There used to be a time when wheat, corn and rice yields increased by 5% and even 10% a year. That was at the height of the Green Revolution, which covered the 1960s to 1980s. In those days food production easily outstripped the growth in the global population. In the forty-year stretch between 1960 and 2000, that population doubled to 6 billion. The good news is that the rate of growth has dropped; by mid century there is likely to be 9 billion to 10 billion people on the planet: roughly a 40% to 50% increase in size.
The bad news is that crop yields, which are increasing at a rate of between 1 to 1.5% a year, are struggling to keep up with the growth in demand. Just about all the growth in population over the coming decades will be focused on cities in the emerging economies. If current trends persist, 70% of the planet will be living in a city by 2050. Think about that for a moment; it means that by mid century there will be more people living in cities than there are alive today. People move to cities because they can earn more. When they earn more they mostly eat more meat-based protein, which in turn stokes demand for grains and water. The shortage of land is something we may be able to fix through expansion in places like Brazil and perhaps Africa, but shortages of water will take greater ingenuity. Some regions of the world will see sharp declines in rain fall due to global warming, and in Asia there is not much spare land available for farming. Ingenuity, of course, is what man excels in - we have the brains, we have the technology: problem solved. Maybe; but then again, maybe this time it might be different.
Until recently, Monsanto’s (NYSE:MON) genetically modified corn and soy seeds had made it one of the market’s most storied growth stocks, an example of the appliance of science to the food problem. Then the stock was hit by bad news. First it was Chinese price competition for Roundup, the company’s herbicide. Over the last week another shoe has dropped - Monsanto’s much vaunted new corn seed, SmartStax, which contains an unprecedented eight inserted genes, doesn’t really stack up at all; yields are no higher than what they were with the previous seed. All of which raises an uncomfortable question: Can big science deliver, or does the solution to the food problem lie down another path?
Monsanto has been the poster child for the gene revolution, but what if there is less to genes than we thought? When the human genome was decoded there was a burst of optimism in biotech, for example, and for a time the press was full of stories that the gene for this disease or that psychological problem had been found, but so far we have seen little payback. Craig Venter, who led the private effort to crack the human genome, has said as much himself.
Man has been selecting for desirable traits in both plants and animals for at least 10,000 years. The traits selected have always come from the existing genome of an organism and the species that will hybridize it. The latest breakthroughs in genetic science, such as fast gene sequencing tools and powerful bio-informatic computers, have allowed scientists to take genes from anywhere they choose - animal or plant - and splice them into unrelated species. A gene from a plant can be given to a mammal. The problem, as the example of Monsanto suggests, is that the payback from this dazzling juggling act may be rather less than we imagined.
The pharmaceutical industry sends us a clear warning what the problem might be. On December 23, 1971, President Richard Nixon signed a bill establishing the National Cancer Institute and declaring that the war against fatal decease would be won. By 1997, biostatisticians showed that there had been a 6% increase in age-adjusted cancer deaths from 1970 to 1990. Other research has estimated that over the last three decades $1 billion has been spent on cancer research. In that time, all that sponsored research has uncovered is a drug called Taxol, which was isolated from the bark of a yew tree found in the Pacific Northwest.
Government money has been thrown at the cancer problem, and independently drug companies have tried to develop cures. Since the mid 1980s, the pharmaceutical industry has seen the rate of innovation decline even though profits and the money devoted to research and development has increased. Up until recently, investors - and I’ll include myself in this before I read Meyer’s book - swallowed the propaganda hook, line and sinker. When Monsanto told us that from 2009 to 2012 the number of traits for the corn it sells would more than double, or that by 2020 there would be a four-fold increase, we believed it. It never occurred to most of us that those new traits might not be capable of doing all that it said on the wrapper.
The Heart of The Problem
Since 1998 yields of wheat, our most popular crop, have barely risen. Two economists, Philip Pardey and Julian Alston, have spent a long time investigating the impact of R&D on the seed industry. Their findings suggest that there is a twenty-year lag from the time that the research is carried out to the time it comes to fruition in the food chain. They argue that the growth in yields started to slow in the 1990s, because there was a drop in basic university and government led research. Just as we have seen with the drugs industry, much of the research is now directed by private institutions who, despite the dogma of free market capitalism, can only be counted on to develop Powerpoint slides. Delivering on what the slides promise is a much more hit and miss affair.
The US spends the greatest sums on crop research. In 2008 dollars, US investment in agricultural development abroad fell to $60M in 2006 from $400M a year in the 1980s. In rich countries, public investment in research and development, which had grown annually by more than 2% during the 1980s, shrank by 0.5% annually between 1991 and 2000. These drops are mirrored in Africa and Asia. The cuts in government funded research were probably based on the supposition that private companies, such as Monsanto, were best able to look after research because it is motivated by profits. It is also fair to assume that in the years that those cuts were made there was not as much concern or research on the effects of climate change as there is today.
A new study by Chinese scientists, which was recently published in Nature, asserts that climate change might induce a net yield reduction of 13% by 2050. They forecast that rice yields would fall by 4 to 14%, wheat by 2 to 20% and maize by zero to 23% by mid century. The reason is that increased carbon levels will increase the rate of transpiration from plants and trees, which in turn will boost their need for more water. This in turn will place further strain on China’s already stretched water reserves. While China has about 20% of the world’s population, it has less than ten per cent of per capita water reserves.
The International Rice Research Institute (IRRI), based in Los Banos in the Philippines, estimates that by 2050 we will need an extra 250 million metric tonnes of rice in Asia alone. According to the UN, food production needs to rise by 50% by 2030 to meet rising demand. What if this magnitude of increase is beyond our already stretched scarce water resources? Accurate forecasting is impossible; water is short today, so how confident can we be of future water levels?
Scientists at IRRI are fifteen months into a project to develop rice seeds that will deliver dramatically increased yields with less water. The scientists are focusing their research on so-called C4 plants, such as maize and sorghum, which possess more efficient photosynthesis processes than rice, which is a C3 plant. The hope is to achieve higher yields while requiring 1.5 to 3 times less water. It all sounds encouraging until you remember that Pardey and Alston estimate that it takes 20 years from research until the seed enters the food chain. Paul Quick, principal scientist and head of the C4 project, cautioned, “The C4 - Rice project is seen as a high-risk scientific venture but this is nothing compared to the potential future risks to human health if the food supply cannot meet demand.” He is right, but the experience of Monsanto and his own words hardly inspire confidence.
Hope and Waste
At the dawn of what became the Green Revolution, Stanford University biologist Paul Ehrlich made one of the last century’s worst predictions when he warned of an impending food crisis, just as the growth in crop yields began to accelerate. It is a mistake to bet against human ingenuity. This time, however, there is cause for concern. The solution to the problem might not be better seed research and the wider use of fertilizers, it might instead lie in combating waste. A former UK government food advisor, Lord Haskins, who worked for the nation’s largest food retailer, calculated that 60 million Britons were each year wasting around 20 million tonnes of food. The average household could save $1,000 a year on food purchases if even a fifth of this wastage could be eliminated. The chief culprit, it turned out, was the use-by date, which was causing consumers to throw out one-third of all the food they bought.
In a recently published book, The Coming Famine by Julian Cribb, Timothy Jones of the University of Arizona is quoted as saying that America wastes 40-50 per cent of all its food. The typical American household trashes 14% of its food purchases, worth $590 a year, including products whose use-by date had not yet expired. Globally, the UN Food and Agriculture Organization (FAO) estimates that a full third of all fruit and vegetables never reach the consumer at all because they perish in fields, in storage, or en route. “Spoilage claims 30% of India’s fresh produce, while post-harvest losses of fruit and vegetables in some African countries can reach 50%,” the World Vegetable Centre notes. As Cribb ruefully notes, “A species that has used its brains to treble food output in two generations is chucking half its achievement into the garbage can.”
The manipulation of genes might still deliver us from famine but it would be irresponsible to simply rely on this science when we have the evidence of the pharmaceutical industry before us. We need to focus on better storage, refrigeration and transport. In the meantime, buying farmland still looks like the best way to play what may become a food crisis.
Disclosure: No Positions