Analysis: Food crisis? How about a price crisis when it comes to commodities?

Shocking, stupid and scandalous.

Media stories that seize the public’s attention usually feature one, or all three, of those attributes.

One such story, from the world of agriculture, was a report from the United Nations Food and Agriculture Organization (FAO) and the Organization for Economic Cooperation and Development (OECD).

The 326-page report, the 2019-2028 Agricultural Outlook (PDF format), was released in July.

In it, economists from the two groups said the next decade could be difficult for farmers because of excess supply and slowing demand for agri-food commodities.

“For nearly all commodities… real prices are projected to remain at or below current levels over the coming decade, as productivity improvements continue to outpace demand growth,” the report said. “Most of the commodities covered in the Outlook are expected to see real price declines over the coming decade by around one-two percent per year.”

Over 12 months, a one to two percent decline isn’t a big deal. But by 2028 the OECD/FAO is predicting prices for meat, dairy, cereals and other ag commodities will be 80 to 85 percent of current prices – factoring in inflation.

None of this is news to agricultural economists.

Thanks to plant breeding, better agronomy and improved livestock genetics, modern farming is incredibly productive. Because of annual production gains, ag commodity prices have been in slow decline for decades.

Strangely, or maybe not strangely, journalists consistently ignore the economic facts of food production. Instead, the media coverage of food and agriculture is all about crisis, calamity and “end of the world is nigh” headlines, such as:

  • World Food Crisis Looms if Carbon Emissions go Unchecked
  • No deal Brexit Could Cause Food Shortages in the UK
  • We’re All Going to Starve to Death… Again

Those headlines are definitely shocking, and stupid, because a shortage of food production is unlikely… now or over the next 10 years.

The FAO/OECD report observes that the so called “food crisis” is more like a price crisis. Nations and regions may have to financially subsidize farmers, who could struggle to pay their bills.

“Lower prices… (will) put pressure on the incomes of those producers who are not lowering their costs sufficiently through improved productivity,” the Outlook said. “A low-price environment could thus lead to increasing demands for (financial) support to farmers, which could in turn affect the projections.”

It’s great fun to pick on the mainstream media, but folks in the ag industry shouldn’t laugh too hard. At every agri-food conference in Canada, several speakers include the same “fact” in their presentation: by 2050 the world will have 9.7 billion people and we have a limited amount of arable land.

That line suggests a looming food production crisis. In other words, if farmers don’t increase yields we’ll all be living in underground bunkers — eating cat food and polishing our stockpile of automatic weapons.

Yes, it’s likely that annual productivity gains in agriculture will eventually slow down. But so will growth of the world’s population.

Some forecasters, including Darrell Bricker, have predicted that China’s population will soon peak and could rapidly decline in the second half of this century — possibly dropping to 600 million by 2100.

If Bricker, the FAO, the OECD and others are correct, it’s time to abandon the “We’re All Going to Starve” crisis.

The new agricultural crisis isn’t as dramatic, but it is real.

In a world with abundant food supplies, how do farmers make money?

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