Archive for the ‘Investment’ Category

Feb26

Agricultural Population Growth Marginal as Nonagricultural Population Soars

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The global agricultural population—defined as individuals dependent on agriculture, hunting, fishing, and forestry for their livelihood—accounted for over 37 percent of the world’s total population in 2011, the most recent year for which data are available. This is a decrease of 12 percent from 1980, when the world’s agricultural and nonagricultural populations were roughly the same size. Although the agricultural population shrunk as a share of total population between 1980 and 2011, it grew numerically from 2.2 billion to 2.6 billion people during this period.

The world’s agricultural population grew from 2.2 billion to 2.6 billion people between 1980 and 2011. (Photo Credit: UNDP)

Between 1980 and 2011, the nonagricultural population grew by a staggering 94 percent, from 2.2 billion to 4.4 billion people—a rate approximately five times greater than that of agricultural population growth. In both cases growth was driven by the massive increase in the world’s total population, which more than doubled between 1961 and 2011, from 3.1 billion to 7 billion people.

It should be noted that the distinction between these population groups is not the same as the rural-urban divide. Rural populations are not exclusively agricultural, nor are urban populations exclusively nonagricultural. The rural population of Africa in 2011 was 622.8 million, for instance, while the agricultural population was 520.3 million.

Although the agricultural population grew worldwide between 1980 and 2011, growth was restricted to Africa, Asia, and Oceania. During this period, this population group declined in North, Central, and South America, in the Caribbean, and in Europe.

In 2011, Africa and Asia accounted for about 95 percent of the world’s agricultural population. In contrast, the agricultural population in the Americas accounted for a little less than 4 percent. Especially in the United States, this is the result of the development and use of new and innovative technologies as well as the increased use of farm machinery, chemical fertilizers, pesticides, and irrigation systems that require less manual labor.

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Apr11

Global Food Prices Continue to Rise

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By Sophie Wenzlau

Continuing a decade-long increase, global food prices rose 2.7 percent in 2012, reaching levels not seen since the 1960s and 1970s but still well below the price spike of 1974. Between 2000 and 2012, the World Bank global food price index increased 104.5 percent, at an average annual rate of 6.5 percent.

Global food prices rose 2.7 percent in 2012 (Photo Credit: Thinkstock)

The price increases reverse a previous trend when real prices of food commodities declined at an average annual rate of 0.6 percent from 1960 to 1999, approaching historic lows. The sustained price decline can be attributed to farmers’ success in keeping crop yields ahead of rising worldwide food demand. Although the global population grew by 3.8 billion or 122.9 percent between 1961 and 2010, net per capita food production increased by 49 percent over this period. Advances in crop breeding and an expansion of agricultural land drove this rise in production, as farmers cultivated an additional 434 million hectares between 1961 and 2010.

Food price volatility has increased dramatically since 2006. According to the United Nations Food and Agriculture Organization (FAO), the standard deviation—or measurement of variation from the average—for food prices between 1990 and 1999 was 7.7 index points, but it increased to 22.4 index points in the 2000–12 period.

Although food price volatility has increased in the last decade, it is not a new phenomenon. According to World Bank data, the standard deviation for food prices in 1960–99 was 11.9 index points higher than in 2000–12. Some price volatility is inherent in agricultural commodities markets, as they are strongly influenced by weather shocks. But the recent upward trend in food prices and volatility can be traced to additional factors including climate change, policies promoting the use of biofuels, rising energy and fertilizer prices, poor harvests, national export restrictions, rising global food demand, and low food stocks.

Perhaps most significant has been an increase in biofuels production in the last decade. Between 2000 and 2011, global biofuels production increased more than 500 percent, due in part to higher oil prices and the adoption of biofuel mandates in the United States and European Union (EU). According to a 2012 study by the University of Bonn’s Center for Development Research, if biofuel production continues to expand according to current plans, the price of feedstock crops (particularly maize, oilseed crops, and sugar cane) will increase more than 11 percent by 2020.

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Mar22

The Looming Threat of Water Scarcity

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By Supriya Kumar

Some 1.2 billion people—almost a fifth of the world—live in areas of physical water scarcity, while another 1.6 billion face what can be called economic water shortage. The situation is only expected to worsen as population growth, climate change, investment and management shortfalls, and inefficient use of existing resources restrict the amount of water available to people. It is estimated that by 2025, 1.8 billion people will live in countries or regions with absolute water scarcity, with almost half of the world living in conditions of water stress.

Global water scarcity map. (Photo credit: International Water Management Institute)

Water scarcity has several definitions. Physical scarcity occurs when there is not enough water to meet demand; its symptoms include severe environmental degradation, declining groundwater, and unequal water distribution. Economic water scarcity occurs when there is a lack of investment and proper management to meet the demand of people who do not have the financial means to use existing water sources; the symptoms in this case normally include poor infrastructure.Large parts of Africa suffer from economic water scarcity.

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Feb22

New Reports Reveal the Human and Financial Costs of Large-Scale Land Acquisitions

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By Laura Reynolds

The Rights and Resources Initiative (RRI), a coalition of groups working for the rights of rural people to access and use their local natural resources, recently released two reports on the state of large-scale land acquisitions and investments, also known as land grabs.

Activists protest against ‘land grabbing’ in 2011. (Photo credit: Andreas Solaro, AFP/Getty Images)

The reports looked at the financial risk associated with international land investments and gave an overview of the setbacks and progress made in land tenure during 2012.

Investors, often from foreign countries, have turned to land development in recent years because of the high profits that can be made from activities such as mining, industrial food production, logging, and production of rubber or biofuels. But these investments often come with high costs as well, according to a December report from RRI. In addition to the human rights abuses and environmental destruction that can coincide with large-scale land acquisitions, investors can face an increase in their operational costs of as much as 2,800 percent.

The report, “The Financial Risks of Insecure Land Tenure: An Investment View,” profiles five foreign land investments that failed because of a lack of transparency or legality, resulting in financial hardship for the investors. In 2005, the Swedish ethanol producer SEKAB attempted to purchase 400,000 hectares in Zanzibar, Tanzania, to cultivate biofuel crops, but public outcry and the company’s failure to follow policy and environmental protocols led creditors to adandon the project and forced SEKAB to sell its assets at a loss of over $20 million.

In Grand Cape Mount, Liberia, the Malaysia-based multinational Sime Darby, the world’s largest producer of palm oil, had planned to develop 220,000 hectares for oil palm and rubber plantations after signing a 63-year concession with the national government. But land tenure disputes and large-scale rioting have repeatedly disrupted operations, putting the project’s long-term feasibility at risk.

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Jan07

An Update on the 2012 U.S. Farm Bill

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The National Sustainable Agriculture Coalition (NSAC), an organization that advocates for federal agricultural policy reform, published an article on January 3 explaining the implications of the Farm Bill extension for agriculture, food, and rural development programs in the United States over the next nine months. The Farm Bill is passed every five years and determines national policy and funding for all agriculture, nutrition, conservation, and forestry programs.

The U.S. Congress recently passed a temporary “Farm Bill” to determine funding for agricultural programs throughout the country. (Photo credit: Dickinson Organic Farm)

The temporary bill, passed as part of the year-end “fiscal cliff” negotiations, cut many programs established to promote sustainable agriculture, including programs for minority and beginning farmers, farmers markets, organic agricultural research, rural development, and renewable energy. The bill also retained direct subsidies for producers of commodities like corn and soybeans—regardless of producer income or commodity price—which currently cost the U.S. Department of Agriculture $5 billion each year.

To read NSAC’s full analysis of the Farm Bill extension and its predictions for the permanent version of the bill, click here. And to hear NSAC Policy Director Ferd Hoefner speak more about the Farm Bill negotiations on National Public Radio, click here.

Dec20

New Book Discusses Causes, Effects, and Extent of Land Grabbing

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By Andrew Alesbury

On December 4, the Woodrow Wilson Center in Washington, D.C. held a book launch and panel discussion for the recently released book, The Global Farms Race: Land Grabs, Agricultural Investment, and the Scramble for Food Security. The book is among the first to examine the burgeoning and complex trend of land grabbing and its implications for investors, host countries, and the world as a whole.

The Wilson Center recently held a book launch and discussion on the prevalence, causes, and effects of land grabbing. (Photo credit: Wilson Center)

The panel discussion, which was webcast live, was led by four experts in the global food security and agriculture community: Michael Kugelman, the book’s co-author and Senior Program Associate at the Wilson Center; Derek Byerlee, an independent scholar and advisor; Gary Blumenthal, President and CEO of World Perspectives, Inc.; and Janet Larsen, Director of Research at Earth Policy Institute.

The speakers noted that land grabbing, or the acquisition of large plots of land by foreign actors such as national governments or large corporations, has become particularly notable since 2007. A growing number of countries, fearful of unrest caused by volatile food prices or driven by the need for more energy security through biofuels, have begun investing in farmland abroad, cultivating the land and then exporting the products back home.

The countries purchasing the land typically have insufficient farmland at home (or they have exhausted it) but have ample capital to invest abroad. Among the biggest investors are China, India, Japan, South Korea, Egypt, and Saudi Arabia, which have been buying up substantial parcels in regions like sub-Saharan Africa, Southeast Asia, and Latin America. The International Land Coalition estimates that more than 200 million hectares of foreign agricultural land (nearly the area of Western Europe) were approved or under negotiation between 2000 and 2010.

In The Global Farms Race, the authors note that these land transactions occur most frequently in less-developed countries where governments lack transparency or accounta