Transcript Reproducible Private Property Resources

Reproducible Private Property
Resources - Agriculture
The secret to solving the world food problem lies
in transferring the modern technology from the
developed countries to underdeveloped countries.
1974: World Food Conference –
 Goal: eradication of hunger, food insecurity &
malnutrition, Time: within a decade
1996: Rome: World Food Summit: Headquarters of
FAO of United Nations
 Participation: 10,000 from 185 countries +
European Community
 Target:⇩ no. of undernourished people by 2015
by half – Rome declaration
 June 2002: World Food Summit
 Delegates: from 176 countries+ European
Commission
 Target: repeated their pledge
 Goal never met
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High level meeting on food security for all,
Madrid 26 -27 Jan2009
3rd world food summit – November 2009 in
Rome, Italy - goals: solidify a strong and effective
commitment from World leaders to eradicate
hunger by 2025 & to address the root causes of
the present situation through the full
implementation of the Human Right to Food
4th Food Technology & Innovation Forum and
Food Safety Summit, May 11th-12th, 2010, Hyatt
Regency O'Hare, Chicago brings together
leading professionals to discuss, innovate,
knowledge-share and shape the future of the
food industry into the new decade
The Truth
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According to UN Hunger Project, International
Fund for Agriculture Development & FAO:
June 19, 2009 - 1.02 billion people, more than
ever in human history are undernourished
worldwide – 100 m more than last year – 1/6th of
total humanity- >1 ∕4th of these are children
⅓ of children in developing countries
malnourished – more severely in South Asia &
Sub-Saharan Africa
Approx. 24000 people die from hunger or from
hunger related causes, each day – 10.8 m
children die, per year, due to malnutrition
In US 1 in 10 households are at risk of hunger
If food availability is not a problem – why
hunger?
 Food – staple requirement – is renewable
property resource – can be sustained as long as
there is energy from the Sun
- Are agriculture practises sustainable and
efficient?
- Land not free – farmers must invest for ⇧ in
production & income
- Why malnutrition? Must find:
 Scarcity of food? Global?
 Misdistribution - With in nations/ among nations?
 Temporary shortage due to disasters?
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Global Scarcity
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Need to change the relationship between
agriculture surplus nations & other nations
Situation desperate - Must be more stern: “life
boat ethics” – Garrett Hardin
When famine is inevitable, sharing can become
counterproductive
In absence of global scarcity then a world- wide
famine can be avoided by sharing resources
Global Scarcity Hypothesis
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Most agree that enough is being produced world agriculture produces 17% more calories
per person today than 30 yrs ago - although
population ⇧ by 70% and less land is used for
cultivation
Population growing, although slow, has not
stopped  demand for food rising
We produce food - a renewable resource - with
limited land
Owner has control over his resources but not
over the market to get monopoly profit
How does market behave? Depends on nature
of supply curve
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Initial equilibrium at
Qo – price Po
Later demand keeps
rising & reaches D5
– if supply is Sa the
OQ5a produced and
if supply is Sb then
Q5b – but then price
rises to P5b
Even when supply
curve is Sb –
adverse supply
circumstances – still
DD=SS
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This shows what is scarcity in world food market.
It doesn’t mean a shortage.
Adverse supply – Sb - price rises  demand
chocked off or additional supplies called forth –
profit rises due to high price
Is demand for food price sensitive?
some feel it will be bought at any price as is
necessity - demand inelastic
All food falls in this category? Some is far away
from that.
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Which is more representative – Sa or Sb?
As demand ⇧ supply can be ⇧ either by
extensive or by intensive cultivation – in
the past both are used
1st more fertile land – then less fertile…. If
price rise is enough to make farming
profitable ∴ supply curve is upward sloping
India’s SEZs – farmers not giving up on
land
DNA – Daily News & Analysis: Nov 16, 2007
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2 forms of global security hypothesis to be
tested against the available evidence:
Strong form: per capita food production is ⇩ - ∴
supply curve is steep indicating that it cannot
keep pace with ⇧ population – if this is valid –
PC food production falling  life-boat ethics
Weak form: per capita production is rising –
supply curve steep indicating ⇧ in food prices >
other prices ∴ per capita welfare ⇩, even if per
capita production is ⇧. This problem is more of
cost of food than its availability – as supply of
food ⇧ - cost of food ⇧ relatively, to the cost of
other goods
Testing the Hypothesis
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We would like to assess the degree to which
historical record supports the existence of global
scarcity
Rule out strong form – food production ⇧ at a
speed > population – rule out strong form in the
recent past
Weak form: more true all over the world
Supply curve for food products steeper than for
other products. Prices of agri prod > than other
products
Historical evidence: agri supplies have ⇧ at a
faster rate than population, but at ⇧ cost
Future cost of food?
What factors influence it?
Past trends suggest: major role of developing
countries to supply an increasing share of
world’s food production to support their
increasing population + ability of developed
nations as exporters of food – developed nations
should expand their ability to produce to face
distribution problem
Food production/productivity ⇧ due to better
techniques, pesticides, HYV seeds, irrigation ….
And irrespective of ⇩ land
Us from 30 bushels per acre to 130 bushels during
1930-2000 – livestock: similar trend
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Technological Progress: supports hope for ⇧
production – 3 techniques
Recombining DNA
Tissue culture
Cell Fusion
To do this generic engineering techniques include:
Make crops resistant to diseases / pests
Create new plants
Give ability to produce their own fertiliser
⇧ crop yields - photosynthesis
There are problems:
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Declining share of land for agriculture
⇧ High cost of energy
⇧ environmental cost
Rising cost of traditional farming
Price distortion in agriculture policy
Potential side effects of genetically modified
(GM) crops
Close examination of the above concerns reveal
Current practises neither effective nor
sustainable – the transition that is efficient &
sustainable may ⇩ productivity levels
Allocation of agricultural land
Land under agricultural sector is reducing – it will
go to other uses when it is more profitable there
– causes:
- ⇧ Industrialisation & ⇧ urbanisation  ⇧ value
of land
- Less land required to produce more food due to
⇧ productivity
⇧ food prices & ⇧ demand for food should ⇧ value
of agri. Land – slow conversion - reverse trend?
Energy costs: in developing countries agri
production is very energy intensive - productivity
gains from energy – mechanisation + ↑ use of
pesticides & fertilisers
– if substitutes to energy not developed  SS curve
must shift to left indicating rising costs – energy &
capital are complimentary – when energy price rises
↓ in capital + ↓ energy use  ↓ in yield per acre
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Environmental costs: problems intensified
Use of chemicals & fertilisers
Grass-land & forests converted to farming
Soil erosion - techniques to control expensive loss
by fertilisers – losses irreversible – fertilisers cheap
⇧ in frequency & quantity of fertilisers
Pesticides – contaminate water supply used by
humans & aquatic life
Sustainable agriculture
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One with less fertilisers & pesticides – OECD
countries are facilitating transition - incentives
Scandinavia - New Zealand
Irrigation: yield ⇧ - by 2030 irrigated land will ⇧ by
27% in developing countries & 70% gain in cereal
production will come from irrigated land
Organic food industry: fast growing in US - certified
organic crop land – premium price
Mandatory labelling standards - OFPA 1990
US & EU working together
Role of agriculture policies
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Gains in agricultural productivity with externalities others bear the cost - Govt. policies must bear
responsibility - 3 policies
Subsidies for specific inputs
Support prices
Trade barriers for protection
Anderson & Blackhurst: studied correlation
between size of subsidies & use of fertilisers –
‘larger the subsidies larger the fertiliser use’ –
subsidies lead to use of inefficient & unsustainable
levels of fertilisers
Now many governments have started encouraging
sustainable agriculture by
 discouraging harmful effects of traditional methods
 learning more sustainable practices are known
 giving information to farmers derived from research
 Providing financial assistance for the transition to
sustainable agriculture
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Conclusion: agriculture productivity is expected to
rise at slow pace – in future changes will be in
productivity + agricultural practices
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GMO technology is still a debatable issue
Agricultural Knowledge Triangle
Research
Farmers
Education
Source: FAO/World Bank 2000.
Extension
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In the future scientists may develop GMOs,
which lead to a dramatic reduction in the use of
pesticides and artificial fertilisers.
Recently scientists developed a genetically
modified strain of rice, golden rice, which
contains vitamin A and extra iron, and a strain of
vitamin A-rich sweet potato acceptable in subSaharan Africa.
Every year over a million children die of vitamin
A-related diseases: golden rice could prevent
such deaths.
Conway believes that the tools of biotechnology
are essential if crop yields are to be raised.
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Opponents of GMOs, on the other hand, believe
that the risks are too great. They fear that gene
transfer to wild relatives of genetically modified
crops may give rise to super weeds, and they
are also concerned about the impact of GMOs
on human health.
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They see the introduction of GMOs, which are
largely developed and sold by a handful of
multinational corporations, as further evidence of
the industrialisation of agriculture, and a further
nail in the coffin of small farmers.
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While FAO admits that the number of hungry will
remain "stubbornly high", it believes that growth
in food production, although slower than in the
past, will still outstrip population growth.
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There is little doubt that sustainable agriculture
can bring considerable benefits to many parts of
the world, but sustainable agriculture alone will
not be enough to ensure the food security of the
growing numbers of rural poor. A good pricing
policy, credit systems, gender discrimination and
policies, which neglect the poor; all need to be
tackled if the poor are to get a better deal.
Distribution of food resources
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Problem is not of global security but of distribution
– malnourishment in poorest sections – mainly in
poor countries
Issue is how to get food for them?
Alleviation of poverty & ⇧ ability to pay for food
could solve the problem
sufficient calorie intake even in developing
countries – shows no global scarcity – the least
developed countries have failed to keep pace with
population & their dependency on food imports
has ⇧ - poverty, popu growth & insufficient food
Their poverty ⇧ - population is ⇧ at ⇧ rate & the
degree income inequality has ⇧ too.
Foreign exchange used for food imports - ∴ less
for capital goods – affects productivity
 ∴ both is necessary – population control
strategies & ⇧ food availability to poor
 All countries cannot be self-sufficient - and poor
countries must try ⇧ domestic production - use
comparative cost advantage – Ricardo – even
developed countries gain by trading with poor
countries – specialisation - world production ⇧
 Limits to ⇧ agricultural production are economic
& political – agriculture production undervalued
in low-income countries  Marketing Boards & Export taxes
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Feeding the poor
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Undervaluation was due to misguided attempt to
use price controls – provide poor with food at
regulated price – backfire if availability of food ↓ Support prices – way to ↓ nutritional gap among
poor with maintenance of adequate supply of food?
Green Revolution:
 Bright side: better diet for poor & ⇧ in employment
– 1950s in US – productivity doubled / tripled over
30 years period – 2 crops a year – transformation
 Dark side: Irish potato famine of mid 1980s – more
species  ⇧ risk of pests & diseases – smaller
farmers – not the beneficiaries of new hybrids
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In the short run foreign food aid will
help when traditional sources are inadequate
due to natural disaster
when it doesn’t interfere with the incomes of
domestic producers
In the long run foreign food aid means
Technical help – leading to co-operatives
Large scale operation – risk sharing
⇧ in general standard of living and effective
population control
Help to small farmers
Solution to distribution problem
Feast & famine cycles
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Fluctuation in food availability due to
Vagaries of weather &
over production or
underproduction
planting decisions
Benefit to the society by smoothening the fluctuations
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Larger the fluctuations  larger the swings in
prices + farmers production decisions worsen the
situation – the tendency can be represented by
cob-web model
Cob – web model
S
Price
P0
P3
P4
P1
D
O
Q0 Q 3
Q4 Q1
Quantity
Initially SS is
Q0 price is P0
- ∴ next
season plan
to produce
⇧=OQ1 –
price ⇩ OP1
∴ next
season SS
OQ3 – price ⇧
OP3  ⇧
production
OQ4 - price
OP4 .……
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In developing world demand for food is priceinelastic ∴ ⇧ the price – to adjust short supply
due to weather problems – gamble in monsoon
Price
P2
B
P1
P0
C
A
D1
D
D2
O
S1
S0
Quantity
Initially DD D1 & SS
S0 - equi at A - price
is OP0 – If short SS
 S0 then price rises
to OP1 or OP2
depending on the
elasticity of demand
 When demand is
inelastic farmers
gain more due to
higher price
Producers want to guard against excess supply
and consumers want to guard against short
supply
 Stabilization is good for all
Views:
 Stock-piles – buffer stocks – stability
– Internal– expected to be internationally coordinated - but implementation difficult as
interests of the producer nations & of consumer
nations are different
– International To alleviate hunger caused by
disasters - “World emergency stock-pile” –
internationally co-ordinated
Both should work together
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Conclusion:
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Serious malnutrition in many parts of the world
Root cause is poverty – intensified by
fluctuations in the availability of food
Developing countries could ↑ their production by
about 4% per year – if developed countries
share technology
Not enough just to produce ↑ - poor should
afford it – reduce poverty + increase
employment
Stock piles – key element