FOOD

1

• FOOD AGRICULTURE IN
• THE GLOBAL ECONOMY
• HOWARD PETCH

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYPOSITION
STATEMENT

• UK Agriculture increasingly operates in a global
  market place in which the availability and
  affordability of food is right back centre stage
  as a political issue. Against this background UK
  Agriculture is emerging from a decade that in
  economic and social terms has been the most
  challenging since the end of the second world
  war.
• Gradually, following the reform of the CAP and
  removal of production subsidies the industry is
  embracing a different, more diverse and market
  orientated culture but the early shoots of
  recovery are challenged by turbulence in input
  costs, financial markets. Significant increases
  in food inflation surprised some whilst this is
  likely to moderate most commentators would agree
  that the age of cheap food has gone.
• Shifts in consumer awareness, climate change and
  related forces are exciting indications of new
  challenges, threats and opportunities based on
  the realisation that our land and how we use and
  steward it must not be taken for granted.
  Increasingly agriculture is being seen as central
  to the solution of arguably the most challenging
  of global problems. Current global food supplies
  are subject to huge volatility

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYTHE
GLOBAL CONTEXT

• This suggests that the outlook for world food
  supplies is in fact relatively stable and that
  supply is keeping up with demand (Defra Food
  Chain Analysis Group Dec 2006)
• We are facing a mounting crisis in securing
  global food supplies, with climate change,
  rocketing oil prices and growing demand all
  placing a strain on traditional supply chains.
  (Professor Tim Lang June 2008)
• The major challenge is to produce more food
  (50 increase by 2030) with less available water,
  less available energy resources, fewer
  pesticides, increasing competition for land,
  while emitting fewer greenhouse gasses.. World
  policy makers have ignored the imminent threat
  until now( John Beddington Government Scientific
  Officer October 28th 2008)
• With grain stocks at an all-time low, the world
  is only one poor harvest way from total chaos in
  world grain markets (Lester Brown one of the
  worlds most influential thinkers 2008)
• Cereal production across the EU grew by a
  massive 50m tonnes this year.globally wheat
  harvests are set to exceed estimates as producers
  have responded to high prices and shortages last
  year and benefited from more favourable weather
  conditions (Farmers Guardian Oct 3rd 2008)

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYWHY SUCH
A DRAMATIC CHANGE?

• Population growth (70 million per year)
• More people moving up the food chain (gt3billion)
• Renewable fuel mandates in USA and Europe
• Climate change implications flood, drought, etc
• Depletion of irrigation supplies falling water
  tables
• Diminishing gains from agricultural technology
  (1950-90 2 per annum since 1990 only 1)
• Cumulative impact 1990-2005 annual increase in
  consumption 21 million tons per annum Since 2005
  gt40 million tons and rising.
• Seven out of last 8 years world grain consumption
  has exceeded production Carryover 54 days
  lowest on record

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYWHAT ARE
THE IMPLICATIONS?

• Steep rise in global food prices made worse by
  oil price
• Food riots in various parts of the world
• 860 million people (15)chronically malnourished
  (average calories per capita per day 2700 hence
  still a political rather than technical issue)
• Huge market volatility made worse by speculators
• Global political concern response G8 summit
• Highlights issues of land use and protection of
  the environment
• Highlights a range of other technical/ethical/poli
  tical issues

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYGLOBAL
RESOURCE ISSUES

• First green revolution due to nitrogen
  fertilisers, plant genetics, agro-chemicals and
  irrigation. In 40 years population x 2.15 world
  grain x 2.25 Per capita area of cereals reduced
  from 0.235Ha to 0.127Ha. Yields increased from
  1.2 to 2.7 tons/Ha
• Limited additional land available Intensity of
  usage?
• Global food production needs to rise by a further
  50 by 2030 and to double by 2050 (FAO)
• Soil degradation resulted in loss of 430m Ha in
  40 years salinization desertification water
  logging etc
• Severe water shortage limiting scope for more
  irrigation currently 16 worlds crop land
  produces 33 output
• Increase in temperature (climate change) 1C 10
  less

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FOOD AND AGRICULTURE IN THE GLOBAL ECONOMYUK
AGRICULTURE THE RECENT PAST (1995-2006)

• Dramatic fall in incomes - variation according to
  enterprise
• Concern re long term viability / loss of self
  worth
• Succession Future of family farm?
• Lack of investment
• Loss of personnel / skill base / new entrants
• Ripple effect through rural economy
• Social implications for rural communities
• Wider perception of agriculture

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYUK
AGRICULTURE THE CAUSES

• World commodity prices supply demand ratio
• Expansion in proportion of food traded
• The impact of currency values Euro Sterling
  Dollar
• Shift in power in the food chain
• CAP Reform
• Consumer trends
• BSE /FMD x 2 / Blue Tongue
• High levels of regulation
• Weak marketing infra-structure
• Limited farmer collaboration
• Technical / Business Management limitations

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYREFORM
OF THE CAP

• Reform 2005 -2013 Further reform to come
• Removal of production subsidies
• Farmers paid (Single Farm Payment SFP) for
  environmental benefit and delivery of public
  good
• Must fulfil Cross Compliance requirements
• Additional Environmental Schemes Entry Level
  Higher Level
• Set Aside back into production - contested
• Modulation funding directed to Rural
  Development
• In theory do not have to produce anything to
  receive payment
• Also national government response following FMD
  via The Curry Commission (2002) The Future of
  Farming and Food

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYUK
CONSUMER TRENDS

• Levels of expenditure 10.3 spend on groceries
  Now going up
• Convenience( cash rich-time poor- 1934 2.5 hours
  preparing food 20108 minutes)
• Snacking Less traditional meal times busy lives
• Health concerns low fats functional foods-
  pro-biotics omega 3 etc
• Removal of seasonality
• Niche products specialities organics
• Local sourcing 74 buy or would like to buy some
  local
• Ethical issues packaging energy efficient
  animal welfare fair trade farmers market
  environmental concerns etc
• Price is still the major driver now even more
  so.

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYFOOD
PRICE FACTORS (Defra)
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FOOD AGRICULTURE IN THE GLOBAL ECONOMYUK
FARMING RESPONSE

• Change of mindset culture to market/consumer
  driven
• Up corn Down horn has brought benefits and major
  problems
• Entrepreneurial approach including more
  integration to wider rural economy
• Business management expertise becomes a key
  driver/constraint
• Enhanced IT / technical skills concentration on
  knowledge transfer
• Tendency towards large scale commodity production
  (industrial farming?) and/or value added
• Family businesses increasing turnover by
  diversification, innovation and value added
• The best are very impressive but still some small
  non viable businesses

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYRESPONSE
OF VARIOUS ENTERPRISES

• Significant increases in price of wheat and other
  arable crops huge increases in price of fuel,
  fertilisers, chemicals great volatility in the
  market
• High feed prices have impacted the livestock
  sector especially pigs and poultry Huge
  reduction in pig herd gt40. Pork from 116 to 69
  supply in 3 years
• After crisis period for milk the price increased
  but much of this offset by higher production
  costs. Will not fulfil national quota Industry
  still on the edge
• Beef sheep experience fluctuating fortunes
  best prospects for those adding value More often
  than not they are secondary enterprises
• Uplands Hills (beef, sheep public good) Major
  questions re the future of the hills. What does
  the nation want?
• Horticulture (14) Vegetables Fruit Ornamentals
• Organics (3 area_at_ 620k H 85 is pasture)
  Higher NFIs 30 in SW

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYTHE
INDIVIDUAL RESPONSE

• Options for the individual business
• Exit the business / industry Difficult for
  tenants Need new entrants
• Improve efficiency scale (creative ways)
• co-operation/collaboration business skills
  
• Add value to output processing marketing etc
• Find additional source(s) of income on or off the
  farm
• The requirement for success is market driven,
  sound business culture

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYSOME
INNOVATION OPTIONS

• ON FARM AGRICULTURAL OPTIONS
• Alternative crops energy forestry
  amenity pharmaceutical contracting care
  farming niche products exotic livestock etc
• ON FARM NON AGRICULTURAL OPTIONS
• Tourism sport leisure retail value
  added equine environmental schemes rural
  workshops /offices kennels etc
• OFF FARM OPTIONS
• Full or part time employment self employed
  business activity other local business

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYSOME BIG
ISSUES

• BIO-TECHNOLOGY THE GM DEBATE
• THE USE OF LAND BIO FUELS?
• INTENSIVE OR EXTENSIVE ORGANICS?
• THE CARBON FOOTPRINT(UK Agric 7 ghg)
• ANIMALS FOR MEAT
• REGULATION OF SOIL, WATER ENVIRONMENT
• ENVIRONMENT / PRODUCTION TENSION
• PUBLIC GOOD IN THE COUNTRYSIDE
• TRADE POLICIES FREE FAIR
• FOOD PROVENANCEDEVELOPING WORLD
• INVESTMENT IN INDEPENDENT RESEARCH
• CONSUMER RIGHTS OBLIGATIONS

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FOOD AGRICULTURE IN THE GLOBAL ECONOMYROLE OF
THE ( RURAL) CHURCH

• Awareness and concern Understanding the context
  
• The Christian consumer
• Be an Effective Christian Presence (Ecumenical)
• Pastoral and Advocacy role
• Prophetic Interpret Biblical Truth
• Help bridge the rural urban divide Reconnection
  to the land
• Support for rural ministry Not the poor relation