Robert Johansson SPECIAL EVENT Discussion on the Key Findings of FAO’s 2019 State of Food Security and Nutrition in the World Report Co-Organized by FAO North America and IFPRI JUL 18, 2019 - 12:15 PM TO 01:45 PM EDT

1. Office of the Chief Economist
Rob Johansson
Chief Economist USDA
FAO’s 2019 State of Food Security
and Nutrition
Washington, DC (July 18, 2019)
1

2. Office of the Chief EconomistOffice of the Chief Economist
Meeting the SDG #2 of ending hunger, achieving food
security and improved nutrition, and promoting
sustainable agriculture
2

3. Office of the Chief EconomistOffice of the Chief Economist
…Challenges
3

4. Office of the Chief EconomistOffice of the Chief Economist
Challenges facing food and agriculture over the next 10 years
1. Growing population
2. Changing climate
3. Resource constraints
4
https://www.standard.co.uk/news/worl
d/australias-historic-heatwave-
continues-as-temperatures-stay-
above-40c-a4042376.html
https://www.newscientist.com/article/2164238-
five-billion-people-face-water-shortages-by-
2050-warns-un/
https://unequalscenes.com/mumbai

5. Office of the Chief EconomistOffice of the Chief Economist
Example -- Water stress by country in 2040
5
https://www.sciencenews.org/article/future-will-people-have-enough-water-live

6. Office of the Chief EconomistOffice of the Chief Economist
Challenges posed by economic shocks
6
https://www.ft.com/content/45eb1800-e228-11e6-8405-9e5580d6e5fb

7. Office of the Chief EconomistOffice of the Chief Economist
Meeting those challenges…
> Macroeconomic
> Productivity
> Trade
7

8. Office of the Chief EconomistOffice of the Chief Economist
3.00
3.50
4.00
4.50
5.00
5.50
2015 2016 2017 2018 2019 2020 2021 2022 2023
April 2018 forecast
October 2018 forecast
April 2019 forecast
Percent change
Growth forecasts less optimistic --- global purchasing power falls by
$1.7 trillion (cumulative from 2019 – 2022)
World GDP
8
Data: IMF
3.00
3.50
4.00
4.50
5.00
5.50
2015 2016 2017 2018 2019 2020 2021 2022 2023
April 2018 forecast
October 2018 forecast
April 2019 Forecast
Percent change
Emerging Markets and Developing
Countries

9. Office of the Chief EconomistOffice of the Chief Economist
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0
2
4
6
8
10
12 1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
2022
2025
2028
2031
2034
2037
2040
2043
2046
2049
Billionpeople
Developed Sub-Saharan Africa
North Africa and Middle East East Asia
South and Central Asia Latin America and Caribbean
Oceania Growth Rate
World population continues to grow, though slowing
9
Data: UN (2017)

10. Office of the Chief EconomistOffice of the Chief Economist
…Technology
10

11. Office of the Chief EconomistOffice of the Chief Economist
As in the past, we will depend on productivity growth, fueled by new
technologies
11
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
TFP Output Input
US, Index: Year 1961 = 1.00
Anhydrous
ammonia
injection
becomes
predominant
No-till starts to
become popular
Robotic
milking
introduced
Satellites used
for precision ag Big data
applications
Weed and pest
resistant biotech
First automated
irrigation
system field
tested
Consumer-
focused biotech
traits
Drought tolerant
biotech
Source: USDA-OCE using data from USDA-ERS

12. Office of the Chief EconomistOffice of the Chief Economist
Real prices trend down, as crop production outstrips demand
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0
100
200
300
400
500
600
700
800
1960 1970 1980 1990 2000 2010 2020
Real Crop Prices
Corn
Soybeans
Rice
Wheat
2005 = 100
0
30
60
90
120
150
180
210
240
1960 1970 1980 1990 2000 2010 2020
World Crop Production
Corn
Soybeans
Rice
Wheat
Data: USDA, BLS
2005=100
Corn price down 59%
since 1960, soybeans by
52%, rice by 70%, and
wheat by 65%.
Corn output has risen 435% since
1960, soybeans by 1,190%, rice by
225%, and wheat by 215%.

13. Office of the Chief EconomistOffice of the Chief Economist
Real prices trend down, as U.S. livestock production outstrips demand
0
50
100
150
200
250
300
350
400
1960 1970 1980 1990 2000 2010 2020
Real U.S Livestock, Poultry, and Milk Prices
Steers
Chicken
Milk
Hogs
0
30
60
90
120
150
1960 1970 1980 1990 2000 2010 2020
U.S. Meat and Milk Production
Beef
Chicken
Pork
Milk
Data: USDA, BLS
2005=100 2005=100
Steer price down 44%
since 1960, hogs by 68%,
milk by 52%, and chicken
by 56% (from 1964).
Beef output has risen 87% since
1960, pork by 143%, milk by
77%, and chicken by 1,050%.
13

14. Office of the Chief EconomistOffice of the Chief Economist
Technology will change in many different ways over the next 20 years
14

15. Office of the Chief EconomistOffice of the Chief Economist
Global Area of Biotech Crops, 2017: Country areas (Million Hectares)
Regional proportions
10 Latin American, 8 Asia Pacific, 2 North American, 2 EU,
and 2 African countries
46%
10%
1.5%
0.5%
42%
Regional
proportions
vary significantly

16. Office of the Chief EconomistOffice of the Chief Economist
Growth in trade…
16

17. Office of the Chief EconomistOffice of the Chief Economist
Especially for emerging and developing markets, higher trade growth
translates into higher economic growth
17
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023
Percent Real GDP growth
Real trade growth
Note: 2019-2024
are IMF forecasts
Source: World Economic Outlook Database, International Monetary Fund, April, 2019
Asian financial crisis,
1998-99, quickly
followed by Russia,
Argentina, and Brazil
debt problems.
Uruguay round of trade
negotiations, sponsored by
GATT, end (1994), tariffs are
cut, and WTO established
(1995). 127 of 130 GATT
members join WTO. NAFTA
begins in 1994.
Doha round of trade negotiations
begin in 2001, but fizzle. Meanwhile,
33 countries (notably China and
Russia), join the WTO. Bilateral trade
agreements proliferate.
Global financial
crisis, 2008-10 ends
the strongest global
growth spurt since at
least the 1950’s.
Both trade and growth
stagnate.

18. Office of the Chief EconomistOffice of the Chief Economist
Global ag imports have more than doubled over past 15 years….
US $118 b
Canada $34
b
Mexico $27
b
EU $130 b
Japan $52 b
China $118 b
ROW $342 b
Global ag imports (2017)
$821 billion (incl. U.S.)
Data: Global Trade Atlas; EU imports exclude intra-EU trade
18
US $41 b
Canada $13 b
Mexico $11
b
EU $57 b
Japan
$31 bChina $11 b
ROW $87 b
Global ag imports (2002)
$251 billion (incl. U.S.)
10x increase

19. Office of the Chief Economist
 Significant growth in RTAs since 1995
 WTO monitoring 291 RTAs in force
(Jan. 2019)
 Most are FTAs (~90%)
 Trans-oceanic FTAs (i.e., EU-Japan,
CPTPP) make up nearly 50% of
agreements
Figure 1, Competitive FTA Report
Regional Trade Agreements
Growth of Regional Trade Agreements
0
50
100
150
200
250
300
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
NumberofAgreementsorMembers
CU FTA PSA Cross-Regional GATT/WTO Members
Source: Authors tabulations from WTO Regional Trade Agreement
Information system, available at:
http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx
Source: Grant and Peterson (2019; Virginia Tech University)

20. Office of the Chief EconomistOffice of the Chief Economist
…potential challenges from changing consumer preferences and
trade patterns
20

21. Office of the Chief EconomistOffice of the Chief Economist
“Middle Class” in middle income countries could reach 874 million
households by 2026, up 71% from 2016 levels
1
4
2
1
7
6
2
5
7
6
6
7
28
150
151
0 50 100 150 200 250 300 350 400
Colombia
Vietnam
Malaysia
Taiwan
Philippines
Thailand
South Korea
Turkey
Egypt
Brazil
Mexico
Russia
Indonesia
India
China
Households w/ Real PPP incomes greater than $20,000 (millions)
2016 Proj. gains by 2026
Million Households
Source: Global Insight’s Global Consumer Markets data as analyzed by OGA
21

22. Office of the Chief EconomistOffice of the Chief Economist
22
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Share of US Exports by Category (% of value)
Consumer Oriented Total Bulk Total
Intermediate Total Agricultural Related Products
Exports of US Bulk Commodities Have Fallen as a Share of Total
US Exports
Source: USDA Foreign Agricultural Service's Global Agricultural Trade System

23. Office of the Chief EconomistOffice of the Chief Economist
China per capita GDP leads the way, with other regions following
23
1980 1985 1990 1995 2000 2005 2010 2015
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Sub-Saharan
Africa, 2017
India, 2017
Current USD
Source: World Bank
China, 2017

24. Office of the Chief EconomistOffice of the Chief Economist
2013 meat consumption per capita and GDP per capita
0
20
40
60
80
100
120
0 50 100 150
Norway
Switzerland
Luxembourg
Japan
Argentina
Australia
United States
China, Hong Kong
India
China Mainland
Kg meat consumption per capita
thousand2010USDpercapita
Data: World Bank, OECD, FAO Source: Meyer (2019; University of Missouri)

25. Office of the Chief EconomistOffice of the Chief Economist
Growth in meat and dairy consumption, kg per capita
0
50
100
150
200
250
300
1980
1985
1990
1995
2000
2005
2010
0
10
20
30
40
50
60
70
80
90
100
1980
1985
1990
1995
2000
2005
2010 0
10
20
30
40
50
60
70
80
90
100
1980
1985
1990
1995
2000
2005
2010
0
10
20
30
40
50
60
70
80
90
100
1980
1985
1990
1995
2000
2005
2010
NigeriaIndiaUnited States China, Mainland
Source: Meyer (2019; University of Missouri)

26. Office of the Chief EconomistOffice of the Chief Economist
0
50
100
150
200
250
1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017
Global soybean meal feed demand:
by regions, 50 years of growth
Million metric tons
EU
North America
Source: USDA FAS PS&D Data, April 2019.
China
Two Stories:
• Growing global meat
demand in emerging
economies
• Developed countries
are stable
Japan, S Korea, and Taiwan (below)

27. Office of the Chief EconomistOffice of the Chief Economist
Source: USDA Agricultural Baseline Projections to 2028, February 2019.
Developing economies driving projected increases in global meat
imports

28. Office of the Chief EconomistOffice of the Chief Economist
Technology comes in different flavors
28
https://www.agri-pulse.com/articles/11982-
aquabounty-can-start-making-selling-ge-
salmon-in-us
https://www.memphismeats.com/
1. Biotech
2. Plant technology
3. Cell technology
4. Organic Tech
5. Robotics
6. Etc….
https://www.wsj.com/articles/farming-
gets-high-tech-in-bid-to-offer-locally-
grown-produce-1460576984
https://charleston.eater.com/2018/6/1/17418
706/impossible-burger-in-north-carolina
https://www.technologyreview.com/s/604303/
apple-picking-robot-prepares-to-compete-for-
farm-jobs/

29. Office of the Chief EconomistOffice of the Chief Economist
…USDAInternational Food Security Projections
29

30. Office of the Chief EconomistOffice of the Chief Economist
Global 2019/20 production and consumption at near-record or
record highs
300
400
500
600
700
800
MMT
Production
Consumption
Wheat
300
400
500
600
700
800
900
1,000
1,100
1,200
MMT
Production
Consumption
Corn
0
50
100
150
200
250
300
350
400
MMT
Production
Consumption
Soybeans
30
Source: World Agricultural Supply and Demand Estimates, July 11, 2019

31. Office of the Chief EconomistOffice of the Chief Economist
USDA international Food Security Assessment (IFSA)
• Prepared by the Economic Research Service
• The ERS international food security model projects food demand and
access in 76 low- and middle-income countries—39 in Sub-Saharan Africa,
4 in North Africa, 11 in Latin America and the Caribbean, and 22 in Asia.
• Projections of food gaps for the countries are based on differences
between a nutritional target and estimates of food demand.
• Demand projections are based on prices and incomes.
• IFSA and SOFI have methodological and data differences
• Next report to be released in August 2019
31

32. Office of the Chief EconomistOffice of the Chief Economist
32
2018 IFSA: Incomes expected to rise, grain prices to decline between
2018-2028
Average real per capita incomes vary
across regions and projected to rise in
all regions
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Sub-Saharan
Africa
Asia North Africa LAC
USdollars,peryear.
2018 2028
Per capita incomes by region, 2018 and 2028
World prices of grains projected
to fall or remain stable
0
50
100
150
200
250
300
350
400
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
PriceinrealUSD/ton
maize rice sorghum wheat
SSA = Sub-Saharan Africa, LAC = Latin America and the Caribbean.
Source: USDA Agricultural Projections to 2027, Long-term Projections report OCE-2018-1.
Prices of major grains, 2018-2028
Source: USDA-ERS

33. Office of the Chief EconomistOffice of the Chief Economist
Growing economies with access to growing supplies and falling real food
prices will see improved food security
2018 = 21.1% food insecure 2028 = 10.4% food insecure
33
Source: USDA-ERS
[Compare to 11% percent undernourished in 2018
SOFI] Biggest percentage drop is for Asia

34. Office of the Chief EconomistOffice of the Chief Economist
… and the total food gap will fall (2018 report).
0
5
10
15
20
25
Asia LAC North Africa SSA
MillionMT*
The food gap
2018 2028
LAC=Latin America and the Caribbean, SSA=SubSaharan Africa
Source: USDA Economic Research Service
Total food gap:
2018: 36 mil. tons per year
2028: 24 mil. tons per year
• SSA’s total food gap was by far
the highest among all regions
(59% of total gap) with the
slowest projected decline.
• Asia’s food gap is projected to
decline by 66 % over 2018 to
2028.

35. Office of the Chief EconomistOffice of the Chief Economist
35
0
2
4
6
8
10
12
14
16
ECOWAS Rice Imports
2013
2014
2015
2016
2017
2018
2019
Actual
MMT
Source: USDA
Long-term uncertainties
due to (name a few):
• Political and economic
challenges in importers
(e.g., Nigeria)
• Weather
• Energy prices
• Disease
• Policy changes in
importing and exporting
countries
Imports in emerging economics up in long-term, but with much
uncertainty

36. Office of the Chief EconomistOffice of the Chief Economist
Conclusion 1 – so far, productivity growth keeping up with demand
• Increasing trade and productivity are needed to meet challenges of growing
population and changing climate subject to resource constraints
• To date, in aggregate, ag commodity production increases are meeting or
exceeding demand, leading to falling real prices historically and projections of
relatively flat prices
• Projections are for continued long term global trade growth in agriculture
commodities
• Strong income growth in some developing countries and urbanization lead to
increased import demand for grains and High Value Products
• Higher trade growth translates into higher economic growth
• Global ag imports have more than doubled over last 15 years
36

37. Office of the Chief EconomistOffice of the Chief Economist
Conclusion 2 - percent of population that is food insecure to projected
to fall
• Growing economies with access to growing supplies and falling real food prices will see
improved food security
• USDA estimates show the percent of the world population that is food insecure fall by half
over 2018 to 2028
• But many uncertainties over projections of market impacts (eg.)
• China ASF impacts and potential spread to other countries
• Energy prices and costs of agriculture production
• Policy changes by importers and exporters – especially, China and US
• Biofuels production (policies and profitability)
• Weather impacts, increasing severe weather events
• Implications of increasing consumption and production of meat substitutes – both plant-
based and animal cell culture technology
37

38. Office of the Chief EconomistOffice of the Chief Economist
Conclusion 3 – Role of technology in addressing food security
• Productivity gains are fueled by new technologies, such as in biotechnology
• Potential for biotechnology to
• Help farmers increase yields while reducing yield variability
• Produce environmental benefits - reduce use of pesticides
• Provide poverty alleviation
• The benefits of biotechnology to farmers and the poor will depend on the
degree to which
• Technological innovations address production and consumption
constraints, and are affordable to farmers
• Institutional and political barriers to its use are lowered
38