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Food is the only economic sector that touches every human every day: everyone eats and nearly half the world’s population relies on income from work in food production or distribution.
Yet today we face an agrifood systems (AFS) poly-crisis worldwide: a cluster of interrelated challenges with a total impact greater than the sum of the individual risks each poses. A record number of people are beset by one or more food emergencies: food insecurity or undernourishment; being overweight or obese; insufficient consumption of dietary minerals and vitamins. Agricultural development accounts for many new infectious diseases among humans and for a majority of zoonoses. And, despite their potential to mitigate climate change, AFS contribute 20-30% of global greenhouse gas (GHG) emissions and are major sources of air and water pollution.
Together, these challenges increase healthcare costs and poverty rates and lower labour productivity and economic growth. We urgently need to transform our AFS to remedy these various, inextricably linked crises.
Also on the Forum Network: Agriculture and climate change: A complicated relationship by Lee Ann Jackson, Head of the Agro-food Trade and Markets Division, OECD
Agriculture and food systems have a unique relationship with climate change. While it is among the most vulnerable sector in the economy to a changing climate, agriculture and food production itself substantially contribute to climate change, explains Lee Ann Jackson, Head of the Agro-food Trade and Markets Division at the OECD.
This will require concerted, multinational efforts spanning multiple policy domains to achieve healthy, equitable, resilient, and sustainable (HERS) systems. Policy reforms are essential to an AFS transformation because the challenges and opportunities we face originate from food-related decisions made by every single person on Earth each day, whether they are consumers, investors, producers, regulators, or workers.
We must accelerate and expand knowledge-driven innovation to produce more HERS food per capita with a lower absolute land, water, and chemical footprint, thus with less adverse environmental and health impacts. Doing so requires tailoring bundles of social and technological innovations to specific contexts to transform our present, unsustainable approaches to HERS AFS.
We have used concerted agricultural policy efforts to spark impactful change before, in both the 1930s to 1950s (in what are now today’s high-income countries, or HICs) and the 1960s to 1980 (the Green Revolution in Asia and Latin America). In each case, new technological advances were bundled with supportive policy and institutional efforts, reflecting a commitment both to science-based progress and to protection for those who might otherwise lose out in the creative destruction intrinsic to change.
Today’s global food poly-crisis arises due to simple economics: food demand growth has outpaced supply growth since the 1990s, especially for more nutrient-rich foods. This has led to real food price inflation and greater food price volatility and has increased AFS GHG emissions and pollution since the turn of the millennium. Policy can switch this imbalance, nudging down demand growth and substantially accelerating sustainable growth of healthy food supply.
Another policy tool to reduce food demand is to roll back biofuel mandates, which create competing demand for cereals and oilseeds, diverting commodities from food and feed supply chains.
Changes will be needed on the demand side and the supply side. Regarding demand, one potentially more impactful approach promotes true cost pricing in public procurement. The best, albeit imprecise, current estimates are that the negative externalities of today’s AFS amount to US$8-52 trillion annually, likely at least triple the US$9 trillion currently spent on total global food consumption. Governments ultimately bear significant fiscal costs from these large spillovers.
Another policy tool to reduce food demand is to roll back biofuel mandates, which create competing demand for cereals and oilseeds, diverting commodities from food and feed supply chains. Biofuels mandates yield little or no measurable improvements in GHG emissions but do fuel food price increases and create incentives to clear more land to cultivate feedstocks. Dropping biofuel mandates is the single fastest step governments can take to reduce food price pressures and their associated ills.
Regarding supply, the focus must be on raising total factor productivity growth in agriculture and in producing foods in nonagricultural systems that require little land, water, agrochemicals or non-renewable energy. Most future supply growth must come from an increased output from the same land and water footprint, a considerable share of it from nontraditional, non-farm sources like controlled environment agriculture, novel foods and feeds, and more sustainable and healthier protein-rich foods produced in factories rather than on farms.
Reallocating just 15-20% of current transfers to AFS producers to R&D could enable a budget-neutral 50% expansion in public AFS R&D with a focus on healthier, more resilient, and sustainable products and methods.
Unfortunately, public investment in AFS research and development (R&D) has waned in recent decades and remains heavily focused on refining traditional crops and methods. Reallocating just 15-20% of current transfers to AFS producers to R&D could enable a budget-neutral 50% expansion in public AFS R&D with a focus on healthier, more resilient, and sustainable products and methods. Innovations such as true cost pricing in public procurement policies, advanced market commitments, or benevolent patent extensions could boost the relative returns to HERS AFS R&D, bringing much-needed private investment at a relatively small cost to taxpayers. By way of comparison, the entire annual budget of the CGIAR – the international agricultural research system – is roughly 0.05% of the $2 trillion in cash reserves held by the S&P 500 firms alone.
Thanks to advances in genetics, synthetic biology, combinatorial chemistry, nanoengineering, artificial intelligence, etc., our ability to create new crop varieties and livestock breeds, identify desirable traits in indigenous ones, and develop emerging novel, HERS food products and production methods, is growing. This requires parallel progress in biosafety, food safety, intellectual property and other regulations. That said, policymakers must heed credible evidence and permit the responsible, monitored use of expanding scientific toolkits.
Emergent digital technologies can also help to boost AFS TFP, resolve growing agricultural labour shortages where working-age populations are falling, and improve water, soil, pest, and agri-chemicals management. But without concerted efforts to promote credit and insurance options, broadband access, and agricultural extension support for small-scale farmers, these innovations will be slow to reach low-and-middle-income countries (LMICs) where they are urgently needed.
Aid, trade finance, and technology transfer policies must aim for technological and institutional leapfrogging akin to that seen in communications and banking systems in Africa and Asia.
Expected population and income growth patterns imply that virtually all future global food demand growth will occur in Asian and African LMICs. Aid, trade finance, and technology transfer policies must aim for technological and institutional leapfrogging akin to that seen in communications and banking systems in Africa and Asia, which largely skipped landlines and retail branch networks to quickly scale mobile phones and digital financial services.
Governments must also revisit trade agreements to extend disciplines to export restrictions. International trade accounts for less than one-third of food consumed globally. Trade is a crucial price shock absorber that will grow ever more valuable as supply shocks grow more frequent and severe, due to extreme weather events with climate change.
Policy reforms outside of agriculture are likewise crucial to accelerating food supply growth. Immigration policies, advances in renewable energy technologies, and energy, environmental and transportation policies that reduce GHG emissions and air and water pollution can significantly boost AFS productivity.
Good food policy requires strategically combining different approaches to fit the context; no one-size-fits-all solutions exist. Policymakers have a range of instruments at their disposal to induce impactful innovations and demand- and supply-side responses that can help steer the world away from the current global food poly-crisis and towards healthy, equitable, resilient, and sustainable AFS.
Urgent action is needed, as institutional and technological changes take time, and the world cannot afford for food demand growth to continue to outpace supply growth.
To learn more, read also the OECD-FAO Agricultural Outlook 2022-2031
A consensus assessment of the ten-year prospects for agricultural commodity and fish markets at national, regional, and global levels, and reference for forward-looking policy analysis and planning.
And also check out: From the OECD Agriculture Ministerial to COP27 by Marion Jansen, Director, Trade and Agriculture Directorate, OECD
As COP27 begins, people across the globe are also facing rising food prices and increased food insecurity. Now is the time for action, both to ensure a productive food system that can feed a growing population and to transform the agricultural sector to meet climate goals.
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