accordingly, have long-term consequences. Producers are affected, too. As sellers of commodities, high volatility brings with it considerable downside price risk, which affects planting decisions and undermines agricultural investment where it is needed most. In addition, increasing volatility makes it difficult for farmers to extract price signals in production response.

It is important to clarify what we mean by volatility and to highlight some conceptual difficulties. It is indisputable that price volatility measures price fluctuations. However, a trader in Chicago will probably give a different assessment of wheat price volatility than a smallholder farmer in Pakistan or a baker in Niger.

It is therefore important to seize this window of opportunity to reflect on how to avoid subsequent crises by addressing the longer-term challenges.

Agricultural Challenges: 

World population is projected to grow from 6.5 billion in 2005 to nearly 9.2 billion by 2050. To feed a population of more than 9 billion, global food production must nearly double by 2050. The population growth will take place in developing countries and it will occur in urban areas, which will swell by 3.2 billion people whereas as rural population contracts. This means that a shrinking rural work force will have to be more productive and deliver more output from fewer resources. Higher productivity requires more investment in agriculture, machinery, implements, tractors, water pumps, harvesters, etc., as well as skilled and better trained farmers and better functioning supply chains.

Fewer farmers will have to feed a more populous world with fewer resources. One way would be for world agriculture to expand its land basis and use some of the nearly 4.2 billion hectares potentially available for rain fed crop production (only 1.5 billion ha are currently in use). But this would not be possible without further environmental damage and increased greenhouse gas emission. Other avenue would be to tap into yet unused yield-enhancing technologies, which could double productivity for many crops in many countries. However, such potential can only be realized if farmers have improved access to inputs, apply better fertilizers in more abundance, make use of better seeds, improve their farming and management skills and expand land under modern irrigation.

In addition to rising resource scarcity, global agriculture will have to cope with the burden of climate change. The Intergovernmental Panel on Climate Change (IPCC) has documented the likely impact of climate change on agriculture in great detail. If temperatures rise by more than 2oC, global food production potential is expected to contract severely and yields of major crops may fall globally. The declines will be particularly pronounced in lower-latitude regions. . In Africa, Asia and Latin America, for instance, yields could decline by 20 ~ 40 percent In addition, severe weather occurrences such as droughts and floods are likely to intensify and cause greater crop and livestock losses.

Rapidly rising energy prices have created an added challenge for global food supplies. Rising fossil energy prices mean that agriculture will become increasingly important as a supplier to the energy market. The potential demand from the energy market is so large that it has potential to change the world’s traditional agricultural market systems completely.

Areas to Address:

These challenges can be addressed in particular in following areas:

  1. Improve Management at farm level of:
    o Nutrient
    o Soil
    o Water
  2. Improve agricultural productivity through better management of agricultural practices and better quality farm input
  3. Development and conservation of natural resources.
  4. Expansion and improvement of rural infrastructure, broadening of market access and better repartition of food value chain.
  5. Strengthen capacity for knowledge generation and dissemination

References

  1. FAO – Food Outlook May ’15 http://www.fao.org/3/a-i4581e.pdf
  2. FAO Report ‘Fertilizer Requirement in 2015 & 2030’
  3. Wikipedia - http://en.wikipedia.org/wiki/Agriculture
  4. Wikipedia - http://en.wikipedia.org/wiki/Green_Revolution