Creating Tomorrow: Food

Human living is in the early stages of huge change that will take us well beyond historical experience. In this, the third of a five-part series, business professor and sustainability expert Dr Wayne Cartwright explains what this will mean for energy use, the weather, food, finance - and life in general as we know it.

Most cities are not set up to support large amounts of homegrown food. Photo / Getty Images

Dr Wayne Cartwright. Photo / Supplied

OPINION: The pressure on the global capacity for food production from oil costs and climate change would be a huge issue for mankind even if the world population were stable. However, it is increasing, so the challenge to feed people is coming at us both ways - more people, and forces of change that make food production more difficult.

This article explores what is happening globally and then looks at New Zealand.

Changing conditions

Global food production is becoming more difficult and unreliable for four reasons. First, variations in rainfall and temperatures outside seasonal norms are already causing traditional crops to fail in many regions. These variations and their effects will intensify as the effects of climate change strengthen.

For example, the recent extreme drought in the Great Plains in the US, which greatly reduced corn and wheat yields, will soon result in increased food prices.

The previous year, drought in Russia and Ukraine had a similar effect on the same foods. As another example, subsistence crops in sub-Saharan Africa, which have grown reliably for hundreds of years have been failing, because expected rains have not arrived.

Alternative crops may eventually be found that thrive in the changing conditions, but there is little time available to experiment and adjust farming practices. Although some aspects of climate change are resulting in other regions experiencing more favourable conditions, the overall effect will be to make global food production more challenging.

Drought in the Great Plains in the US can raise food prices around the world. Photo / Getty Images

Water depletion

Second, several regions that depend on water from aquifers are experiencing drops in the levels of these essential sources of water, mostly due to over-use. This is happening to major commercial farming regions where pumping allocations have been too liberal, such as the Great Plains, and also to subsistence agriculture in countries such as India, due to increases in local community population.

Rising fuel costs

Third, rising fuel oil prices will substantially increase on-farm costs and hence the prices that farmers must receive to stay in business.

This will affect especially the arable cropping types of farming that are highly mechanised. It will have less direct effects on pastoral agriculture that is less energy-intensive and on the production of vegetables and grain cropping, which use more manual labour.

It is ironic that the major shifts in agriculture in the poorer countries over the last several decades - replacing subsistence food production with more mechanised corporate farming - will make food production in these regions far more vulnerable than it would have been. Certainly, these shifts increased crop yields greatly, but it is these yields that are now at risk from oil prices.

Fuel oil prices will also increase the costs of food transportation. People and communities that depend on imported food will become more vulnerable. The costs of food processing, packing and storage will also rise, but this will depend more on electricity prices (which indirectly reflect oil prices as well).

Rising fertiliser costs

The fourth reason is that nitrogenous fertilisers will also increase in cost, by about the same proportion as oil. These fertilisers are essential to the commercial arable farming systems that produce most of the world's food. Access to the relatively cheap Haber-Bosch process - using oil as energy and natural gas feedstock - that converted nitrogen from the atmosphere to fertilisers such as urea was one of the key foundations of the 'Green Revolution' of the 1960-70 period, which dramatically averted widespread starvation.

The forthcoming sharp and permanent increase in oil and gas prices will make this source of nitrogen much more expensive. Relatively cheap chemical sources of nitrogen for crops are about to disappear. This change also directly affects much of pastoral agriculture where current pasture management systems depend on nitrogen fertiliser.

New markets, new methods

These four changes will result in global food supply deficits that are likely to approach starvation conditions in many regions. There will also be major changes in the patterns of international trade in food as production capacities decline in some regions more than others, new producing regions open up, and demand in regional markets shifts.

The relatively affluent regional markets that are most exposed to embedded dependency on energy from fossil fuels - North America, parts of Western Europe, Japan, Australia and China - will suffer significant drops in disposable incomes.

Regional markets that are highly exposed to severe weather events will be further disrupted. Generally, food prices will rise continually relative to incomes, because oil prices will increase supply chain costs while depressing consumer incomes.

Food will account for increasing proportions of household spending, resulting in more prominent public concerns about food prices.

All of these changes will reduce overall demand for luxury and convenience foods, and increasing proportions of consumers will shift towards foods that deliver primarily nutritional benefits at reduced cost.

These consumers will also develop stronger preferences for foods that have safe and secure sources as well as sustainable supply chains that have relatively low footprints for energy, water, and carbon emissions. Measures of these conditions are likely to become prominent as both retailer requirements and import market entry criteria.

Responding to escalating costs of commercial food production and transportation, food production in home gardens and local communities will expand, leading to much more localised distribution and retailing similar to traditional 'farmers' markets'.

However, the scope for these developments will be constrained in densely populated city areas. Traditional city planning has made little provision for growing food locally.

Supermarket food retailing, which is based on economies of scale and low energy costs, will be challenged strongly by these developments.

These trends towards localisation will also result in food importers facing greater challenges in establishing and maintaining consumer trust in products that have distant origins.

Nutrition will be the top priority

In regions that have low incomes, food markets will be dominated by the need for nutritional sufficiency. Groups who are already at or below safe nutritional levels will become more at risk, and these groups will expand as economic contraction reduces incomes.

The focus in these markets will be on security of supply of nutritionally sufficient foods. The first priority for consumers will be availability and affordability.

Food deficits will become the subject of considerable national and international political attention. Open market operations will be considered insufficient or inappropriate, so will be complemented by government intervention at all levels - international, national, and local.

Although the volume of food required for markets that are focussed on achieving nutritional sufficiency will grow rapidly, there will be little or no opportunity for commercial profits. Instead, these markets will be served through channels that have large inputs of aid funding and government subsidies.

Shipping will replace air freight as the latter becomes more expensive. Photo / Getty Images

Shipping and security

The cost of international transportation of foods will rise sharply as oil prices increase, providing large incentives for innovations that reduce exposure to energy costs.

Air transportation of food will become uneconomic but large container ships will be well suited to accept the innovative technologies that will minimise shipping costs. When geopolitical conflicts arise over access to water and oil, it is likely that some shipping routes will be disrupted and become unsafe for extended periods.

Food processing and manufacturing will be dominated by efforts to reduce energy costs and to meet increasingly stringent requirements for the efficient use of water. It will also operate within allowed rates of gaseous emissions, discharges to waterways and disposal of solid waste. These rates will be determined by the inputs that can be accommodated sustainably by the affected ecosystems, and so will differ between locations.

Food processing and manufacturing will become highly adaptive and resilient, to meet rapid shifts in market requirements and conditions.

What does this mean for New Zealand?

Food is the largest sector of New Zealand's economy. This country exports a very high proportion of protein-rich foods, with most of these products sold in affluent markets.

The major change drivers of oil prices and climate change will greatly affect the New Zealand food sector, but less severely than most other countries. Most production in this country is pastoral rather than arable, which is more energy-intensive.

The increasing cost of nitrogen fertilisers will force a radical change in dairy farming systems. In any case, pollution of waterways is already obliging farmers to reduce nitrogen application. Innovative farmers have already found alternative systems.

New Zealand's relative distance from international markets will lead to major efforts to reduce the weight and volume of food products as fuel prices increase, and for adopting preservation technologies that avoid refrigeration.

Negative perceptions of the energy and carbon footprints of shipping New Zealand food will strengthen in parallel with public concern.

New Zealand's position as a high-protein food producer will bring opportunities - and serious challenges. Photo / Getty Images

However, by far the largest effect on the New Zealand food sector will be the severe economic shock and permanent contraction of demand in relatively affluent export markets. Simply put, these markets will buy substantially lower volumes of animal protein products.

It is predicted that the direct affect of global warming on New Zealand food production will be very substantial. A higher frequency of severe storms will disrupt road, rail and electricity infrastructure. Programmes to mitigate these risks should begin immediately.

Farms will be increasingly at risk from severe droughts, especially in the east. It is essential to begin upgrading water conservation and management to levels well beyond current plans.

A greater frequency of unseasonal frosts will challenge orchardists and vineyards. There will be increased risks of pest and disease incursions associated with increasing temperatures.

On the positive side, it is likely that New Zealand will be affected less severely than most other producing regions that are competitors in affluent international markets. This will provide food exporters with major opportunites to secure competitive advantages and increase shares of these markets - which will nevertheless be smaller.

Feeding the world

In a future that includes the certainty of global food deficits, several other international perspectives will arise for the New Zealand food sector.

One will be political pressure from international food relief agencies for New Zealand to produce greater volumes of more affordable foods, especially grains, instead of dairy products and meat.

The government should strenuously resist these proposals because they are based on erroneous understandings that New Zealand has substantial land areas with high natural fertility, suitable for arable farming. Actually, most of our soils are light and relatively infertile, so are best suited to pastoral agriculture.

It is also likely that calls will be made for New Zealand to accept large numbers of immigrants who would be fed - along with the rest of us - on the same lower-cost staple foods. Such proposals should also be rejected because they are based on misunderstandings about New Zealand's food production capacity.

People offshore believe the country to be sparsely populated, without realising the high proportion of land that is steep and mountainous so cannot be settled or farmed.

That said, New Zealand will be politically obliged to assist materially with the global food deficit. Supply to affluent markets will not cut it so a policy that supplies to international food relief programmes will be necessary.

Check out the full series as featured in Element magazine from the NZ Herald:

• Creating Tomorrow: Energy
• Creating Tomorrow: Weather
• Creating Tomorrow: Food
• Creating Tomorrow: Finance
• Creating Tomorrow: Community and Economy

Dr Wayne Cartwright has postgraduate degrees in agricultural science and economics and has served 34 years in tertiary education - including 30 as a professor in the business schools at the Massey and Auckland Universities.

He has consulted widely in business management, international business and governance, and strategic responses to future insight. He has served on several corporate boards of directors.

He is a past chair of Sustainable Aotearoa New Zealand (SANZ) and has been on the Council for Socially Responsible Investment. He co-wrote and edited the 2009 SANZ publication Strong Sustainability for New Zealand: Principles and Scenarios.

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