Economic Drivers


Population Growth and Urbanization’s effect on farmland

There are two important attributes that set Farmland apart from other investments. The first is inelastic demand. People need food to survive its just a matter of where do they get that food from. The second are the various political and environmental factors that continue to eat away at an already-finite supply of global farmland.


It’s not just the growing global population (8 billion people by 2025 according to the World Bank) that will drive increases in food demand, but also the socio-economic changes that are already altering consumption habits all over the world. As the middle class of countries like China and India continues to swell, their diet shifts from being primarily vegetarian to including a lot more meat, which is more grain-intensive and thus places a greater demand on food producers. These fundamentals have piqued the interest of many investors around the world.


BBC World Debate - Food - Who Pays the Price



The Food and Agricultural Organization of the United Nations (FAO) has issued a sobering forecast on world food production. If as forecast the global population reaches 9.1 billion by 2050, the FAO says that world food production will need to rise by 70%, and food production in the developing world will need to double. This estimate does not however take into consideration the growing agricultural production for biofuels. Other obstacles faced are increased energy prices, water shortages, loss of farmland to urbanization, increased drought and flooding due to climate change.

The FAO also reported that after a decade of steadily rising hunger, the number of people in the world who are chronically hungry crossed the one billion mark in 2009. The FAO estimated the number of people suffering from chronic hunger at 642 million in Asia and the Pacific, 265 million in sub-Saharan Africa, 53 million in Latin America and the Caribbean, and 42 million in the Near East and North Africa.


Q&A with FAO economist on SOFA report



According to the Food and Agriculture Organization, we consumed more grain than we produced in the 2010/11 marketing season. Food is expected to cost significantly more over the next decade than the previous one. And as global population continues to expand but land and water resources do not, the strain on food markets will increase. One of the big issues facing countries is to ensure we not only have enough food to feed populations but that the price is at levels where the poor can afford proper diets. The FAO says that investment in agriculture in the developing world has to increase about 50% from current levels if we’re going to meet the needs of an expanding population.


Part 2 BBC World Debate - Food



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