Global Food Demand

Over the past four years, rising world food prices and the global economic downturn has increased the ranks of the world's food insecure from 848 million to 925 million as of September 2010 (WFP and FAO). This has reversed decades of slow yet steady progress in reducing hunger. While the human costs have been considerable, the political consequences have been significant as well.

Rising food prices sparked demonstrations and riots in 48 countries in 2007–08. While prices receded in 2009, they reached historic highs in February 2011 and were once again implicated in political turmoil. High food and fuel prices were among the grievances motivating the demonstra- tions that led to the ouster of Tunisian President Zine El Abidine Ben Ali and Egyptian President Hosni Mubarak.

The world is entering a period of unprecedented demand growth due to a rapidly expanding Global population's requirement for food and feed. Additional pressure is being placed on the global food chain as vast tracts of agricultural land are turned over to growing fuel. On the supply side, climate change, political unrest and encroachment onto farmland is driving up the price of food production, limits to expanding cultivatable cropland and pressures on existing production, make keeping up with rising demand one of the global challenges of the globes near future.

As per United Nations figures, the production of grain per person has been in decline for the last 30 years and the land available for farming per person for longer. Agriculture in the current climate provides an ideal investment, for the medium to long-term investor, looking for regular returns, a low entry level and socially responsible investment.

Food is a crucial global commodity, along with water, the two commodities that the human race can- not survive without. Food pricing and availability, has obvious immediate price & health concerns.

Food security and economic growth interact in a mutually reinforcing process over the course of countries development. Countries where food is abundant, or where the supply of food is guaranteed have historically grown economically and development wise at a far higher pace then those countries without the ability to guarantee their populations food security. The development of the United States of America has been based initially upon agriculture, the USA is still a global food super power.

It is only in modern times that entire societies have achieved food security. Earlier, only privileged members of society were able to escape from chronic hunger and the constant threat of famine. Many countries in the developing world, especially in Africa and South Asia, have not managed this escape. South Asia accounts for 50% of the malnourished globally. The majority of South Asia's poor are living in India. India is one of the BRIC economies, and has shown rapid economic growth over the last decade, with growth of 6.5% predicted by Standard & Poors for 2012 – 2013. With over a billion people in a single market, India, like China faces massive challenges, but has huge opportunities as it has a massive internal market that can power the countries growth and development. But like China its first priority is to feed its population with its new found wealth. 

China has been very successful in feeding it's people, now with higher disposable incomes, China's masses are consuming more meat and calories then ever before. The China effect is already being felt on the global food supply chain, the addition of India to this, adds more pressure on global food supplies. India has a calorie intake of approximately 2,300 calories/capita, China close to 2,970 calories/capita, with the USA at 3,770 calories/capita. As can be seen countries like India and China have a long way to go before they reach USA or even European consumption levels.

An investment in food production has an assured future demand as the global population rises by over 80 million people per year. With demand accelerated by fast growing developing natio- n's populations increasing buying power. Greater consumption of meat around the world, puts greater demand on cereal production for animal feeds.

With more mouths to feed globally, rapid economic growth in emerging markets and increasing amounts of cropland being turned over to the growth of biofuels, is driving up demand and price pressures on cereals globally. Agriculture sits at the midst of a perfect storm of population growth and an expanding global economy.
It is estimated that the population of the world reached one billion for the first time in 1804. It took another 122 years before it reached two billion in 1927, but then only 33 years to hit three billion people, in 1960. The global population reached four billion in 1974, five billion in 1987, six billion in 1999 and seven billion in October 2011.

According to current projections, the global population will reach eight billion by 2025

Food shortages and malnutrition are already common in Asia and Africa. For anybody that is socially conscious this is one of the greatest concerns facing mankind. According to estimates there are close to 1 Billion hungry people in the World. Without large-scale new investment in agriculture, maximizing under utilized resources, this trend will only worsen in the years ahead.

Rich countries have little to fear from hunger, wealthy consumers have a substantial buffer of non-food expenditures to rely on, even if food prices rise sharply. In a market economy, the rich do not starve. Wars, riots, hurricanes and floods, for example, can disrupt the smooth functioning of markets, and all in their wake can perish. But rich societies usually have the me- ans to prevent or alleviate such catastrophes, social or natural. Food security in rich societies is simply part of a broader net of social securities.

Food is essentially unaffected by governments, politics, economics, currency fluctuations, inflation and interest rates, the long-term demand on agriculture will continue, and cereal production is a global commodity.