Agriculture, one of the key focus sectors of The Center for Industrial Development, is of strategic importance to any country: there exists no safe, developed, and independent country with a struggling agricultural sector. Therefore, it should not come as a surprise that late last year, Chatham House: The Royal institute of International Affairs organized the next edition of The Sustainable Food Future Summit. Highly informative and fast-paced discussions followed involving the Secretary General of the FAO, José Graziano da Silva, as well as the UK’s Minister of State of the Department for Environment, Food and Rural Affairs, George Eustice. The main takeaway from the London discussion was that we can approach the conversation on the future of agriculture from two perspectives: revolutionary and evolutionary.
The first approach seems to have a powerful proponent in the Secretary General of FAO, who noticed that it is critical to depart as soon as possible from the current model of agriculture to a new model, which “not only feeds the people, but also feeds the planet.” The major criticism towards modern agriculture – which is rooted in the successes of the Green Revolution spearheaded by Nobel Peace Prize winner Norman Borlaug – are its negative externalities which include soil erosion that washes away synthetic fertilizers into water tables and subsequently oceans. The leader of the FAO is convinced that if we continue doing what we are doing so far, we will only end up with more well-known problems. In other words, we have to change agricultural systems rapidly and profoundly.
While it is true that many farmers struggle to appreciate the scale of the above argument, it must be noted that the majority of public opinion does subscribe to José Graziano da Silva’s argument. Such sentiments consequently drive people’s voting decisions, which result in government policies placing more and more pressure on farmers and the agricultural sector at large. This is why awareness of the above dynamic is critical to empower the agricultural sector to unite itself and start sharing the insights of how agriculture works with the wider society.
An evolutionary approach towards agriculture was represented in London by the UK’s Minister of State of the Department for Environment, Food and Rural Affairs, George Eustice. The Minister fully acknowledged the fact that over 800 million people globally are still hungry. However, according to the Minister, that point should not lead us to a premature conclusion that modern agriculture does not work and should be abandoned here and now. As it has been mentioned, the Green Revolution did lift over one billion people out of poverty, and were it not for the the Green Revolution, we would need four times more arable land than is currently being farmed today to feed the world’s current population. Therefore, the Minster argued, the future of agriculture lies in continuous innovation that brings new technologies. He highlighted genetically-based approaches that aim at breeding new varieties of crops and animals which will not only be able to withstand a changing world, but thrive in a warmer and more populous one.
Between the two approaches to agriculture, the revolutionary one had significantly more supporters in London in comparison with the evolutionary approach. However, what united everyone present at the conference is the need for a strategic understanding and approach towards agriculture, keeping in mind its key role in human dignity and national sovereignty. On this point, it was further noticed that food is being used more and more often as a weapon, which not only directly contradicts human dignity, but also the sovereignty of countries.
Agriculture’s importance is further emphasized when it starts to feature in the conversation about the healthcare budgets of countries. For example, it is predicted that within the next 15-20 years’ time the world will face an epidemic of type II diabetes. This epidemic has direct ties to agricultural policy and the production of certain foods. The dream of the experts present in London is to see countries’ health policies change in such a way that this epidemic be prevented. Looking at the costs involved in disarming epidemics before they materialize – especially when we do know they are likely to materialize! – are ridiculously small in comparison with the costs of dealing with the actual epidemic through new agricultural policy. Sadly, very few governments are making strategic choices aimed at preventing a problem 20 years from now, as they are thinking and acting in the four-, or five-year election cycle. As a result, healthcare budgets are growing at an unsustainable rate in attempt to solve future health problems, many of which can also be solved through agricultural policy.
The importance of transparency
One does not have to think about the above for long to arrive at a very simple question: shouldn’t we be more ambitious and quicker in re-thinking agriculture so that the identified inefficiencies are eliminated? José Graziano da Silva deeply believes that since long ago, parents feeding their children have had no certainty of whether what they were feeding them was safe. Of course, they would like to think that they know that what they are feeding their kids is safe, but according to the Secretary General of FAO, that is no longer even a possibility. Therefore, it is argued, greater transparency of food labeling is critical for making our food habits more sustainable for ourselves and the planet.
The conundrum of food pricing
It was insightful to hear the experts agree that, on average, food prices have been decreasing over the last few years and now food, comparatively speaking, is cheaper than ever. However, it is important to look critically at this trend and the potential problems it creates when it comes to negative externalities as well as decreasing farmers’ income. Perhaps higher food prices are necessary to enable farmers to deliver higher quality food while caring for the environment. At the same time, the experts overthrew the argument that food subsidies exist to make farmers rich. In fact, according to the experts present in London, food subsidies exist to precisely balance the needs of cheap food for the entire population and sustainable income for farmers.
This argument for higher prices lead to another fundamental point made at the conference: increasing the price of food does not result in the increase of the number of hungry people in the world. Interestingly enough, this is the case because the majority of 800 million hungry people globally are… farmers! And the majority of those farmers are based in Sub-Saharan Africa and South-East Asia. Therefore, increasing the price of food means increasing the income level of subsistence farmers, who can get out of poverty if the prices of food rise.
It is further argued that food price increases are fully feasible. This is because the cost of wheat in the loaf of bread, for example, does not exceed 9% of its retail price. On this point, farmers present at the London’s conference noticed that the price of bottled water is often higher than the price of the milk they get from a milk processor. “How is that possible?” one farmer asked.
Brexit and agriculture
No conference taking part in the UK these days is complete without talking about Brexit. It seems that the sentiment on Brexit among participants of this event was positive. Minister Eustice believes that Brexit offers an unprecedented opportunity for re-thinking the agricultural and fisheries policies of the Kingdom. According to the Minister, the two pillars of new agricultural policy should be doubling the country’s efforts on agricultural R&D as well as designing new financial support schemes for farmers. When it comes to the former, the emphasis is placed on developing new crop varieties. As for the latter, the subsidy system of the future will put achievement of environmental goals as a central concern, according to the logic that public money should be for truly public goods.
Brexit also means the UK has to face a critical question: which trade block does it want to align itself with in the future? There are two options on the table: the US and the EU system, which are fundamentally different. It is the EU where the quality and environmental standards are the toughest. Moreover, it is the EU where British farmers already export the majority of their crops. Furthermore, the UK already meets all of the requirements of joining the EU block, as it is still a member state. Assuming that the importance of environmental protection will grow in the future and keeping in mind all of the above facts, the question of what was the point of Brexit for agriculture emerges. More and more farmers in the British society are starting to think about this question and are not happy with the answer they arrive at.
How to shift through the uncertainty
Similarly, to an average British farmer uncertain of the consequences of Brexit, one can be overwhelmed by the complexity of fundamental and perceived forces influencing the agricultural sector and consequently, making, or breaking investments across the agricultural value chain globally. Very few people doubt agriculture is the place to be: we all have to eat three times a day. However, assessing resilient business cases in the sector, connecting with stakeholders through the life-time of the investment, and finally, but definitely not lastly, increasing the value of investments in the sector takes unique skill sets and insights. This is exactly the gap The Center for Industrial Development is delighted to bridge today and in the future. Please contact us today to learn how we can help you invest and succeed in global agriculture.
Mateusz Ciasnocha is constantly on a mission to “unleash dormant potential.” He specializes in agriculture, energy, and Africa, and is also passionate about innovation and entrepreneurship. A Hult International Business School graduate, Mateusz currently studies at ESCP Europe Business School and the University of Oxford, where he is receiving a Masters in Energy Management and Philosophy Certificate, respectively. Mateusz is currently in India participating in the prestigious IDEX Fellowship, which enables him to work with Vrutti to support 130,000 smallholder farmers.