Supply Factors

Long term supply factors that regulate grain production are natural resources such as land, water and irrigation, and agricultural technology. The constraints on land are becoming severer. The annual growth rates of global cultivated areas for grain have been falling the last three decades, according to the FAO data. The growth rate was 0.33% for the sixties, 0.28% for the seventies and 0.18% in the eighties. The world total arable area has increased from 1.27 billion hectares in 1961 to a peak of 1.44 billion hectares in 1987, and then decreased to 1.38 billion hectares in 1996. As shown in Figure 1.3, the global per capita grain harvested area has continued to fall from 0.24 hectares in 1950 to 0.12 hectares in 1994 as population explosion has continued. The total grain harvested area in the world increased to a peak of760 million hectares in 1977 as shown in the same figure, but it has since fallen to 690 million hectares in 1994. According to the data from the USDA, the grain harvested area in China had been falling since reaching a postwar peak of 98 million hectares in 1976, and since then has been reduced by 7% to 91 million hectares by 1992. The grain harvested area in India increased by 14 million hectares from 1961 to its peak of 106.6 million in 1983; since then it has fallen by 6.26 million hectares up to 1992.

Fig 1.2. Net food export. Data source: FAO, Trad yearbooks

t^ ooc} o rj cm co ^j4 lo t— oo <j> oij csj co ^ ltxo 00 o o ^ cs1 — ct—t— t—C—t— C—CO^OOOOCOOCOOOOOOOOO^^^CTi developed all

developing all calendar years

According to the FAO data for 1989, the total arable area in the world is approximately 1,500 million hectares, about 800 million hectares of which are in developing countries. Also, the total area of pasture and forest in the world is 7,400 million hectares, 42% of which is in developing countries. How much of this pasture and forest area in the developing countries can be turned into arable land for grain production and how much should be conserved as they are is an important issue in coping with the trade-off problem between food and local environment. An FAO report10 estimated that the potentially cultivable area in 92 developing countries, excluding China, was more than 1,800 million hectares, more than twice as much as the current arable area in the developing countries. Most of this potentially cultivable area exists in South America (48%) and sub-Saharan Africa (44%). Other research institutions and researchers came up with similar estimates during the seventies. Can this vast ,potentially cultivable area which is mostly pasture and forested land be brought into agricultural production? In the same report, the FAO estimated that actual cultivated area would increase only by 93 million hectares in these developing countries by 2010. The reasons that actual reclaimed area in Africa and

South America is estimated to be so small are such strong constraints as:

1. The need for linkage among regional food production, farm income and food demand, by which I mean that reclamation of land in a region must be done by the people in the region, in the sense that the increased income of the people in the region by the reclamation and food and agricultural production on the newly reclaimed land should be spent for increased food production, in order for the reclamation to be sustainable and equitable;11

2. Low population density in Africa and South Africa;

3. Environment and other externality (AUTHOR: externally?) related needs, to maintain forest and pasture; and

4. Economic cost for reclamation.12

In developing countries, competition for land use among economic sectors has been intensified during the last few decades. The agricultural sector has been losing ground in this competition. In my recent survey of agricultural resources on the Deccan Plateau in India in September 1998, I found that most

Fig 1.3. World total harvested area of cereals and per capita harvested area of cereals. Note: used mainly the FAO data and additionally the USDA data.

of the agricultural land along the main roads (about 500 meters on both sides) within about 50 kilometers radius from main cities had probably been purchased by some nona-gricultural entities, and agricultural production there was abandoned. According to my own observations during the last twenty years, a large part of one million hectares of good paddy land in the Menam Chao Phraya Delta surrounding Bangkok, Thailand has been converted to factories, houses, roads and vast unused land. Agricultural land conversion has been rapid in China, Thailand, the Philippines, Java, India, etc. These countries do not have effective agricultural land conservation laws or institutions such as the Agricultural Land Law and supporting institutions in Japan.13 This is the main reason that these countries have lost large amounts of good agricultural land.

Soil quality has been deteriorating throughout the world. According to one study, 15% (2 billion hectares) of the globe's total 13 billion hectares of land has been degraded.14 Of that total, it is said that 16% (300 million hectares) is severely degraded. In the intensive research interviews which I undertook in 1993 and 1994 with about thirty farmers scattered over semi-arid northeastern Thailand, every farmer without exception said that they have experienced a decrease in the yield of rice and cassava within the last twenty years, and blamed a decrease in soil fertility as the cause. Many farmers told me that they did not have enough barnyard manure to apply to their fields, as agricultural machines had replaced draft animals. They told me that they reluctantly had to start applying small amounts of expensive chemical fertilizer to non-irrigated paddy and upland crop fields in order to cope with the soil degradation. In my extensive Indian rural survey in August 1998, I found that drying cow dung cakes on farmhouse walls has decreased considerably from two decades ago. This is probably a reflection of the decrease in the number of animals replaced by machines. If so, organic materials input into Indian soil must have decreased considerably.

Although the growth rate of global irrigated area was above 2% annually in the sixties and seventies, it fell to just above 1% in the eighties.15,16 An increasing trend in the irrigated area per person has reversed since 1978, and this measure decreased by 6% from 1978 to 1991. The FAO considers that these are serious limitations in food supply, for more than half of the increase in the global food production resulted from the increase in irrigated area from the mid-sixties to the mid-eighties. Causes for the declining growth rate in the irrigated areas are the post-Second World War declining trend in real world grain prices; increases in the cost of building large scale surface irrigation systems in recent decades; severe deterioration in more than half of the irrigation facilities, and shortage of government funds to build new irrigation systems, in developing countries; under-utilization of irrigation systems, increasing water wastage, waterlogging, salinization and environmental destruction by dams; human diseases related to irrigation water; and external benefits derived from irrigation facilities.12,17 Soil salinization is said to occur in 10% of the global irrigated area. In 1998, I heard from an expert on Chinese irrigation systems that most of the Chinese irrigation facilities are severely deteriorated and/or were poorly constructed. But there are not enough government fund and time to build new systems against the exploding population. Thus, the main emphasis in the irrigation policy of the Chinese government is now water saving. In 1995 a high Philippine government officer in charge of irrigation told me in my interview that there is not enough government funding to construct the irrigation facilities planned, so the limited funds must be used for rehabilitating and repairing deteriorated facilities.

Agriculture now uses two-thirds of the world's fresh water supply; there are growing limitations to it. Increasing amounts of fresh water resource are being diverted to indus trial and household uses as the economy grows. Water shortage is especially severe in northern China and western India. Drying up of the Yellow River is a good indication of water shortage in northern China. The drying up has been worsening every year since 1972. It reached the peak of 700 kilometers from the mouth of the river and of about 300 days in 1996. In my field survey in China in September 1998, I found that irrigation in rural Beijing was often restricted in order to supply water to Beijing City. In that month the Feng River was barely flowing at Taiyuan City in Shanxi Province, but many other rivers in that province have dried up. The underground water table in many places in Shanxi has been declining at the alarming speed of 1 to 2 meters per year during the past 30 years. Stoppage of water supply to houses in big cities was common then.18 In my Indian survey in August 1998, I gathered that, for about 18 hours of each day in most Indian cities, water is not supplied to the city's people. Most rivers on the Deccan Plateau were extremely polluted. In the Punjab, the grain bowl of India, the underground water table has been declining by 50 centimeters per year because of excessive pumping due to the free electricity for pumping policy. During my survey in America in the late eighties, I have personally witnessed the fear of long run water shortage in California due to difficulties in building irrigation dams because of environmental protection movements. Exhausting underground water resource by overutilization for various purposes has been occurring in the United States, Northern China and India.19 A rice farmer in Texas told me in the late eighties that he might have to abandon his rice production in 10 years because of the declining underground water table.

The needed future increase in the world grain supply must rely on yield increase because of the restrictions on cultivated land, irrigated area and water. The green revolution considerably increased the yield of wheat and rice during two and half decades after 1961, as shown in Table 1.1. The yields of maize, barley and total grain have also increased considerably during the same period. However, the growth rate in the yield of grain has declined rapidly from about 3%

during 1961-70 to about 1% during 1985-96, as shown in Table 1.1. This long run decline in the growth rate of yield of major grain is a very serious problem in coping with the global population explosion, as constraints on agricultural land, water, and irrigation are becoming more serious, as described above. Yield of grain must grow at an annual growth rate of about 3% in order to cope with population explosion.

Although the theoretical or potential yield of new varieties of rice and wheat is clearly greater compared to the ordinary varieties, it is sometimes lower in experimental fields and farmers' fields.20 Yield of new high-yield rice varieties in the experiments at the International Rice Research Institute (IRRI), and national rice research centers and at farmers' fields in Asian countries, have recently been static or reducing.21,22

Various factors can be considered in the postwar decline in the growth rates of, and recent stagnation in, global average grain yield. The fast grain yield increase of the green revolution was made possible mainly by the increased use of fertilizers. The world total fertilizer use started to fall from the late eighties, and it had continued to fall until the mid-nineties; it is expected to be stabilized during the nineties as a whole.23 Lester Brown showed that the effectiveness of chemical fertilizers in increasing grain yield has decreased globally, and it was only one-fifth as effective for the period 1984-89 as for 195084.24 The recent yield stagnation may reflect the exhaustion of our accumulated technical knowledge of the grain varieties. The global stock of agricultural technical knowledge, which in the past had been accumulated rapidly by high research investment, and had resulted in the green revolution, has recently been exhausted because of the decline since the eighties in global research investment.21,25 Investment for agricultural/rice research in Asia has also stagnated, along with the rapid decrease in the global price of rice in real terms, since the eighties.26 Another reason for the yield stagnation is the decline of soil fertility due to the expansion of double or triple rice harvests per year in Asia and of double cropping of rice and wheat in the Indo-Gangetic region.22,27 Yields of rice and wheat have recently seemed to be reaching a plateau and it is feared that they are near the biological limits for rice and wheat. 28,29 Global shortages in water resource for agricultural production and global deterioration of soil fertility have worsened during past decades, as mentioned previously. The significant reduction in growth rates of global grain yield and in global planted area of grain has caused stagnation or reduction in grain supply and continuous reduction in the global grain stock ratio since the mid-eighties.

Let us look at the movement of crop yield and production in China, a very significant world agricultural country. According to the FAO data, grain yield has increased substantially after the Second World War, from 1.9 tons per hectare in 1961 to 4.5 tons in 1994. Although grain yield has undoubtedly increased, I thought the yield in 1994 was too high. Surprisingly, it became clear from a recent investigation by the Chinese Science Academy that statistics of cultivated area in China are 40% less than the actual amount. If we recalculate the yield in 1994 with this actual area, it is about 3.2 tons. Even the revised yield is at the same level as the average grain yield in Japan, America and Europe in the same year and is still very high. Water shortage is a serious short term and long term problem in northern China, as described above. The prices of agricultural inputs such as chemical fertilizers have increased rapidly from the early nineties, and will remain at high levels in the future. Agricultural research investment has stagnated.30,31 Consequently, rapid increase in the crop yield, such as in the recent past, will be difficult in the long term. In my recent survey in China, I gathered that superior agricultural land had been rapidly converted to nonagricultural uses because of the extremely rapid economic growth up to the early nineties. The harvested area of grain has been reduced at an annual rate of 0.462% from the postwar peak in 1976 to 1992, as described above. Grain production (including soy beans) in China has increased at an annual rate of 3.42% from 130 million tons in 1950 to a midterm peak of407 million tons in 1984, and although it reached a historical record of 466 million tons in 1995, it has only increased at a rate of 1.27% annually from 1984 to 1994.

Table 1.1. Long run decline in the annual growth rate of the world average yields of major cereals

All Cereals Rice Wheat Maize Barley

Data Source: FAO Production Yearbooks via FTP.

The Chinese government raised the buying prices of the grain under the quota system from the farmers by 88% in July 1994, and by 20% in 1996 as well. However, these were still a long way off the free market grain prices. It is reported that many farmers stopped rice and grain production because of the government's low buying prices.32

What will be the global grain yield in the 21st century? I think it will not grow very fast, for the following reasons. First of all, I think stagnation in the growth of grain yield will continue into the early 21st century. Water shortage and soil degradation will worsen in the early 21st century as population explodes and economy grows. The long run decline in the growth rate of grain yield cannot be reversed in the short run.

The type of technology in the near future is also relevant. The green revolution technology with high yielding varieties of grain and high inputs of chemical fertilizers and other agricultural chemicals will basically be used for the grain production of the globe. Higher input of chemical fertilizers will be needed in order to produce more grain to provide for an exploding population. But, marginal productivity of chemical fertilizer will decline. In developing countries, lesser amounts of organic matter will be input, as farmers will keep less animals and more agricultural machines will be used, and more biomass will be used for cooking and other household uses. This will cause deterioration of soil structure and soil fertility in the long run. As more chemical fertilizers are used, more pests and diseases will attack grain. Then, increasing amounts of chemicals will be used, against which resistance will be formed in pests and diseases.16 And, more chemicals will be needed which will destroy environment. But I think we cannot expect that an alternative technology which will increase grain yield with much less environmental destruction and soil degradation will be developed and be adopted by world farmers on the global scale by the early 21st century. Thus, the technology in the near future will be one of less yield increase and more environmental destruction.

It is more difficult to increase yield of wheat, barley, sorghum and millet than rice and maize under current agricultural technological conditions.16 However, some are of the opinion that the significant differences that exist in the yield of each grain among various countries or regions in the world show the possibility of adopting existing technology and increasing yield through increased use of chemical fertilizer, and at the same time decreasing the environmental damage and soil deterioration, especially in developing coun-tries.23 The difference in the yield, however, shows in most cases not a difference in potentiality in the existing technology, but in the restrictions of natural conditions such as soil and climate on the yield, as is clearly seen in the big difference between the yield of wheat in Western Europe and North America. As previously described, the growth rate of grain yield has decreased significantly since the last half of the eighties, and yield of new high-yielding rice varieties has been stagnating or decreasing in Asia. The harvested area of rice, 90% of its production and consumption concentrated in Asia, has been decreasing as well. As mentioned above, a 3% annual increase in rice yield will be needed to cope with the highest level of population explosion until 2020.29 Although until now the potential yield of various crops has been raised annually by 1-2% through the efforts of genetic research,20,22 a 3% annual increase in rice yield in the long term is very difficult.

How will such new technologies as biotechnology and hybrid varieties contribute to increasing grain yield? Since the appearance of hybrid corn in America in the thirties, F1 vigor has been considered the breakthrough technology that would be the best means of increasing yields. But those views are too optimistic. The only country where hybrid rice varieties have been planted on a sizable scale is China. They were planted to 55% of the country's rice harvest area in 1992. This was possible because the high cost of hybrid seed production has been mitigated by cheap labor cost and government subsidies. It is said that yield of the hybrid rice on the average was only 20% higher than the ordinary varieties. In my field survey in China over the last few years, I heard from farmers and experts that Chinese consumers had been shifting from less delicious hybrid rice to ordinary rice and farmers had been abandoning hybrid rice planting. Although efforts have been made for the last twenty-five years, hybrid wheat seeds have not been successful, due to the prohibitively high cost of seed production.20,33 Although significant increase in crop yield has been expected from biotechnology utilizing gene transformation and gene mapping, virtually no useful result that considerably increases crop yield has been achieved so far. Many researchers now consider that it takes several decades to extend new seeds developed by biotechnology among the majority of the farmers in the developing countries. Biotechnology is considered as an important means for genetic research and it will bring gradual increase rather than a breakthrough in yield.20 The "super rice" developed by IRRI in the Philippines using biotechnology increases rice yield by 30%. The rice has a plant type 90 cm in height with four or five short and strong stalks with big ears, eliminating stalks with no ears.33 However, I heard in my discussion with Professor T. Horie of Kyoto University, who is knowledgeable about the results of experiments with this rice in Japan, that the yield increase has not yet been achieved because of many non-filled grains. My judgement about the yield increasing potential of biotechnology in the near future, listening to discussions among the world's leading genetic engineers at this 12th Toyota Conference, is very pessimistic.

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