Urbana, Illinois
May 12, 2008
by Bob Sampson
Symptoms of the food-versus-fuel crisis are appearing regularly
in the news but the underlying causes--and long-term
implications--are poorly understood, said a
University of Illinois
agricultural economics professor.
"An important component of the food-versus-fuel debate that is
not well understood is how increases in wealth for Asian
consumers are dramatically affecting the markets for commodities
worldwide," said Peter Goldsmith, director of the National
Soybean Research Laboratory and an associate professor in the U
of I's Department of Agricultural and Consumer Economics.
To help fill that knowledge gap, Goldsmith, Tad Masuda, a
postdoctoral researcher, and Barbara Mirel of the University of
Michigan have built a 3-D computer model that visually conveys
the interrelationship and impacts of income changes around the
world on consumption, production, and markets.
"Global Food in 3-D--Version 2" is a Web-based program that will
be accessible on a trial basis worldwide to analysts and other
interested parties by June.
"It will put the story of food demand at everyone's fingertips,"
Goldsmith said.
The program deploys three interactive features on the screen--a
sidewall, a back wall, and a floor.
On the "side wall," users can graphically display consumption
and production data for 15 protein commodities. These can be
displayed by country, region, or for the world.
"In the global food system, the production and consumption of
commodities are increasingly separate," Goldsmith said. "For
example, poultry and pork trade has increased 14 percent to 16
percent per year since 2000, respectively. Brazil is now the
largest exporter with Russia and China being the leading
importers. The shift in the loci of world poultry and pork
production will have larger impacts on underlying feed markets
and grain flows."
The "back wall" features country-specific information such as
consumption per capita, income elasticities, and population
metrics. These data help to demonstrate how income affects
consumption.
"The relationship is simple--if I get $1 more in income, I'll
not only eat more. If I get significantly more income, I'll eat
even more but will shift my consumption to different types of
food," he said. "We have that data for every country in the
world going back to 1961 and projecting up to 2030."
As a component of the food-versus-fuel debate, there is an
economic principle known as "elasticity." Simply defined, this
means as incomes move up, food consumption and expenditures
change. This is why small increases in income in heavily
populated nations like India and China can have major impacts on
commodity markets, especially those tied to protein.
"The visualization provided by this program helps one understand
this relationship. It provides a vivid demonstration of how the
complex system involving income growth, population changes, and
food consumption functions," he said.
The "floor" of the model is a map of the world which dynamically
reflects changing consumption or production patterns and
elasticities over time.
As meat and poultry consumption rises in Asia with increased
incomes, a greater demand is triggered for corn and soybeans to
feed beef, pork, and poultry. Holding all factors constant,
projections indicate that 120 million metric tons more of pork
and poultry will be needed by 2030. This means 110 million
metric tons more of soybean meal, 140 million metric tons of
soybeans, and 62 million hectares of land to grow these
additional crops.
"Not only can we not add land fast enough to meet this rapid
rise in demand, but it would place a significant burden on our
natural resources," he said. "So how do you produce more
soybeans?
"I think the answer lies in more research and technical change.
Improvements in yield, technologies to reduce input use, and
increases in livestock feed efficiency will be critical to
meeting future demand while improving the productivity of
agricultural inputs and reducing the load on environmental
resources."
The Global Food in 3-D model can be used to demonstrate and
understand how demand has changed for commodities and where
production has been and is going. Poultry, for example, was a
commodity largely consumed during the 1960s in the Caribbean,
North America, and Europe. By 2007, new countries in other areas
of the world were becoming major consumers and a radically
different pattern emerged.
"In terms of consumption, poultry was until the 1990s largely a
U.S. business," said Goldsmith. "After that, Brazil and China
have become major players. China now consumes more poultry than
the United States and is projected to consume 40 percent more
poultry than the United States by 2030. Where will the grain to
feed this poultry come from? This demand is placing a tremendous
stress on crop production even without using crops for fuel."
The model allows users to make comparisons. What are the effects
on markets when incomes are rising in Asia and what are the
implications for the future?
"We also know that as incomes rise, consumers change their food
choices. They go first from rice to meat and then in some
countries move to high-end seafood," he said. "Other commodities
stay basically flat in some countries. In the United States, for
example, dairy consumption doesn't seem to change while the big
opportunities for dairy appear to be in South America. But each
country, at each point in time, for each foodstuff can be unique
and makes generalizations risky. Hence, we felt there was a need
for a software tool that employed visualization to help simplify
a complex situation."
Asia can't produce the food needed to feed its population,
Goldsmith added. "That food will have to come from the western
hemisphere. China, once the home of the soybean, is now the
world's largest importer of soybeans."
All of these complex and interrelated developments become
clearer when moving across the screen with its tables and maps.
Goldsmith noted that the original idea for the model was
developed earlier this decade by Steven Sonka, a former director
of NSRL and retired professor of agricultural economics, and his
then-doctoral student Donna Fisher. They studied how
visualization helped managers make better decisions when dealing
with complex problems in the future. The Illinois Soybean
Association and the Soybean Disease and Biotechnology Center
provided support for development of the software. |
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