Food Security

APEC Workshop on Food Security

Tokyo, Japan

26 September 2012

Bruce BlakemanVice President, Asia PacificCargill

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Cargill is an international producer and marketer of food, agricultural, financial and industrial

products and services

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Cargill is composed of over 75 businesses, operates

in 65 Countries & has over 140,000 employees

Animal and aqua nutrition & feed

Commodity trading & processing

Meats & proteins

Energy, petroleum & fuels trading

Farmer services

Overseas shipping

Financial & risk management

Food & beverage ingredients

Foodservice

Health & personal care

Salt

Metals & minerals trading

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1BILLIONUNDERNOURISHED

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Can we feed the world? YES!4

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The Complexity of Food Security

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Increasing demand for crops for biofuels

In the mix:Changing appetites/

Demand for protein

Increasing global

consumption

Production shortfalls

Declining R&D investment

Government policies that inhibit trade

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54%0%

32%

6%

8%

Population growth numbers plotted onto the notional map of centre of economic gravity.

Sources: OECD Development Centre and “The Global Economy’s Shifting Center of Gravity” by Danny Quah

(EconoMonitor, Aug 2010)

The center of gravity at 3-year intervals. • Black is history 1980-2007.

• Red is extrapolation 2010-2049.

Population & economic growth are moving towards Asia from the West

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Food Consumption vs. Income(Animal products includes meat, fish/seafood, eggs – no dairy)

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Source: Internal Cargill Analysis

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What drives food demand?Processed food demand: the S-curve

Expe

nditu

re o

n pr

oces

sed

food

s

Real per capita disposable income in PPP terms

Affluent countries

Developing countries

$7,600

$3,500$34,000

$10,800

Point of inflection

$47,200Based on Euro MonitorSource income data:

CIA Fact book

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1000

1200

1400

1600

1800

2000

2200

2400

2600

2800

1975 1980 1985 1990 1995 2000 2005 2010

Production Consumption 1980-2003 trend

Global Production and Consumption of Grain, Rice and Major Oilseeds

mmt

6 years of above trendrecord crop production

and consumption

Source: USDA

20111975

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Grains – Less Room for Error

WORLD COARSE GRAIN STOCK % OF USAGESOURCE: USDA

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Global Food Production vs. Price

-30

-20

-10

0

10

20

30

40

50

60

70

1975

1980

1985199

0199

5200

0200

5201

0

Percentage change in production

Percentage change in price

Source: USDA

(production of grain, rice, major oilseeds, PO, FSHM vs. corn/soybean/wheat futures price index)

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Biofuels Volumes – a Major Shift

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Mln MT Mln MT

~10% of world grain market

~11% of world vegoil market

Assumes 3129 Kilo of Ethanol/MT of grain

Source: OECD/FAO/USDA

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So what needs to happen?

• Increase farm productivity – increased yields

• Liberalize trade of food– Trade agreements

– Standards harmonization/SPS

– Quotas

• Increased investment in logistics

• Allow flexibility in biofuel mandates

• Tap Africa’s potential

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Key Driver of Production Growth: Yield IncreaseGenetic improvements and fertilizer intensification drive supply expansion through yield --acreage has not been a significant supply drive until recently

Production

Yield

Area

Index (1975=100)

Source: USDA

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Comparative Advantage

The world will always raise the most food the most economically if every farmer plants the right crop for the soil and climate, and then trades with others.

David Ricardo

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Increasing Productivity

• Provide farmer training, especially to small holder farmers

– Governments need to invest in extension services

• Give farmers access to the best technology – seeds, growing techniques, fertilizers, insecticides

• Provide certainty of land ownership rights to farmers

• Provide financing to farmers

• Allow clear market signals to farmers so they can make decisions on what & how much to grow

– Price discovery to farmers

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World Food Flows

exporters: more land exporters: more land than peoplethan people

importers: more people importers: more people than landthan land

(grains, rice, oilseeds, meals, oils, feed equivalent of meat – net interregional in mmt)

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Free Trade Facilitates Access to Food

• Global food supplies fluctuate less than local harvests

• For food to move from areas of surplus to areas of deficit, it must be traded

• Countries need to commit to “no export bans” on food

• New trade agreements need to negotiated

• Behind the border issues need to be addressed:

– Harmonization of Standards

– SPS equivalency recognition

– End Import Quotas

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Investment in Logistics

• A recent study estimated that 40% of all crops in India goes to waste because of lack of proper storage and cold-chain -- so an incredible amount of food is wasted because we cannot get it from the farm to where it is needed

• Governments need to increased investments in ports, rail and roads to move crops to market

• Farmers and the private sector need to invest in on-farm storage and cold-chains

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African Agriculture Today• Africa net importer of food

and agricultural products, despite its vast resources

• Factors: population growth; low agricultural productivity; poor policy choices; lack of infrastructure; weak institutions

• Lack of land ownership rights

• Low yields and low land use

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Summary• We can feed the 9 billion people in 2050 with the technology

we have today• The main point, however, is we need the public and private

sectors to work together to address food security

• Food security is not just about growing more food (which obviously has to happen) but we also need to provide the right policy environment to allow the free flow of food to go from where it grown to where it is needed to feed the world’s population.

• Countries need to work together to develop trade agreements and standards & regulatory harmonization to allow the movement of food

• Investments need to be made in small holder training and food logistics

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Nourishing ideas. Nourishing people.TM