Generated Summary
This document is a working paper from the Food System Economics Commission that analyzes the challenges facing global agri-food systems and proposes a governance model to address these issues. The study examines the impact of the COVID-19 pandemic, climate change, and the Russia-Ukraine conflict on food production, distribution, and access. The paper investigates the current state of world agri-food systems, focusing on the concentration of agricultural production in certain regions, the impact of climate change, inequalities in food distribution, and limitations in crisis management. The study considers international governance and recommends improvements to enhance performance and institutional capacities to deal with the challenges. The paper explores the dynamics of food prices, trade, market failures, and the role of governance in addressing these issues and proposes a new governance model for world agri-food systems.
Key Findings & Statistics
- The value of agricultural production grew with fewer employees, with an increase in the use of agrochemicals –e.g., 36% in the use of pesticides (FAO, 2021b).
- Agricultural value added increased by 73% between 2000 and 2019 (around 3.5 trillion dollars).
- Agriculture has reduced its participation in the world’s labor force from 1,050 million people to 874; by 2020, it represented 27% of the world’s workers (FAO, 2021b).
- High and upper-middle-income countries concentrate 60% of global production.
- Since 1961, the average yield of cereal grain has remained flat in Sub-Saharan Africa at around 1.5 tons per hectare, while in South Asia, it grew reaching 3 t/ha, and in East Asia, it increased to 6 t/ha (Fuglie, Gautam, Goyal, & Maloney, 2020).
- The TFP accounted for 44% of the growth in the agricultural output.
- Engel’s Law postulates that as income rises, the proportion of food expenditure falls.
- In the 1990s, the average annual growth in TFP in high and upper-middle-income countries was between 1.8% and 2.4%, while in low and lower-middle income, it was between 0.9 and 1.3% (own calculation based on USDA (2022) data).
- The rich-poor gap yields would virtually disappear, going from 214% to only 5% (Adamopoulos & Restuccia, 2022).
- “Inappropriate technologies” (defined as mismatch in the presence of crop-specific pests and pathogens (CPPs)) reduces global productivity by 58% and increases cross-country disparities by 15%.
- The Global Surface temperature was 1.09°C higher in 2011-2020 than in 1850-1900 (pre-industrial era), with a more significant increase over land (1.59°C) than over oceans (0.88°C).
- Food systems emit about 18 Gt CO2 equivalent per year globally, representing 34% of total GHG emissions in 2015 -although their share of total emissions has decreased from 44% in 1990 (Crippa, et al., 2021).
- The most significant contribution comes from agricultural production associated with land use (71%); also, only 6 top economies (China, Indonesia, United States, Brazil, European Union, and India) accounted for 51% of aggregate emissions from food systems (Crippa, et al., 2021)
- Food systems emit about 18 Gt CO2 equivalent per year globally, representing 34% of total GHG emissions in 2015 -although their share of total emissions has decreased from 44% in 1990 (Crippa, et al., 2021).
- Between 2000-2009, a 1°C warming in West Africa led to regional average yield reductions of 10-20% for millet and 5-15% for sorghum, with associated losses between 2.33-4.02 billion USD for millet and 0.73-2.17 billion USD for sorghum (compared to a non-warming counterfactual) (Sultan, Defrance, & Iizumi, 2019)
- The anthropogenic climate change also affected agricultural TFP, accounting for about 21% of the reduction in productivity since 1961.
- The effect is more severe in warmer regions such as Africa, Latin America, and the Caribbean, with an estimated reduction of -26 to -34% (Ortiz-Bobea, Ault, Carillo, Chambers, & Lobell, 2021).
- In 2021, wheat exports from both countries accounted for around 30% of world market.
- In 2020, about 690 million people suffered from hunger (FAO, IFAD, UNICEF, WFP and WHO, 2021).
- The low-income countries spent, on average, 48.5% of their budget on food, beverages, and tobacco, the middle-income countries 31.1%, and the high-income countries only 20.4% (Muhammad, Seale, Meade, & Regmi, 2011).
- The per capita availability per day of calories in rich countries is about 3,500, which drops to 3,200 and 2,700 for upper and lower-middle-income countries and decreases significantly to 2,400 for low-income countries (OECD-FAO, 2022).
Other Important Findings
- Global agri-food systems face significant challenges including the COVID-19 pandemic, climate change, and the Russia-Ukraine conflict, leading to consequences on production, distribution, and access to food, accentuating regional gaps and inequalities.
- The 2008 crisis highlighted issues related to financial speculation in raw materials, including food.
- The current situation is marked by increased food prices, particularly cereals and fertilizers, but also by the operating model of agri-food systems and their governance which have not facilitated the approach and management of the crisis.
- International food-system governance is a significant trigger in dealing with the problem of agri-food systems but the outcomes are weak.
- Five critical issues agri-food systems face in their transition toward sustainability, inclusion, and food security include: agricultural production concentration, climate change impacts, food distribution inequalities, food quantity and quality disparities, and limitations in avoiding and facing crises.
- Agricultural Economic Growth can be decomposed as an increase in the use of input for better efficiency in the use of the resources.
- The agricultural productivity gap has tended to reduce among high-income countries, but it has expanded among lower-income ones.
- Climate change impacts include differentiated regional effects, increased food insecurity, and threats to global nutrition.
- Agri-food systems play a dual role in climate change, both as contributors to and as a sector affected by climate change.
- Food distribution and the configuration of global agri-food systems further accentuate inequality in the right to adequate food.
- Market concentration has grown significantly in agri-food systems, leading to power asymmetries and limiting the ability of systems to meet their objectives.
- Agri-food systems face limitations in avoiding and facing crises, and that the periods between crises are increasingly shorter and with more significant impacts.
- The current governance of agri-food systems does not adequately address market failures from the concentration of markets, the expansion of global value chains, and unequal trade participation.
- The paper highlights the need for a new governance model that emphasizes healthy food for everyone, regenerative practices, equitable distribution, and the right to adequate food.
Limitations Noted in the Document
- The paper notes that the current governance of agri-food systems does not have the conditions and capacities to handle the problem, giving mechanisms and solutions to correct the global imbalances with consequences in food access, poverty, and inequality.
- The current governance does not create capabilities, especially in the weakest countries, to confront shocks and crises which will be more frequent and intense shortly and to regenerate conditions for food systems to work and achieve a sustainable transformation.
- The study mentions the challenges of global governance lie in the high coordination costs associated with a worldwide organization that can exacerbate the free-rider problem in collective action and inefficiencies.
- The document states that the current food price crisis will affect most of the world’s population, and that the governance of food security at the international level is highly fragmented.
- The solutions to these challenges would come from increases in agricultural productivity.
Conclusion
The Food System Economics Commission working paper provides a comprehensive analysis of the challenges facing global agri-food systems, highlighting the impacts of climate change, market failures, and inequalities in food distribution. The study emphasizes the need for a new governance model that prioritizes the right to adequate food for all, promotes sustainable production practices, and addresses power imbalances within the food system. The document underscores the interconnectedness of global issues, such as hunger, malnutrition, and environmental degradation, and advocates for international cooperation and a shift towards more equitable and sustainable practices. The paper emphasizes that to address these global challenges, food systems must evolve to include the key elements such as sufficiency, regeneration, distribution, commons and care, in order to have the capacity to achieve significant changes, especially in the rules and models of world food trade. The study also suggests that productivity gaps are not a barrier for agri-food systems to fulfil their fundamental purpose. Furthermore, the paper calls for global food-security cooperation to be built from the bottom up, creating a solid sub-regional and regional collaboration that can eventually be matched at the worldwide level. The international institutions must support such regional cooperation in specific areas of expertise. The new governance must have the capacity to achieve significant changes, especially in the rules and models of world food trade. Moreover, the study highlights the importance of international arrangements in terms of better technologies, especially to those nations with low capacities to improve productivity for healthier and more accessible food. Overall, this paper presents a compelling case for a more just and sustainable approach to global food systems, emphasizing the need for systemic change and international collaboration to address the complex challenges of hunger, malnutrition, and environmental sustainability.