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Reader riposte: The problem of long-term food demand

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COMMENTS

22 April 2008 14:49

Rawdon Dalrymple writes:

Stephen Grenville deals with present problems over the very sharp rise in food prices. But is this the first episode in a long-term and perhaps worsening  problem? As Peter McCawley points out, the present situation is partly due to the lack of investment in agriculture in recent decades. In the 1960s there was a big push on agriculture, which produced a huge increase in the output of grains especially, with output in tons doubling and trebling over a few years. The money spent on the International Rice Research Institute at Los Banos in the Philippines, for example, was not great as a proportion of the World Bank’s or USAID’s budget, but it made an immense difference.

The problem is far larger today than it was then.  In 1950, the population of China was 460 million. Now it is 1.3 billion. In the meantime there has been a considerable reduction in arable land because of expansion of industry and urbanization and desertification. The country faces a major water problem. So food demand has increased enormously with population growth and the continuing increase in income. To take another example, the population of the Philippines in 1939 was 16 million. Now it is 88 million and expected to grow to 100 million by 2015. The land area of the Philippines is about the same as that of New Zealand. In neither of these examples can we expect great increases in domestic food production. China will be able to afford to import food but the Philippines has a weak economy and limited import capacity. There are more extreme examples in Africa.

So the problem in the slightly longer run is not just food supply but growing demand, perhaps to the point where global production capacity is stretched to the limit. What happens to prices then?

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