Modelling and Food Security
Greg Reid
The main approaches used to model future food production are either economic or agronomic. Economic modelling uses demand and supply relationships which assume that an increase in price of a commodity will lead to an increase in production either through technology improvements or additional farmland. This approach is used to confidently predict that Australia will double food production by 2050 despite climate change and despite absolute restrictions to the supplies of water and arable land.
Agronomic modelling uses inputs from climate trends and the specific requirements of individual agricultural products. Rice fails to produce grain if temperatures exceed 36 degrees centigrade during flowering and wheat is similarly affected by temperatures over 34 degrees. Agronomic modelling takes into account many physical factors and predicts a considerable decline of food production in a warming world.
Economic modelling projects what might be produced as though money can substitute for finite resources. Agronomic modelling projects what can be produced provided that rates of resource depletion are governed only by production needs.
Both modelling systems fail to grapple with impacts on the individual units of production ie farms. Farming is a risky business. Narrow margins and increasing climate variability mean that losses in poor seasons are often much larger than profits in good seasons. Debt is the enemy of the farmer and is exacerbated by high capital costs for machinery and infrastructure. To be a farmer is to be a gambler but climatic and social trends lengthen the odds.
The average age of farmers in Australia is 56 years old with an average debt around $1m per farm and this is not ideal when you are close to retirement. Debt is not only a barrier to adopting new technology but younger generations are unwilling to take on even larger debts to buy out the older generation. The result is a growing wave of corporatisation of farm enterprises. Corporate entities are able to run multiple farms in different climatic zones and so spread risk. Unfortunately corporate entities supplant the farm as the primary focus of preservation. By prioritising cash flows companies run down natural resources that do not appear on the balance sheet.
The corporate trend in agriculture is also felt in poorer countries where subsistence farmers are contracted to produce cash crops though the outcome is usually disastrous in terms of deforestation, erosion, depletion of aquifers and increasing soil salinity.
Food security is not about maximising short term production or profit but about ensuring long term reliable supply in the face of changing climate. Current modelling methods ignore how climate change drives corporatisation in agriculture which in turn is a major factor undermining long term food security. Intervention in the market is necessary to create positive incentives to preserve food producing resources. The alternative is increasingly volatile food markets and declining global production.
The Murray-Darling water market is an example of a mechanism intended to preserve a key resource but unfortunately this type of intervention can lead to perverse outcomes. High efficiency water use requires power for pumping. Currently, power prices are rising faster than water prices and the result is many farmers are reverting to low pressure flood irrigation that wastes water.
To avoid perverse outcomes, incentives are needed that adequately reward resource conservation rather than just shifting costs.
Food security is an issue grossly underestimated in rich countries like Australia. We would do well to remember that food is a commodity that goes to the highest bidder. Many countries are finding they may produce enough food but they are not the highest bidder. It is already a cruel reality that your next meal of rice is possible only because someone else went hungry. Australians should not assume that we will always be at the head of the queue.
Countries that have absolute food shortages are faced with soaring prices and political instability. It is no accident that the wars, rebellions and terrorist campaigns in the world today are mostly in countries with insufficient food resources. These countries may be distant but Australia is not immune to the impacts on global markets and politics.
If modelling is to be of value in policy design it can neither be too economically simplistic nor too technically focused, since both approaches do not include the dynamics of natural resources and social trends. It is not necessary to absolutely quantify the later two factors. Instead it is only essential that policy incorporates adequate incentives to align environmental and social trends with long term food production. An example would be stewardship payments supporting sustainable land management and water use efficiency. Of course incentives have costs but then after all we cannot eat money.
Greg Reid is an ERA member who lives in NSW
