Investment in Food Sector is Needed to Continue Success of Past Five Years, Claims GFSI Report

While far too many people in the world still go to bed hungry every night, progress has been made across a range of measures that contribute directly to national food systems’ ability to provide nutritious food affordably to all.

 

While many know about the increase in private investment by farmers and agribusiness to drive productivity, other investments are also helping solve the problems and should not be overlooked.

 

The Economist Intelligence Unit's Global Food Security Index (GFSI), sponsored by DuPont, measures the annual development of national, regional and global food security. The research points to a central five-year trend: investments in key structures for and drivers of food security are the most critical factor in national food system improvements in efficiency and effectiveness. Additional key learnings since the inception of the study are:

 

•    Critical investment areas include infrastructure, programs that protect individuals from food-related shocks, sources of finance for farmers and new agricultural technologies. Better ports, roads and food storage capacity directly impact both access to food and the mitigation of post-harvest to market food loss.

 

•    Improving the structural elements of food security requires multifaceted aid. Government-led investments, enhanced by private support, have resulted in both increased food affordability and availability. For example, Algeria’s 2010-14 Public Investment Program allocated 7,000bn dinars to agriculture and infrastructure. Key program initiatives targeted the use of water-saving irrigation equipment, the intensification of seed production, development of agribusinesses and the introduction of a network of small and medium-sized enterprises (SMEs) in inputs and agricultural services.

 

•    Infrastructure development is the most important factor in market access and the availability of food throughout the system. The building and expansion of much needed transport infrastructure will continue as developing countries maintain their emphasis on agricultural development. A model for best practices, Ethiopia’s Growth and Transformation Plan looks to build almost 5,000 kilometres of railway across eight major routes to forge a national rail network and increase trade and economic ties with neighboring states. Government long-term planning in Cote d’Ivoire includes improvements to domestic and cross-border transportation links. There are also plans to substantially augment the capacity at the Port of Abidjan by 2021 to relieve growing congestion and secure Abidjan’s role as a key transit point for imports to and exports from West Africa.

 

Watchlist for 2016
Demographics Estimates point to a 20% growth in the earth’s population between now and 2050, accompanied by a 60% projected demand increase for staple crops, especially wheat. At the same time, production yields in key countries are at risk from rising temperatures and limited availability of arable land. Food prices remain susceptible to major swings, especially as severe weather events can impact production drastically.

 

Urbanization over half of the world’s population already lives in urban areas and this percentage is expected to increase to two-thirds in the coming decades. Urbanization will continue to put pressure on national and city-level food systems. Demographic pressures are already felt in many communities, and  urbanisation is a particularly critical challenge to food security in lower-income countries, where financial and physical access to food is already constrained. In addition to amplifying access problems, urban growth exerts pressure on freshwater resources and energy. 

 

Macroeconomics Crude oil prices underlie key food system costs, especially transportation and production inputs. Oil prices continue to fall, and high and growing inventories accentuated by the repeal of United States-led sanctions on Iran have pushed oil prices below the US$30/barrel mark. Though a modest recovery is expected in the second half of 2016, the average price forecast remains low. The outlook for key food commodities remains positive. Consumption of wheat is expected to grow by 1.5% to 717m tonnes in 2015-16, but wheat supplies are ample, as growth in world wheat production has recently outstripped accompanying gains in demand. Current market fundamentals—including the strength of the US dollar, the relative strength of the US economy and economic uncertainty in major importing countries like China—indicate that the downward food price trends in most markets will continue, at least in the near-term.

 

Innovation Just as digital technology has revolutionized access to financial services for the poor, growing mobile penetration and broadband access across the developing world will drive access to agricultural extension services and market information. Digital agriculture is already helping smallholders to access market information and to better understand demand and prices. They also have access to information about precision agriculture technologies and input use so that they can effectively and sustainably use water and fertilizer resources to increase yields per hectare.

 

Macroeconomic trends and innovative technological advancements, coupled with the private-sector investments and public policy initiatives that have driven food security successes across the developing world in past years, should support continued improvements over the short-term. Demographic pressures, resource shortages and climate change, however, pose a very great risk to global food security long-term. As governments, NGOs and the private sector work together to meet the new United Nations Sustainable Development Goals to eradicate hunger, sustainably increase production, and conserve and preserve natural resources, the emphasis on investment must continue. A focus on both public and private sector innovative capacity building will help to ensure that the world is able to feed itself in the future.