The New Normal? A Tighter Global Agricultural Supply and Demand Relation and Its Implications for Food Security

Abstract

The tight food markets and rising prices of 2005–2008 and today have been caused by various factors, such as rapid growth in demand for biofuels, bad weather, and increased demand for meat, dairy, livestock feed, rice and wheat due to rapid economic growth and urbanization, particularly in Asia and Africa. In the longer term, climate change and growing water scarcity along with worsening water quality will be major challenges to agricultural production and food security. This paper uses IFPRI’s International Model for Policy Analysis of Agricultural Commodity and Trade (IMPACT) to assess long-term agricultural supply and demand relations. Examining these new global food system realities through the lens of scenarios for agricultural supply and demand indicates that, if current policies and investment trends continue, real world prices of most cereals and meats are projected to increase in the future. Growth in demand for meat, milk, biofuels and growing scarcity in water supplies are projected to put pressure on agricultural prices and strain land and water resources further. Climate change will have negative impacts on agricultural production in much of the world. Rising prices and poor progress on food security are not, however, inevitable. Policy reforms and increased