1. The New Normal?
A Tighter Global Agricultural Supply and
Demand Relation and its Implications for
Food Security
Mark W. Rosegrant, Director
Simla Tokgoz, Research Fellow
Prapti Bhandary, Senior Research Assistant
Environment and Production Technology Division
ABARES's Outlook 2012 Annual Conference
Canberra, Australia
March 6-7, 2012

2. Outline
 Drivers of agricultural growth and food security
 Model description
 Baseline projections of supply, demand and food
security
 Alternative scenarios for crop productivity and energy
price
 Conclusions and policy implications
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3. Drivers of Agricultural
Growth and Food Security

4. Drivers of Agricultural Growth
and Food Security
 Demand drivers
• Population growth: 9 billion people in 2050
• Urbanization: 2008 = 50% urban; 2050 = 78%
urban
• Income growth
• Biofuels and bioenergy
• GHG mitigation and carbon sequestration
• Conservation and biodiversity
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5. Drivers of Agricultural Growth and
Food Security
 Supply drivers
• Water and land scarcity
• Climate change
• Energy prices
• Investment in agricultural research
• Science and technology policy
• Management and governance reform
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6. Model Description

7. The IMPACT Model
 IMPACT – “International Model for Policy
Analysis of Agricultural Commodities and
Trade”
 Representation of a global competitive
agricultural market for crops and livestock
 Global
• 115 countries
• 281 food production units (countries x river basins)
• 46 agricultural commodities
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8. Flow Chart of IMPACT Model
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9. Baseline Projections of Supply,
Demand and Food Security

10. Annual Average Growth in GDP between 2010
and 2050 – Baseline Projections
Source: IFPRI IMPACT Model, September 2011 simulations
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11. Annual Average Growth in Population between
2010 and 2050 – Baseline Projections
Source: IFPRI IMPACT Model, September 2011 simulations
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12. World Crop Yields
Annual Average Growth Rate
Source: IFPRI IMPACT Model, September 2011 simulations
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13. World Crop Area
Baseline Projections
Source: IFPRI IMPACT Model, September 2011 simulations
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14. Source of Cereal Production Growth,
2010 - 2050
Source: IFPRI IMPACT Model, September 2011 simulations
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15. Percent Change in World Prices of
Cereals between 2010 and 2050
Source: IFPRI IMPACT Model, September 2011 simulations
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16. Percent Change in World Prices of
Meat between 2010 and 2050
Source: IFPRI IMPACT Model, September 2011 simulations
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17. Cereal Production
Baseline Projections
Source: IFPRI IMPACT Model, September 2011 simulations
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18. Meat Production
Baseline Projections
Source: IFPRI IMPACT Model, September 2011 simulations
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19. Per Capita Meat Demand
Baseline Projections
Source: IFPRI IMPACT Model, September 2011 simulations
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20. Population at the Risk of Hunger
Source: IFPRI IMPACT Model, September 2011 simulations
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21. Alternative Scenarios for Crop
Productivity and Energy Price

22. Scenarios Compared to Baseline
 Scenario 1 – Yield Increase
• Higher crop productivity growth rate resulting in higher crop
yields
• Increase the productivity growth rate for each crop such that
the projected crop prices in 2050 in real terms are the same
as crop prices in 2010 in real terms
 Scenario 2 – Energy Shock
• Doubling of oil prices in 2050 compared to baseline
• Higher fertilizer price (fertilizer price growth rate increased
by 75%)
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23. Changes in World Prices of Crops
Relative to Baseline, 2050
Commodity/Scenario Yield Increase Energy Shock
Rice -20.2% 9.8%
Wheat -26.3% 10.1%
Maize -36.3% 13.4%
Other Grains -12.0% 6.4%
Soybeans -19.2% 8.2%
Sorghum Source: IFPRI IMPACT Model, September 2011 simulations
-17.7% 6.5%
Source: IFPRI IMPACT Model, September 2011 simulations
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24. Changes in World Prices
Relative to Baseline, 2050
Commodity/Scenario Yield Increase Energy Shock
Beef -4.9% 2.2%
Pork -5.8% 2.2%
Poultry -8.8% 2.5%
Soybean Oil -15.3% 26.3%
Rapeseed Oil -22.8% 50.5%
Milk -3.4% 1.1%
Source: IFPRI IMPACT Model, September 2011 simulations
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25. Impact on Population at Risk of Hunger
Relative to Baseline, 2050
Commodity/Scenario Yield Increase Energy Shock
East Asia and Pacific -11% 6%
Europe and Central Asia -4% 2%
Latin America and Caribbean -19% 17%
Middle East and North Africa -16% 8%
South Asia -32% 19%
Sub-Saharan Africa -32% 15%
Developed -1% 4%
Developing -26% 14%
World -24% 14%
Source: IFPRI IMPACT Model, September 2011 simulations
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26. Conclusions and Policy
Implications

27. Conclusions
 World prices of most cereals and meat are
projected to increase in real terms in the
coming decades with business-as-usual
 Rising prices will slow food demand growth for
poor consumers, adversely affecting food
security and human well being
 Population growth in developing world will lead
to rapid growth in cereal demand
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28. Conclusions
 Rising income and rapid urbanization in Asia
will change composition of demand towards
meat and dairy
 On the supply side, water scarcity, climate
change, land degradation and lack of necessary
resources will reduce yield growth rates
 With declining water availability and land for
profitable cultivation, expansion of area will
contribute little to future production growth
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29. Conclusions
 Intensified linkages between energy and
agricultural markets
• through growth in biofuels production
• through higher input costs to agricultural
production
 Developments in energy markets impact
agricultural markets and affect food security in
developing countries
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30. Energy Policy Implications
 Adopting a low-carbon fuel standard (like the
California policy, versus the existing national
RFS) would shift ethanol production away from
grains and towards other lower-carbon
feedstocks
 Reduce OECD subsidies and mandates for
biofuels; liberalize trade in biofuels
 Reduce water, energy, fertilizer subsidies
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31. Agricultural Productivity
 Increasing crop productivity: agricultural research,
water management, and rural investment
• Emphasis on crop breeding (including
biotechnology) targeting abiotic and biotic stresses
• Water harvesting, precision agriculture, minimum
tillage, integrated soil fertility management,
integrated pest management, reduce post harvest
losses
• Rural infrastructure investment to improve access
to markets, information, credit, inputs
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