The world's farmers need a pay raise, or else, come mid-century, the other 8 billion of us may not have enough to eat.
As the Earth Policy Institute notes, the world produced more grain than it consumed throughout the 1970s, 1980s, and 1990s. Today, those surpluses are gone. While the world harvested 20.4 million tons of grain between 2001 and 2010, it consumed 20.5 million tons. This gap may sound small, but it will surely widen later this century as the world population and food demands continue to rise.
At its "How to Feed the World" meeting in October 2009, the UN Food and Agriculture Organization stated that world food production would have to increase 70% by 2050 to adequately feed the growing world population. This would require an investment of $83 billion a year in the developing world alone. However, it also noted, "Farmers and prospective farmers will invest in agriculture only if their investments are profitable."
Unfortunately, farming in the last few decades has not been particularly profitable. The real prices of rice, wheat, soybeans, and maize fell by an average of 2%-3% per year between 1975 and 2008, according to University of Minnesota economists Julian Alston, Jason Beddow, and Philip Pardey.
Cheap food is a boon for consumers, but not for farmers and not for the planet. Among the effects are disincentives for farmers to grow more food, leading to reduced agricultural productivity gains, a disincentive to young people to work in agriculture, huge wastage, and spreading ill-health in society. Cheap food prices also reduce national and international investment in agriculture, as investors consider farming less profitable than other opportunities. Because of the disincentives to investment, farmers cannot adopt more sustainable and productive farming techniques so readily.
The dramatic increases in world crop prices in 2008 and 2010 have not made farming more profitable. The reason is a growing imbalance in market power between farmers and the businesses that dominate the food supply and input chains.
Two decades ago, most consumers bought their farm produce from local farmers in local markets. In the twenty-first century, market power is increasingly concentrated in a very small number of food corporations and supermarkets sourcing food worldwide. The food corporations minimize their input costs by paying farmers less for farm commodities. The power of the farmer to resist downward price pressure has weakened, as farmers in rich and poor countries alike now compete intensely with each other to sell at the lowest possible prices.
At the same time, the manufacturers of fuel, machinery, fertilizer, chemicals, seeds, and other farmers' necessities have grown much larger, more globalized, and more powerful. This makes it easier for them to raise the cost of their products. When farm commodity prices rise, the industrial firms increase the prices of their wares, often by far more. In 2008, when grain prices rose 80%, fertilizer prices went up 160% in some cases, while oil reached to $160 a barrel with proportionate increases in farm fuel costs. Many farmers have noted the irony: They earn lower profits when commodity prices are higher.
Farmers are thus trapped between muscular globalized food firms that drive down the prices of their produce and muscular industrial firms that drive up the cost of their inputs. The economic message now reaching most of the world's farmers from the market is "Don't grow more food." As a result, world food output is increasing too slowly to meet rising demand, overall farm productivity gains are sliding, and yield gains for major crops are stagnating.
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