2 Degrees + Food: Take Aways

By China Water Risk 10 October, 2012

Lisa Genasci's key takeaways from 2 Degrees + Food's keynote speaker Dr. Shenggen Fan and the panel

Global food production needs to increase 70% by 2050, but water scarcity may make this figure unachievable
Crop based biofuels, dietary changes in Asia and urbanization are adding to food stress
Investment, innovations and incentives needed - drough tolerant crops & appropriate fertilizer use

With the world’s population expected to reach 9 billion by 2050, projections are that we will need to expand global food production by 70% to keep our world fed.  But this could be a practically impossible task given our parallel resource scarcity.
And it’s the food, water and energy nexus that’s keeping observers of this trend awake at night. Naturally, adequate water supply is essential for food production, which now accounts for 80 percent of global freshwater withdrawals annually.  Yet, according to the International Food Policy Research Institute (IFPRI), half of all grain production is at risk of insufficient water resources by 2050.
And, of course, there is the intertwining of food and oil prices as a result of increased energy use in agriculture and the growing share of food crops used to produce biofuels. Higher energy prices in recent years have meant higher food prices, while more land and water have been employed to produce energy. At the same time, access to adequate food and water has declined, with climate change exacerbating the problems.

“Business as usual is not working …. what we need is business unusual.”

Dr. Shenggen Fan, Director General of the IFPRI

Dr. Shenggen Fan, director general of the IFPRI, addressed some of these significant challenges while in Hong Kong late last month.  “Business as usual is not working”, he said, “what we need is business unusual.”
Fan featured at the Economist Conference, Feeding the World: Asia’s prospect of plenty, and at the Climate Change Business Forum’s 2 Degrees Plus Food seminar. The latter event followed on from 2 Degrees Plus Water, held earlier this year and moderated by China Water Risk’s Debra Tan.
Fan emphasized that with drought in the U.S. and a diminished corn crop this year, we already face possible global food shortages. Drought in Russia, China, North Korea and South Korea are similarly withering key cops and exacerbating shortages. Climate change and the consequent changing weather patterns are now the “new normal” and something to which we all must adapt, he said.
Agriculture, Fan said, is both the problem and the solution to our myriad climate change challenges.  Already, natural disasters cost us over $300 billion last year and Asia is among the regions worst impacted by unpredictable weather.
Yet he emphasized the significance of the agricultural sector. Beyond the hefty water withdrawals, agriculture uses 34 percent of land and 35 percent of labor. In all, 97 percent of agricultural workers live in developing countries and of those, 41 percent are women. In Asia, 90 percent of farmers are working farms smaller than 2 hectares.

Food-Energy-Water nexus

Biofuels – at least crop biofuels – took the heat in 2 Degrees + Food. In his talk, Fan argued that to avert the immediate crisis, the U.S. government should immediately suspend its biofuels program. Under the Renewable Fuels Standard, 9 percent of US gasoline must now be ethanol. This effectively means converting almost 40 percent of the nation’s corn crop into energy.
Growing biofuels, Fan says, already has pushed the global price of food significantly higher to the detriment of some of the world’s poorest, suffering already from food shortages and malnutrition. This brings me to the four principal takeaways from Fan’s speech and the panel discussion that followed.

  1. We live in a world replete with poverty, where economic growth doesn’t necessarily correlate to less hunger. This is true even in Asia, where the economy is booming. In all, he said, 15 Asian countries have alarming levels of hunger, similar to those of Africa. The cost of micronutrient deficiencies in India alone is $17.3 billion, or 2.5 percent of GDP. Meanwhile, Fan quoted World Food Program statistics that show malnutrition costs China 5 percent of its GDP annually.
  2. Dietary changes in Asia, rising incomes and urbanization are adding to food stress, with meat consumption increasing 5-6 percent. Regional economies are even more vulnerable to water stress and climate change, to rising sea levels, and loss in agricultural productivity. This will only be made worse by drought, which this year alone is expected to cut wheat production by 28.8 percent, maize, by 37.3 percent.
  3. Crop-based biofuels are adding to food security and climate concerns. These compete with food availability and push up prices. They also increase carbon emissions in land use change, the conversion of rainforest and grasslands into energy crops. U.S. ethanol distilleries consumed 120 million tons of corn last year alone – an amount that could have fed the world, Fan said. That corresponds to about 40 percent of the U.S. corn crop. In all, 8 percent of corn globally feeds our bio-ethanol habit.
  4. Agriculture contributes to climate change but can also help mitigate it, employing crop management and grazing land management, investments, innovations and incentives. We need to invest $7 billion annually to promote low-carbon agriculture.  This would include choosing crop varieties that are drought tolerant, improving rotations as well as appropriate use of fertilizers.

Other panelists presented a similarly gloomy portrait of our need to produce ever more food amid dwindling resource inputs. We have one planet but will essentially need three by 2050 if we are to produce and consume at the same levels and in the same way. We need to learn to produce more with less. We need radically new measurement tools and technology to achieve this. As consumers, we must all buy into change.
Climate change is still not on the corporate risk registers as a threat to food supply, panelists said. But clearly, hand-in-hand with water scarcity, it should be.

China Water Risk
Author: China Water Risk
We believe regardless of whether we care for the environment that water risks affect us all – as investors, businesses and individuals. Water risks are fundamental to future decision making and growth patterns in global economies. Water scarcity has emerged as a critical sustainability issue for China's economy and since water powers the economy, we aim to highlight these risks inherent in each sector. In addition, we write about current trends in the global water industry, analyze changes occurring both regionally and globally, as well as providing explanations on the new technologies that are revolutionizing this industry.
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