Tag Archives: Agriculture

The lurking menace of weeds – Farmers’ enemy #1

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Here is quite an interesting article from the FAO about the cost of weeds in agriculture.

the more weeds, the less yieldAccording to their numbers, weeds limit crop yields to such an extent that the world misses yearly the equivalent of 380 million of wheat a year, or in money $95 billion. My first reaction was that there is an untapped market for herbicides producers, but the article describes ways of getting rid of the weeds that do not require the use of chemicals.

Compared with the medical cost of obesity in the US of $147 billion a year, or the contribution of the US meat and poultry industry of $382 billion per year to the economy, or the TARP funds for the banks of $700 billion, or the estimated financial toxic assets losses worldwide of $4 trillion, the $95 billion does not seem that big a number after all.

Yet, 380 million tonnes wheat equivalent represent, according to the FAO, half of the 2009 expected world wheat production!

Assuming simplistically that with this wheat we would feed people only a diet of bread, this could feed decently more than 1 billion people! This is all the more amazing as the FAO currently estimates the number of hungry people in the world at 1 billion. Clearly, there should be some possible solutions if policies and politics were targeted at the right goals.

Always interesting to put numbers in a different perspective…

Asia faces food shortage by 2050 without major water reforms

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Here is an article from Science Daily illustrating very clearly the issues I brought up in my earlier article “Managing water is paramount for the future of food production“.

According to Colin Chartres, Director General of the International Water Management Institute: “Asia’s food and feed demand is expected to double by 2050. Relying on trade to meet a large part of this demand will impose a huge and politically untenable burden on the economies of many developing countries. The best bet for Asia lies in revitalizing its vast irrigation systems, which account for 70 percent of the world’s total irrigated land”.

Innovation and tradition shape the future

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Tradition in food can be quite resilientIn order to understand what changes are ahead of us, we need to realize that opposite forces are engaged in shaping the world of the future. As we all know, accepting change is always a slow and sometimes a difficult process. There are those who see the possibilities and those who see the drawbacks. The first train was going, supposedly, to get cows stop giving milk, but we now know that cows love to watch trains passing by. Probably, the first caveman who drew a picture of an animal on the wall was considered by some as a great magician and probably by others as pure evil. As such, such a struggle is very useful, as on the one hand it shakes immobility and open new doors, and on the other hand it prevents us to rush into the unknown without thinking first.

Change is part of our lives and that will not change. The problem that we face about change is actually about the pace of change, more than over the change itself. Over the last century, this pace has just increased steadily, thanks to more and more efficient technology.

If we look back the lifespan of the oldest living person, which brings us back to the end of the nineteenth century, just take a minute to think of all the changes that have occurred since then. There was no car industry, no antibiotics, no commercial airlines, no TV, no internet or cell phones, no supermarkets, just to mention a few things that we take for granted nowadays.

Although such a change is dramatic and has affected the way we live today, it has been a process that has needed time. Usually, it is said that more than 60% of the products that exist today did not exist 10 years ago and if we extrapolate this to decade to come, we can expect some even more spectacular changes.

Innovation is in constant motion and technology helps us to conceive and to use much faster than by the past. Yet, it is interesting to see that even with such a pace of change, traditions still play a very important part in our lives. Even with lots of modern gadgets, most cultures keep their specific characteristics. Their respective values do not evolve as much as our “things“, these just become part of the culture. This is an important point when it comes to innovation: what you offer must meet a need, if it does not, it will either fail, or at best be a fad.

Having a look at the future, you must wonder what the underlying trends of innovation are since it started. I can see several major constant areas of innovation:

  • Reducing physical labor.
  • Helping us live better and longer.
  • Increasing efficiency.
  • Helping communication.
  • Increasing mobility.
  • Offering more leisure and entertainment.
  • Making some people a little wealthier.

What could this mean for food production in the years to come?

  • high tech agriculture - photo BayerMore technology to improve efficiency of water use, fertilizer use, animal feed use, land use, energy use (objective: zero waste).
  • More mechanization, automation and robotising, especially in software more than hardware, working on precision (intelligent technology).
  • Greater focus on health and natural solutions for food and for agriculture/aquaculture/fisheries (objective: zero residue and zero contaminants in water, air, soil, and food).
  • Projects to repair environmental damage and include agriculture/aquaculture/fisheries in environmental management (restore and maintain sustainable food production).
  • Policies, and politics, to increase food production (disease control, regulation, more government intervention at strategic level, incentives).
  • Redistribution of markets with geographical shift of production and consumption areas.
  • Shift from convenient to practical food solutions (bulk meal components).
  • More education on agriculture, food and nutrition (balanced diets, food safety, traceability).

While such changes will come over time, consumers will still be looking for some level of tradition in foods. This can be about authenticity, regional specialties and recipes, or choosing to buy directly from farmers. Obviously, this is not a rational process, but it is more about the perception of “true” and “natural” production systems. After all, nostalgia is a constant of human emotions, too.

Copyright 2009 The Happy Future Group Consulting Ltd.

Organic foods not nutritionally superior. So what?

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A bit of emotion, a bit of reasonA recent study from the UK concluded that organic foods are not nutritionally superior to “regular” foods. Of course, it did not take long for reactions to be published. The pro organics reject the protocol used and therefore the conclusions. The pro “industry” reacted satisfied. All of this is not surprising, and for a simple reason: people choose their foods greatly based on psychological reasons. Let’s face it the debate around organic food is largely about lifestyle and choices.

However, is the result of this survey a surprise? Not really, because in terms of nutritional value, the differences in production systems are not that different. When it comes to food safety, especially residues of chemicals, then it probably is a very different story.

What can affect the nutritional value of foods are the growth period and the timing of the harvest. Produce that grows fast and that is harvested before full ripeness contains relatively more water and therefore there can be a dilution of nutrients per kg of product. This is also true for meat products.

I do not believe that the real debate between” organic” and “industrial” should be so much about nutritional value as it should be about food safety. As consumers get more educated and have more choice, they will give the preference to something more natural and harmless, simply because it is common sense and the safe thing to do. On the other hand of course, agriculture must be in a position to offer affordable products. Organic foods are more expensive and this is what limits its market share to mostly well-off city residents.

If organic foods want to become the standard to feed people, it will have to work on its production costs and price. Retailers are playing a very important role in this, as they more and more dictate to suppliers how food should be produced. This is currently very obvious with seafood and the requirement set by supermarkets to buy only sustainable seafood.

My expectation for the future is that retailers will get more involved in agriculture and will impose on suppliers more restrictions on what kind of products they may use for crop treatment, more restrictions for better animal welfare. The market standards of the future will become “sustainable”, “natural” and “traceable”; not for emotional reasons, but for rational reasons. There will be pain to accept for producers to meet these requirements, and in the end the commercial negotiations will decide what the market price of “natural” foods will be.

Copyright 2009 The Happy Future Group Consulting Ltd.

Future approach of genetics in agriculture

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Where we will decide of our future...

Genetic engineering, that we just mentioned, and traditional breeding and will be increasing intertwined in the future, as they will join their respective areas of expertise into combined genetic improvement programs. Actually, we can expect that these two disciplines will be merged into only one unified science of DNA. We can expect to see an increased number of joint ventures and mergers between genetic selection companies and biotech companies in the future.

So far, genetic engineering has been mostly known to the public opinion thanks to the development of GMOs (genetically modified organisms), and this has been a very controversial area. Genetic engineering will move from a support activity to, for instance, herbicides, to address much more real problems and bring much more real solutions to the challenges of the agriculture of tomorrow. GMOs have served the sales of herbicides produced by the same companies quite well, but of course, this will plateau rather soon, and there will be a need for something else to impress the financial markets. It should not be a surprise to see these corporations specialize in biotech completely, and divest their chemicals “heritage” at some point in the future. The real problems to solve include a broad range of topics. They include technical performance and yields of plants and farm animals. Genetic engineering will help increase the efficiency in the conversion of nutrients and water. It will help plants and animals to have a stronger resistance to diseases, in order to avoid severe production losses. It will provide alternatives to antibiotics, to herbicides and pesticides. It will find ways for plants to absorb or fix the nitrogen of the air to reduce the use of mineral fertilizers. Another area of research will be influencing the quality of final agricultural products, in particular producing healthier foods, and have plants produce medicines.

To solve such problems, the people in charge of such programs will have a very heavy moral responsibility towards society, as the choices they will make will affect the longer term and our ability to survive. The success criteria will go much beyond the financial performance of these companies. This will be translated in the type of bonus packages that the executives will receive. One can wonder whether the correct structure for such companies is to be publicly traded, since stock markets tend to induce a very strong preference to the short-term financial performance. The reflection on such programs will need to go through a serious test of “what ifs”. As per now, money still is the main driver, especially in the arguments of the producing companies and countries. For instance, they reiterate that the decision of the European Union to limit the production and use of GMO will make food more expensive in these countries. Then let’s ask ourselves what if the EU is wrong in their decision? Well, production systems and agriculture would not change much; their food might indeed be more expensive than somewhere else. The people will buy smaller cars and travel less far for their vacation. This is not a very threatening situation if you ask me. What if the ones in favor of GMOs are wrong and the EU is right? The debate is indeed very emotional and political, but this is simply because we lack long term testing of the effects of GMOs to have certainty. This is why the GMO producers have such a hard time convincing their opponents.

More than one species, a whole ecosystem

A better understanding and predictability of long-term effects is paramount in agriculture and food production. Agriculture is not just about producing a particular crop, it is also about managing the total ecosystem that a field is. Actions in genetics need to guarantee the long-term balance of these ecosystems (in which weeds, although of no economic interest, are a part of), because once an ecosystem has been altered, it has been changed forever. Genetic improvement programs must ensure to preserve, in whichever form, genetic diversity and survival of vegetal and animal species, because once extinct, they are lost forever. Long-term fertility of soils is another highly critical part of the protection of our food supplies, because once sterile, the land is lost forever.

So, as you see, we are facing many challenges and genetics is a key element of our food systems. By shifting away of rather superfluous projects, even though they have been quite lucrative for the producers; and by focusing more on true improvement and sustainability of production systems thanks to technical breakthroughs, a combined breeding and genetic engineering will bring constructive solutions. All it will require from the stakeholders is vigilance.

Copyright 2009 The Happy Future Group Consulting Ltd.

The future price of meat and fish: up

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With a world population increasing strongly and an agricultural area that will not grow accordingly, the law of offer and demand clearly indicates that agricultural prices will increase in the future. This is true for agricultural commodities such as grains, but the increase will be even stronger for animal products, such as meat, poultry, dairy and fish.
This will be the result of an increasing and very likely quite aggressive competition between the need to feed people with the basic commodities, the need to feed farmed animals and possibly for some time the need to produce biofuels.
Since it takes more than one and even several kilograms of animal feed to produce one kilogram of meat, the feed conversion ratio (FCR) will affect by which factor the price of the various animal products will increase.
Efficient productions like chicken will be successful and will remain quite competitive pricewise against other sources of animal proteins, thanks to its low FCR, to its low water use and to the good agricultural value of its manure. In the aquaculture sector, efficient productions such us tilapia and pangasius have a bright future ahead, as they can help feed a large population for an affordable price. In general, aquaculture has the opportunity to fill the huge gap left by depleted wild fish stocks, although it will have to solve some issues in order to be successful (see my article titled “The lessons of intensive animal husbandry to aquaculture“). In terms of price, the scarcity of wild fish will make these quite expensive for the future.
Less efficient species such as pigs and beef cattle will see the price of their products increase relatively much more. Pigs also have the disadvantage of producing low quality manure, which will limit the level of intensification. However, pork plays an important role in some cultures, and therefore, it will still show a reasonable volume growth, with geographical variations.
A high FCR species such as beef cattle will probably undergo the most dramatic change. Higher feed costs, linked to a relatively high capital need will probably push a number of farmers to shift to other more efficient productions. Highly intensive systems such the feedlots will also undergo major changes, as regulations on the use of antibiotics and hormones will make them financially inefficient. Further, their high impact on the environment because of the manure will also work against them. I do not expect the 99-cent beef burger to be here for all that much longer, burgers will continue to exist, but just quite a bit more expensive. On the other hand, I can see good possibilities for specialty beef products, such as grass-fed beef, but customers will have to pay the right price for it. Grass is the animal feed that we all seem to underestimate, yet it covers vast areas of very often fragile soil, and cattle is one of the few species that can transform it into high value protein.
In the aquaculture sector, a carnivore species such as salmon will also meet its own limitations. Although, salmon feed has shifted from mostly fish oil and fishmeal to a much more complex mix of vegetal oils, this production will see its production costs rise strongly. I expect salmon to become a luxury product again.

Consumption per capita will decreaseWhat will a higher price mean?
There again, simple economics tell us that this will influence the level of consumption per capita. The price increase will moderate the level of consumption and the price differential between the type of protein, as well as health concerns, will cause a shift between the respective consumption of the different products. In Western countries, people consume quantities of animal products that are substantially higher than what they actually need, and this has led to many health issues. The decrease in consumption will help make people healthier, and reduce the burden of health costs in that part of the world.
In developing countries, the situation is different, as consumption trends show an increase of consumption of animal products, from rather low levels, though. In these countries, consumption per capita will increase, but will not reach the levels that Western countries have shown, simply because prices will be too high to get to such levels.
The decrease of consumption per capita that we will see in developed countries does not mean that the meat industry will get into trouble.  Less average consumption per capita in the West will be more than compensated by the growth in emerging countries, where population numbers are significantly higher, and this will lead to a higher global demand of animal products. The main change is that the consumers will be distributed geographically rather differently than they are today. This also means that production will be located in different areas than today.

Just as a teaser: if Western countries consumers were to reduce their meat consumption to just the necessary maintenance needs, it would free volumes enough to cover the maintenance needs of meat for the whole population of China!

Copyright 2009 The Happy Future Group Consulting Ltd.

G8 shifts focus from food aid to farming

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Here is an interesting article from the Financial Times describing the new approach from G8 countries towards food security. It connects with my previous posting, and shows how strategic agriculture is becoming. It is also nice to see that some world leaders look at this issue in a more sensible manner than in the past, shifting from “give a man a fish, he will have food for a day” to” teach him to fish and he will have food every day”. Well, that is if we manage to replenish our oceans, which is a topic on which I will write in the future.

Of course, it must be clear that if they choose this new approach, it is because they have an advantage in doing so.

The competition for the control of food has started

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A couple of recent articles (Foreign cropland deals and Professional investors look toward overseas farmland) show clearly how much action there currently is about securing food sources in the future. Many players are involved, from countries buying or leasing foreign land, to investment firms and hedge funds.

Agricultural commodities have become quite hot and are expected to become even hotter.

In the future, we can expect to see more of such land acquisition, we will see more alliances, like the “Black Sea Wheat Pool” in which Russia, Ukraine and Kazakhstan are supposedly joining forces to build a strong wheat sort of OPEC. Although considering the relationship between Russia and Ukraine about natural gas, one can wonder what will happen with this.

Taking control one piece at a timeWe must expect strategies about food supplies that will remind us of what we have seen about oil supplies. Politics are going to play an increasingly important role. After all, we can live without oil, but not without food. There will be aggressive moves from countries that are not self-sufficient, first friendly like the land purchases and leases, but there probably will be a point when this might not be enough and regional conflicts will happen. Some exporting countries will also take a more aggressive stance on prices and on availability, but they also will have to be aware that too much arrogance might end up in serious tensions.

In my view, we are going to see very interesting tactics that will include food, energy, trade agreements, diplomacy and military threats as part of the whole bargaining process.

Similarly, we can expect to see more tensions between private firms involved in food and governments. Locally, we can expect nationalizations of land and factories. More regulations of the markets will take place, probably after excesses from privately owned money, investors and businesses will create another “bubble” with agricultural commodities futures contracts, that will end up destabilizing food markets in a somehow similar manner as the financial world has acted for many years before it faced a meltdown.

Copyright 2009 The Happy Future Group Consulting Ltd.

The buried treasure: Arable land under our cities

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Will we see science-fiction urbanism? Will we become urban gardeners?

As the population increases, so does the need for food. In the press, you can read statements like “we will need four Earths by 2050 to feed the world”, although some predict only three.
Fact is that we will not have extra planets to grow our food, and we will either find ways of increasing food production or the world population will regulate itself, be it through famine or wars.
The buried treasure underneath the asphaltInevitably, there will come a time when all apparent arable land will be in use for agricultural production, and there will be a need for more. Already today, we have a vast area of good agricultural land, which is inaccessible, because it is located under cities and roads. This is even more important as the prediction is that the world population will increasingly live in urban areas.
Since the beginning or urbanization, human settlements have developed around the bare necessities, which are water and fertile ground. Today’s major urban centers have been growing from their original core, and they cover a lot of such fertile land. One of the dilemmas for the future will be to accommodate this increasing concentration of population in cities and to keep arable land available. In a later stage, we might have to find ways of recovering this land in some way or another.
In order to conserve arable land from further housing and infrastructure development, we need to think “vertical”. This could mean the end of the individual house, and the further development of higher housing building as the unique model. It is not unthinkable that we will restart agricultural activities in the cities themselves, by allocating some area for gardens both at ground level and suspended on top of buildings, and even the return of farms in the cities. So far, infrastructure had chosen the easy, cheapest and most obvious solution, which was to lay cities and transport on the ground as much as possible. Maybe, we will see an increased redevelopment of roads and transport lines on elevated structures, such as the bridges and the monorail lines that we know today. This could free a huge amount of land for food production. Of course, this sounds like a very costly solution, but food scarcity will make its price skyrocket even more. Another solution, although it seems to go against the trend generally accepted today would be to redistribute the population more evenly between urban centers and agricultural areas.

Copyright 2009 The Happy Future Group Consulting Ltd.

Photos from AgriVision 2009 – Feeding the globe in 2050

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Here is a link on a photo report published in World Poultry about the recent AgriVision 2009 held in the Netherlands.

Their objective was to answer the question of how to feed the world population by 2050, which is the basis of my own quest.

They seem to have come to rather optimistic conclusions. This is good news, but that will require the proper leadership as well from the world of politics as from the business world.