Demographers expect world’s population growth rate to drop to 0.5% in 2050, and we have already seeing steady declines in the population growth rate supporting this view.1 Couple the declining population growth with technical innovation in agricultural production, and the world now has more agricultural products per person than ever before. As these two trends continue to accelerate, the implications for the value of agriculture and food manufacturing will change. In this article, we take a closer look at how they impact developing countries’ diets more specifically.
The chart above shows globally the ongoing relationship between population growth and yield gain in the different crops. Since the early 1980s, the global population growth rate has declined by 50% with the USDA’s current estimate for 2020 at just 1% growth annually. Their forecast calls for this growth to slow to 0.8% annually by the end of the current decade. The Food Agricultural Organization’s (FAO) estimates closely match the USDA’s giving us some assurance that many analysts see the situation in a similar manner. Over the same period, 1980s to today, I calculated the compounded annual growth rate (CAGR) of the yield gains in the different crop categories. Yield gain of grains and cereals has exceeded global population since the early 1990s, and oil crops’ yield gain started outpacing population growth starting in the late 1990s. It’s no wonder that there has not been a scarcity price premium in these crop categories. Now, even without increasing acreage, production will exceed population growth by 50% driven just by yield gain in cereals and grains. The poor prices for crop producers reflect this supply and demand dynamic.
Globally, consumers responded to the falling real price of cereals and grains by increasing their demand for animal proteins, fresh fruits and vegetables. They did not want more calories per person― they wanted more protein and a better variety of foods. As a result, the acreage devoted to cereal’s production has been stagnant since the early 1960s, only expanding by a 0.2% annually even with astounding increase in global population. In contrast, the increasing demand for animal proteins required a strong 2.1% annual expansion of oil crop acreage particularly in South America. At the same time, the global acreage for vegetables and fruits increased 1.9% and 1.6% annually respectively. These crop categories had improving yields as well, and combined with the greater acreage, were able to expand production twice as fast as population.
Two crop categories stand out as losers in this change. Starch crops (roots and tubers) and pulses have seen their production grow slower than global population. These categories have seen limited growth both in their acreage and in yield. As countries that once relied on these ‘starchy staples’ have become more prosperous and urbanized, these food elements have seen their consumer appeal diminish. And again, it’s is not that people don’t like them, but they’re seeking more variety in their foods. This should give agricultural and food producers some signal on where to put their next investments.
Which diet and practices will the developing world follow in the next decade?
We can compare and contrast a couple of possible examples. The FAO produces the only consistent set of food supply datasets at the global level. The data collection and presentation methodologies present very difficult challenges, but we have to rely on the data while keeping the challenges in mind. For this exercise, I chose Nigeria as a model of the developing world as it represents one of the big drivers of population growth in Africa and is a country in transition from rural to urban. The FAO’s data shows a country that currently relies on starches and plant based protein to meet its needs. Animal-based protein does not enter into the top 20 food items.
Source: Food Agricultural Organization
As the chart above shows, cassava, a nutty-flavored, starchy root vegetable, and yams account for 220 kilograms per person in the Nigerian food supply. I personally learned to love cassava (also known as yucca) when I lived in Colombia in the 1990s and thought that the Quick Service Restaurants in the United States should have it as a menu option to complement potatoes. That clearly didn’t catch on! But, 119 kilograms per year of cassava per person would be a tough sell here in the U.S. As Nigerians gain more income and urbanize will they follow the U.S. lead and start to see a decline in cassava consumption? Or, might China’s pattern will be more representative?
The following table shows that China has its own unique pattern of food supply and consumption, and it’s interesting to see that vegetables take a huge lead at 329 kilograms per person. Still, it’s important to remember that kilograms to kilograms can be misleading in terms of caloric energy available. Using the USDA’s database for food composition and the FAO’s global crop production weighting, I calculated the relative caloric values for the different categories. Cereals would have approximately 3,600 calories per kilogram compared to vegetables having 290 calories per kilogram. Fruits and vegetables have a high percentage of water versus items like grains and pulses. Fruits and vegetables have high yields per hectare, but much of that yield represents water not starches, sugars or proteins. The Chinese rely on rice, wheat and potatoes for the bulk of their caloric energy with all three of the items offering excellent value to the consumer. In contrast to the Nigerian diet, six of the Chinese top twenty items are animal or fish based proteins. The Chinese use a more diverse supply of animal and fish based proteins than U.S. diet with its emphasis on the big three of beef, pork and poultry.
Source: Food Agricultural Organization
The U.S. food supply and diet shows some very pronounced tendencies. These reflect the U.S.’s advantage in primary agricultural production, and also reflect eating habits that should give us some concern for future health. Milk (excluding butter) leads the U.S. consumption items with 255 kilograms. Approximately 9% of milk is solids (lactose, proteins and minerals), resulting in about 23 kilograms of solids, which Americans consume most of as cheese. The cheese often gets consumed as a part of prepared foods either in or outside of the home. The second item – beer –surprised me when I pulled the data. There are plenty of calories in beer, and my personal exercise motto is, “I run for the beer”. However, it is certainly misleading to compare 82 kilograms of beer to 81 kilograms of wheat for caloric comparison. Sadly, we have to look to the fourth item to find vegetables. Americans consume one fifth of the vegetables that Chinese consume on average. Americans, again on average, have sufficient income to consume more vegetables in their diet, but they choose not to despite all of the health benefits.
Another unique aspect is the United States’ overwhelming advantage in grain and oilseed production, which allows it to support the most affordable meat supply in the world. The American consumer takes full advantage of it, each person on average annually eating 123 kilograms of poultry, beef and pork. Another outsized category that should draw some concern is the sugar and sweeteners consumption with a combined consumption of 65 kilograms per person. The Chinese number is 7 kilograms for sugar, and sweeteners are less than a kilogram per person. This level of consumption contributes to the higher level of diabetes in the U.S. and other developed countries. Hopefully, countries like Nigeria do not follow this pattern, but only time will tell where the opportunities and problems may lie.
There is a lot to unpack in these trends and comparisons, but it is clear that the future of agriculture and food production will increasingly focus on variety, quality, and not raw calories. Grains and oil crops will continue to be the bedrock of the food system. They remain the most cost effective way to generate calories, but most consumers in developing countries will be switching from a “calories first” diet to a “calories also” diet. It is unlikely that food patterns even in countries like the U.S. will remain stable as the feedback mechanism from the medical community push consumers to eat healthier diets. U.S. agricultural producers and food manufacturers that find a way to supply the variety, quality and ease of serving will be well positioned for future success.
Source: Food Agricultural Organization
1Projections from FAOSTAT database August, 2020.