State of Agriculture

Agricultural production in the latter half of the 20th century increased, with the global food supply outstripping the increase in global demand for food; this was accomplished in spite of increases in global population and incomes. As a result, prices for most major crops declined when adjusted for inflation. Wheat and feed corn declined at an annual average rate of 1% to 3% over the period (Johnson, 1999; Antle et al., 1999). In the absence of climate change, several analysts (e.g., World Bank, 1993; Rosegrant et al., 1995; Johnson, 1999) expect inflation-adjusted food prices to remain stable or slowly to decline over the next two decades. Confidence in this outcome is high over the next two decades.

Declining food prices will likely ease but not fully erase problems of food security, particularly in low-income countries where lack of access to food, political instability, and inadequate physical and financial resources will remain major challenges. In some instances, especially in the small number of nations with little immediate prospect for a successful transition from agricultural economies to manufacturing or service-based economies, lower global food prices could be stressful. However, the anticipated spread of technology and science-based production practices even to the poorest agricultural economies will likely reduce costs of production to help farmers cope with lower prices. Agricultural trade policies tend to decrease the efficiency of production both in high-and low-income countries. In high-income countries, policies tend to subsidize production in order to protect the agriculture sector, while in low-income countries policies tend to tax and discourage production (Schiff and Valdez, 1996).

Much of the optimism for future growth in agricultural production hinges on anticipated technological progress that increases crop yields. Rosegrant and Ringler (1997) argue that considerable unexploited capacity to raise crop yields exists in current crop varieties. Other analysts (Pingali, 1994; Tweeten, 1998) argue that the declining supply of new agricultural land combined with large-scale degradation of soil and water resources will slow the increase in global agricultural output, which may slow or negate the expected decline in real food prices. Approximately 50% of cereal production in developing countries is irrigated and, although it accounts only for 16% of the world's crop land, irrigated land produces 40% of the world's food. It appears that the rate of expansion of irrigation is slowing, and 10% to 15% of irrigated land is degraded to some extent by waterlogging and salinization (Alexandratos, 1995). It is questionable whether irrigation water supplies necessary to meet future irrigation demands will be available. The two conflicting views represented in this paragraph make the future trend in prices beyond the first third of the century highly uncertain.

Was this article helpful?

0 0

Post a comment