Food is the new oil, and who controls the 'oil' controls the world. Food is fundamentally important to everyone, in a world of escalating populations, severe weather patterns and political unrest, one has to ask: what will the geopolitics of food look like in a new era dominated by climate-induced scarcity and food nationalism?
With the world’s population reaching more than 7 billion people, resources to feed people are becoming increasingly stressed. The World Bank calculated that arable land per capita, a key measurement of the production capacity of food, has decreased from 3000 square metres in 1961 to 2000 square metres today.
Most recently, severe droughts in the US, Russia, Ukraine, Pakistan and Kazakhstan have ruined grain harvests at a time when crop yields are stagnating in many countries. "Rice yields in Japan haven't increased at all and the same is true for wheat yields in France, Germany and the UK," says Lester Brown, president of the Earth Policy Institute in Washington, DC.
At the same time, trends associated with climate change and the over consumption of water has caused some scientists to predict that by 2025, 40% of the world’s population will be living in areas with severe water stress.
Mr Brown believes that food security will deteriorate unless leading countries collectively mobilise to stabilise their populations, the climate, and underground resources of water, known as water tables and aquifers; to restrict the use of grain to produce automotive fuel; and to protect cropland and conserve soils.
Hungry for growth
Meanwhile, agriculture and food-related corporations are seeking opportunities to protect and grow their interests around the world. China’s growing hunger for meat, for example, recently resulted in Shuanghui International, owner of China’s largest meat processor, to bid $4.7bn for US-based Smithfield Foods, the world’s leading pork producer. If approved, the deal will be the biggest Chinese acquisition to date of a US company.
Earlier this year, coffee company Starbucks bought its first coffee farm, a 2.5-square-kilometre property in Costa Rica, to grow its own coffee, cultivate new types of coffee beans and test new defences against crop diseases. Officials at the Seattle-based company say that the purchase was made in response to rising concerns over a fungus in Latin America that could reduce coffee production.
In April, global bioscience and agricultural company Monsanto announced plans to invest more than $400m in a new state-of-the-art research building, 36 new greenhouses and 250 additional laboratories at its Chesterfield village research centre in St Louis County, Missouri, to facilitate development of its seed and traits pipeline. "Monsanto has pledged to help those in agriculture find new ways to produce more while using less of our globe's resources," says Dr Robb Fraley, Monsanto's chief technology officer.
In 2012, Swiss food giant Nestlé expanded its operations by opening a new factory in western Turkey. The factory produces breakfast cereals for the Turkish market and 14 other countries in the Middle East and north Africa.
Turkey's bold ambition
Countries around the world are promoting increased agriculture production and investment. Turkey, for example, is looking to expand its fruit and vegetable production by drilling geothermal wells to help boost greenhouse production. The effort is part of the South-eastern Anatolian Project (known in Turkish as Güneydoğu Anadolu Projesi, or GAP), a regional sustainable development scheme that is strengthening Turkey’s agricultural industry by providing infrastructure, planning and education for farmers. The project is expected to draw foreign investment.
Regarded as one of the most ambitious projects in the world, GAP was originally launched to aid the development of land and water resources in the region by constructing 22 dams and 19 hydro-power plants for irrigation and energy, as well as making other investments in irrigation.
Turkey is already one of the largest exporters of agricultural products in the eastern Europe, Middle East and north Africa region. The country's agriculture minister, Mehdi Eker, says that FDI in the food and agriculture sector was worth $14m in 2002 and reached $2.1bn in the first 10 months of 2012. “Both domestic and foreign investments in the agriculture sector are on the rise,” he says.
Turkey's government is planning to fight food inflation by launching an initiative to support small and medium-sized enterprises. This echoes a move by the European Bank for Reconstruction and Development, with additional support from the US, to launch a $533m facility to increase lending to smaller farms. Turkish bank DenizBank has signed a $53.3m credit line to offer loans to farmers.
At Dubai Chamber of Commerce & Industry's Africa Global Business Forum 2013, Hisham Abdullah Al Shirawi, chairman of Economic Zones World, outlined how African countries could tap into the Dubai model of special economic free zones to boost the agriculture and agro-processing sectors in Africa.
Pointing particularly to South Africa, he emphasised that Dubai’s model would best work in countries where water is abundant and where civil unrest was not a problem. He emphasised the expense of sustaining agriculture in a desert region and said that South Africa, specifically, could tap into the massive potential to supply the United Arab Emirates. He also pointed to how Dubai’s economic success has been built on free economic zones that attract multinational corporations.
The US is focusing on the impact of climate change on its agriculture sector. The country's agriculture secretary, Tom Vilsack, reports that while productivity in the US empowers it to feed a growing world population, the country is seeing more severe storms, invasive species and intense forest fires that threaten communities and farmers.
“We are beginning to grasp that challenges of our climate will have impacts unique to each region of our country,” Mr Vilsack said recently at the National Press Club in Washington, DC.
The US Department of Agriculture (USDA) has already invested nearly $120m in coordinating with the country’s agricultural research institutions to focus on research to sustain productivity in the face of modern environmental challenges. For example, USDA is funding $19.5m of research at the University of Wisconsin and Oklahoma State, which will look at the impact of climate variability on dairy and beef production.
“Ultimately, these projects aim to deliver the best new tools for ranchers and dairymen to sustain productivity,” said Mr Vilsack.
The USDA is also establishing seven new regional climate hubs to work in partnership with producers and foresters on new adaptation strategies to keep up production in the face of challenges. “If we are to be effective in managing the risk of a shifting climate, we will need to ensure that our managers in the field and our stakeholders have all the information they need to succeed,” Mr Vilsack said at the National Press Club.
New efforts by the National Resource Conservation Service (NRCS) are moving it into the next generation of research and technical assistance to understand the role of carbon in contributing to global warming. “This is going to allow outside researchers and scientists to begin taking a fresh look at carbon and soil, which, ultimately, will have a regional benefit to crop production,” Mr Vilsack said.
This will build on a USDA campaign for soil health. “We know that healthy soils are more resilient soils,” said Mr Vilsack. “Every pound of organic matter in the soil today can hold 18 to 20 pounds of water, helping these farms and these farmlands become more resilient to periods of drought and other extreme weather conditions.”
It is hoped that these efforts will lead to further investment and economic opportunity.