OECD predicts: No Malthusian food security crisis anytime soon

Good news it seems! The OECD doesn’t expect a Malthusian food crisis to materialise any time soon. 


In their latest Agricultural Outlook (2014-23), the OECD estimates that:

• the world’s farmers and fishers will be able to satisfy demand over the next 10 years
  
• in real terms, prices are expected to continue to fall from their historical highs, largely due to bumper crops, but remain above the historical lows seen in the early 2000s
• rising incomes, urbanisation and new eating habits will reinforce the transition to diets richer in protein, fats and sugar
• there will be a relative shift toward coarse grains and oilseeds to meet demands for food, feed and biofuel, away from staple food crops like wheat and rice
• world fishery production will be driven mainly by gains in aquaculture in developing countries

The OECD notes that "recent policy reforms in agriculture and fisheries markets have enabled demand and supply fundamentals to become more responsive to market signals; however, both remain influenced by policies such as producer support, public stockholding and biofuel mandates."

In a companion editorial, the OECD addresses the populist notion that "nearly a billion people will go to bed hungry tonight, and if we can’t feed the current population, how will we manage with half as many again by 2050, especially if their diets shift towards resource-intensive Western-style foods? Climate change will complicate matters further, with the worst impacts likely to be on the regions the least well-equipped to deal with them. Moreover, agriculture could find itself in competition for land with biofuels and other non-food uses, notably urbanisation".

It responds by noting that "ever since Malthus published his famous essays on demography at the end of the 18th and start of the 19th centuries, there have been predictions that the world will face mass starvation if things go on as expected. As Malthus himself put it in his 1798 work An Essay on the principle of population: 'The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race'.”

More recently, "the food price crisis in 2008, the renewed price hikes in 2010, and depressingly regular reports since of people facing famine (the latest in South Sudan) have raised questions about whether agri-food markets could be relied on in future to deliver sufficient quantities of food at affordable prices. And not just in sensationalist media with their love of explosions in food prices and population growth. In 2009, Sir John Beddington, the UK’s chief scientist, warned of 'Food, energy, water and the climate: a perfect storm of global events?'."

"And yet it hasn’t happened. The UK’s population for example doubled over 1750-1800 (the year in which Malthus published The present high price of provisions), and tripled over the next century. This demographic surge couldn’t have happened without the interaction of a number of elements. We often talk about the agricultural 'revolution', suggesting sudden overthrow of the old systems. But even in Britain, the initial changes to agricultural techniques and practices such as enclosing common land and introducing crop rotation were spread over centuries, and what accelerated the pace of change was interaction with the industrial revolution. Improved communications and storage and preservation techniques allowed producers to serve markets far from home. A well-functioning financial system provided capital. And a feedback loop was created whereby improved food supplies supported a bigger population that in turn provided labour for emerging industries and markets for farmers."

A separate OECD working paper shows that "developing countries with very different levels of economic development, population size and geographical location have succeeded in reducing poverty and improving nutrition. Despite the significant differences among them, they share some characteristics. During the period when they had the greatest success in reducing poverty, the macroeconomic context became progressively more favourable. Their own governments were lowering export taxes, reducing overvalued exchange rates and dismantling inefficient state interventions in agricultural markets. Meanwhile, the governments of rich country trading partners were reducing the kinds of support to their farmers that distorted production and trade the most."

The analysis reveals that, while economic growth generally was an important contributor to poverty reduction, the sector mix of growth mattered substantially, with growth in agricultural incomes being especially important.

In essence, food security is non-sensical in a macroeconomic context. The world has always been able to produce sufficient food, no matter the rate of population growth. And it likely always will, provided that microeconomic and political impediments don't disrupt outcomes too much.

The key issues in food security are:

• distributional - improving the conditions of the food-insecure in countries with poor policies in place

• sustainability - expanding food production while maintaining the productivity of the natural resource base, including in response to changes in climatic conditions

Further reading
OECD-FAO Agricultural Outlook 2014-2023
Malthus wrong again says OECD
Economic Importance of Agriculture for Poverty Reduction