Water, Water, Everywhere and Lots of Food to Eat

     According to the FAO (Food and Agriculture Organization of the United Nations), by 2030 we will have a global population of more than 8 billion and world food production will have to increase by 60 percent to properly nourish all of us.  Amid the usual din of gloom and doom about the future, the FAO has been making some rather remarkably positive outlook statements about how we are going to accomplish this.  Water is the key (http://www.fao.org/news/2000/000306-e.htm).  Recently, in Mexico, I had the opportunity to hear a Brazilian food consultant begin to map some of this out with respect to future shares of global food production.  He was a rather compelling guy.

     This is interesting since as we begin to see ourselves as a global society there are some facinating questions about where future food production will be located and how the production of crops and livestock are likely to be distributed worldwide on the basis of economics.

     The swine industry is getting the first taste of this in the U.S. with our rather remarkable and sustained growth in worldwide exports which now account for well over $25 of every head marketed in the U.S. and growing. See Grimes, Plain and Meyer at: http://agebb.missouri.edu/mkt/exportUSpaper.htm.

     While the industry has been focused on where future growth opportunities for swine production worldwide might be realized, we actually find ourselves a small part of a very large question about how food production decisions of the future will be made and the trading alliances and import/export opportunities that are likely to develop.  

    In light of the new calculus for such decisions which may involve global climate impacts (regardless of how true any of that might actually be)  the energy and carbon footprint involved in shipping foods to distant places may be factored in.  Currently, basic economic theory handles much of the explanation with the notion of comparative advantage. 

     This is a very old, tried and true fact that nations which have a comparative advantage in the production of some good will specialize in it and trade it with nations which have comparative advantages in other goods.  This dividing up of production globally or even regionally makes both areas better off simulataneously.  An interesting dimension of this is that you can show that even if a country or region has a comparative advantage in the production of all goods compared to a neighboring country or region, it is still advantageous for them to specialize and trade and in doing so both areas have more than they would have if they fall back into isolationist (perhaps, locally produced only) production strategies.  More on that to come.

     A comparative advantage simply means that the tradeoff in choosing to produce one good versus another is less in some regions than it is in others.  The FAO is leading us to consider that if you want to map out the future distribution of food production in the world, look at the availability of water resources (and what can be done to bring more water resources to bear in production either through technological means such as enhanced irrigation techniques or water purificaition methods).  Don't underestimate the impact of this of future distribution of swine production globally since not only are livestock big consumers of water but the feed grains needed for production are obviously linked to the calculation.  This suggests that at the base, water is the critical future resource which will drive the comparative advantage equation and if you want to know how those shares of production are likely to be distributed, don't just drink that next glass of water, start thinking about where it came from and how much of it is available.