Market News & Headlines >> No Food Shortage Ahead
The food outlook is not as dire as some reports would have you believe: That’s the message from J.P. Gervais, the chief ag economist at Farm Credit Canada at the Kansas City Federal Reserve’s annual agriculture symposium. He points to the general acceptance of the fact that world population growth and changing diets are projected to increase food consumption by 60% between 2007 and 2050. What is missing from that forecast is the supply response, he says. “World production would need to increase at rates much lower than in the past [to succeed in boosting supply enough].”
Furthermore, he adds that consumption growth eventually will slow as consumers climb the income ladder and questions whether demand growth will match that of the past 10 years. Gervais explains that when annual income reaches $20,000 (adjusted for purchasing power parity) food demand growth begins to slow. Most likely, at that level, consumers have upgraded their diets to an extent that they are satisfied with their level of diet and turn additional income to other sectors of consumption.
Clearly, if this theory is correct, not only might the challenge of feeding the growing global population be smaller than currently accepted, but the prices needed to get there may be somewhat lower.