Agriculture Reference
In-Depth Information
from the historical trend (Shapouri and Rosen, 2007). It is too early to project the
long-term influence of the biofuel push on food prices, but the impact of higher food
prices on consumption in the higher-income, mature markets will be limited. The
food share of total expenditures in these households is very low; for example, in
the United States this share is less than 10%. However, for the LDCs, where more
than half of household income is spent on food, growing food insecurity due to
higher food prices is an increasing concern. Higher food prices would benefit coun-
tries or farmers with adequate agricultural resources where production and exports
could be expanded, but would hurt those who import food and benefit from low
food prices. According to the USDA-ERS medium-term projections (2006 to 2016),
the rapid expansion in global production of biofuels will change the price relation-
ships among agricultural commodities (USDA, 2007). Increased demand for corn
(ethanol) and soybeans (biodiesel) will influence prices of other grain and vegetable
oil crops because of crop area substitution or their feed value. According to USDA
projections, the 2007 increase in grain prices will be followed by a declining trend
such that less than one third of the price spike of 2006-2007 is retained by 2016. As
for LDCs, high food prices could spur domestic production and thereby reduce hun-
ger because domestic production accounts for most of the food consumed in these
countries. However, the net result depends on the magnitude of the supply response
to the price increase and the supporting economic policies in the areas of technology
adoption and other services to improve the functioning of markets.
World food production is projected to grow during 2030 to 2050, but at a lower
rate than the last three decades. Most of the historical gains in global production of
grains (the key component of the global diet) were due to yield growth, and this is
expected to continue in the future (FAO, 2006b). Higher yield growth is necessary to
maintain production growth in the future due to constraints on expanding cropland.
The expansion in production of oil crops, which was much higher than grains in the
past, also will face constraints on land availability. These constraints exist despite
the potential of large unused land area in SSA and Latin America. The reason for
this is that most of the land in these regions has low soil fertility, has high soil toxic-
ity, or is in hilly areas. Using information on soils, climate, and land cover, research-
ers at USDA's ERS compared the quality of cropland by country and region. They
found that the quality of cropland is lowest in SSA. In 12 of 38 SSA countries stud-
ied, less than 1% of cropland was classified in the top three land-quality classes, and
the median share of cropland that was classified in the top three land-quality classes
in SSA countries was about 6%. This is quite low compared with a median of 16%
in Asia (where 7 of 17 countries studied have more than a quarter of their land in the
top three classes) and 27% in Latin America (where 12 of 19 countries studied have
more than a quarter of their land in the top three classes). In contrast, the median
share of high-quality cropland was 29% in the high-income countries (where 13 of
22 countries studied had more than a quarter of their land in the top three classes).
Expanding crop production to where the quality of land is low leads to soil mining
and declining yields. The disparity in land quality is reflected in the differences in
yields—in absolute level as well as growth—both historically and those likely in the
future. In 2004, grain yields in developed countries were six times higher than those
of the LDCs and more than two times higher than those of the developing countries.
