By Gerard Wynn
LONDON, Aug 19 (Reuters) - The Russian drought has
intensified a debate about food security in a warming world and
helped frame a multi-billion-dollar takeover bid for fertiliser
company Potash Corp as a bet on rising food prices.
Aid agencies and other experts say world farming needs
exceptional investment, and perhaps some luck, to feed the
world's growing population -- an extra 2.2 billion people by
2050, according to U.N. projections. Food prices are not
expected to return to the historic lows of the 1990s.
BHP Billiton made a $39-billion bid this week for the
fertiliser company, the world's biggest takeover offer so far
Analysts say the drought in Russia and Ukraine this summer,
the worst in more than a century which damaged the harvest, is
not an immediate threat to global food security, rather a supply
shock of the kind that has followed failed harvests in history.
But they say it has shown how rising global demand for
grains, partly for biofuels, has shifted wheat production to
areas where harvests are less reliable.
Climate change could fuel that instability, while a global
system of stable trade and reserves can offer a buffer.
"Production centres are moving rather rapidly from northern
hemisphere, Western Europe, very certain production environments
to areas like the Black Sea where yields are very erratic," said
Abdolreza Abbassian, head of the U.N. food agency's grain body.
Russia, Ukraine and Kazakhstan have a rising share of world
grains supply, 30 percent now compared with 4 percent 10 years
ago, with the potential to increase land and yields, he said.
"What is certain, with or without climate change, is the
instability of the market. We should have more years like this
where these countries have unexpected droughts or floods and
crops get destroyed right before the harvest."
The drought will cut the wheat harvest of Russia, the
world's third biggest exporter, by about 30 percent. Analysts
say Russia may even have to import this year.
The global harvest will fall by about 4 percent, estimates
the Food and Agricultural Organisation (FAO), but only from two
successive bumper years.
Goldman Sachs last week forecast steep declines in wheat
prices from present levels on 3-12 month horizons, given stocks.
Food prices rose across the board two years ago in a far
more serious crisis fuelled by poor harvests, lower reserves and
higher oil prices than now.
Food production increasingly has to compete with biofuels
for land and for water with urbanisation, while rising affluence
is driving meat consumption, a less efficient use of land to
produce calories compared with grains.
Whether the world can feed itself through future failed
harvests turns on improving yields, reserves, education,
development, efficiency and distribution, to balance climate
change, depleted groundwater and rising fertiliser costs.
Climate scientists forecast seas will rise by up to about 1
metre this century, which may inundate important rice producing
areas such as in Vietnam and Bangladesh, as well as higher
global temperatures and more droughts and floods.
Global population and food consumption is expected to peak
Some environmentalists point to a scenario where the best
farmland is gone and the Green Revolution in food production has
sowed reliance on energy-intensive, polluting fertilisers and
groundwater depletion for irrigation.
"We're totally disrupting the ecosystems that support us, if
we added another 2 billion people they will do much more damage
... will face great horrors," said Stanford University's Paul
Ehrlich, author of "The Population Bomb" which in 1968 cued a
decade of worry about human survival.
"There is a food crisis in the making, period, when it's
going to hit who knows," he told Reuters, adding his book had
been "much too optimistic". He estimated the planet could
sustain in the long term a population of 1.5-2 billion people.
FAO estimates that more than 1 billion people are underfed
now, compared with 878 million in 1970 when such records began.
Lester Brown, founder of the Worldwatch Institute, cited
forecasts of "a perfect storm" of aquifer depletion, rising food
demand, soil erosion, sea level rise and climate change by 2030.
"My own sense is it's much closer," he told Reuters.
"I think water is the most imminent factor, if not reducing
harvests then at least making it more difficult to expand
production," he said, estimating at least 400 million people
were dependent on a food "bubble" from over-pumped groundwater.
The answer was a more efficient farm industry, said India's
M. S. Swaminathan, who led the Green Revolution in India.
"Lowering of the water table is an alarming situation," he
said, as two thirds of Indian irrigation was from groundwater.
"The evergreen revolution is increasing productivity in
perpetuity without ecological harm," he said, referring to a
term he had coined for using rain harvesting, organic manures
and nitrogen-fixing plants, to support aquifers and fertilisers.
India's food security was not under threat, given huge
stocks, but certain crops such as potatoes and wheat were
especially vulnerable to temperature rises, he said.
Precision technologies and crops which eked out fertiliser
and water were some of the best long-term investment bets in the
agriculture sector, said Deutsche Bank's Bruce Kahn.
(Editing by Janet Lawrence)