New York, New York
June 25, 2009
 DB
Climate Change Advisors (DBCCA), Deutsche Asset Management's
(DeAM) institutional climate change investment and research
business, today published a new report, "Investing
in Agriculture: Far-Reaching Challenge, Significant Opportunity:
An Asset Management Perspective." The report explores the
question of how to sustainably meet the growing energy and food
demands of a global population approaching nine billion people
in 2050 in a sector affected by climate change.
DBCCA, in collaboration with The Nelson Institute's Center for
Sustainability and the Global Environment (SAGE) at the
University of Wisconsin-Madison (UW) estimates that the caloric
needs of the planet will soar 50% by 2050 driven by population,
wealth and diet as well as some biofuel demand. The focus of the
report is on how to meet the challenge of boosting agricultural
productivity to meet the needs of the Earth's population. The
paper looks at this challenge through 2050 and presents new
agricultural data and models.
The authors investigate the challenge of boosting productivity
in three phases:
1) They investigate the
world's existing agricultural lands and raised the
productivity using the best available practices. This would
entail massive investment in production technologies and
yet, supply would fall short of meeting demand.
2) They explored utilizing additional lands such as degraded
and abandoned lands, pasturelands and multi-cropping while
still preserving existing forests. This still may not meet
global demand.
3) Taking into consideration the resulting increased use of
water, land and increased greenhouse gas emissions in a
climate change framework, some alternative approaches were
considered such as low-input organic farming practices,
broad scale reallocation of land uses, and the potential of
using more biotech crops, to maximize output with minimal
input.
"Meeting the challenge of
feeding and fuelling a growing population in a world facing
climate change requires boosting yields through sophisticated
land management with mechanization, precision irrigation and
fertilization methods," said Dr. Bruce M. Kahn, Senior
Investment Analyst. "However, this alone may be insufficient and
farmers, markets and governments will have to consider other
alternatives including more substantive land use changes and the
potential benefits of biotech crops. While the challenges in
developing biotech crops require substantial research and
development, and a robust regulatory environment, they offer the
potential to substantially reduce water and fertilizer inputs
and increase productivity."
"It is important to note that there is no silver bullet to
increasing global agricultural production, only silver buckshot
where a diverse mix of management, technology and foresight are
applied to solve one of the greatest challenges we face in the
next century," said David Zaks, a researcher at UW's SAGE. "If
we are to manage global agriculture sustainably, we need tools
and data to make informed decisions, such as geographic
information systems, satellite imagery and on-the ground
production data."
According to the report, policy solutions are necessary in
boosting agricultural productivity. Currently, there are a host
of tariff systems and subsidies that create distortions in the
global agriculture markets. Additionally, policy makers and
scientists are asking how agriculture can help to mitigate
carbon emissions. This is evident in the current Waxman-Markey
legislation. Sustainable forestry, addressing deforestation, and
ending slash-and-burn agricultural conversion are obvious
answers. Carbon sinks can also be created through practices that
sequester carbon in agricultural soils, such as low tillage and
biochar.
On the investment front, the report outlines the long-term view
that the upward trend in agricultural prices will resume. The
good news is that this should stimulate investment and will
offer large investment opportunities across the agribusiness
complex including, fertilizers, irrigation, mechanization,
sustainable biofuels as well as management practices and
infrastructure development.
The report analyzes production trends, identifies opportunities
for improvement and studies the supply-side responses that will
attract capital in the effort to boost agricultural output. The
following topics are also discussed at length:
- Recent market trends and
what they mean for the future
- Land-use analysis:
measuring the production and yield gap by major crop and
region
- Constraints for raising
productivity
- Key investment themes and
implications (including, water, fertilizers, stronger plant
varieties, agricultural equipment, farm commercialization,
and supply change management)
- Biotech and Genetically
Modified Organisms (GMO) crop options
- Policy trends
Madison, Wisconsin
June 25, 2009
Source:
The Nelson Institute for
Environmental Studies, University of Wisconsin-Madison
With the caloric needs of the planet expected to soar by 50
percent in the next 40 years, planning and investment in global
agriculture will become critically important, according a new
report released today.
The report, produced by Deutsche
Bank, one of the world's leading global investment banks, in
collaboration with the University of Wisconsin-Madison's
Nelson Institute for
Environmental Studies, provides a framework for investing in
sustainable agriculture against a backdrop of massive population
growth and escalating demands for food, fiber and fuel.
"We are at a crossroads in terms of our investments in
agriculture and what we will need to do to feed the world
population by 2050," says
David
Zaks, a co-author of the report and a researcher at the
Nelson Institute's Center
for Sustainability and the Global Environment.
By 2050, world population is expected to exceed 9 billion
people, up from 6.5 billion today. Already, according to the
report, a gap is emerging between agricultural production and
demand, and the disconnect is expected to be amplified by
climate change, increasing demand for biofuels, and a growing
scarcity of water.
"There will come a point in time when we will have difficulties
feeding world population," says Zaks, a graduate student whose
research focuses on the patterns, trends and processes of global
agriculture.
Although unchecked population growth will put severe strains on
global agriculture, demand can be met by a combination of
expanding agriculture to now marginal or unused land,
substituting new types of crops, and technology, the report's
authors conclude. "The solution is only going to come about by
changing the way we use land, changing the things that we grow
and changing the way that we grow them," Zaks explains.
The report notes that agricultural research and technological
development in the United States and Europe have increased
notably in the last decade, but those advances have not
translated into increased production on a global scale.
Subsistence farmers in developing nations, in particular, have
benefited little from such developments and investments in those
agricultural sectors have been marginal, at best.
The Deutsche Bank report, however, identifies a number of
strategies to increase global agricultural productions in
sustainable ways, including:
- Improvements in
irrigation, fertilization and agricultural equipment using
technologies ranging from geographic information systems and
global analytical maps to the development of precision, high
performance equipment.
- Applying sophisticated
management and technologies on a global scale, essentially
extending research and investment into developing regions of
the world.
- Investing in "farmer
competence" to take full advantage of new technologies
through education and extension services, including
investing private capital in better training farmers.
- Intensifying yield using
new technologies, including genetically modified crops.
- Increasing the amount of
land under cultivation without expanding to forested lands
through the use of multiple cropping, improving degraded
crop and pasturelands, and converting productive pastures to
biofuel production.
"First we have to improve yield,"
notes Zaks. "Next, we have to bring in more land in agriculture
while considering the environmental implications, and then we
have to look at technology."
Bruce Kahn, Deutsche Bank senior investment analyst, echoed Zaks
observations: "What is required to meet the challenge of feeding
a growing population in a warming world is to boost yield
through highly sophisticated land management with precision
irrigation and fertilization methods," said Kahn, a graduate of
the Nelson Institute. "Farmers, markets and governments will
have to look at a host of options including increased
irrigation, mechanization, fertilization and the potential
benefits of biotech crops."
The Deutsche Bank report depended in part on an array of global
agricultural analytical tools, maps, models and databases
developed by researchers at UW-Madison's Center for
Sustainability and the Global Environment. Those tools,
including global maps of land supply for crops and pasture, were
developed primarily for academic research, says Zaks. The
Deutsche Bank report, he continues, is evidence that such tools
will have increasing applications in plotting a course for
sustainable global agriculture. |
|
