Business World

Sunday 16 December 2018

Global demand for food boosts Irish shares

Thomas Molloy and Carey Gillam

ANYBODY holding shares in Kerry Group or Glanbia will have been watching their recent rise with glee. Shares in both companies hit record highs yesterday as demand for food continues to entice investors.

There are many reasons behind the recent gains but one of the key explanations is rising global demand for food.

The UN food body FAO says food output must rise by 70pc by 2050 to feed a larger, richer world population.

The Global Harvest Initiative, a public policy advocacy group in Washington, says more investment is needed to increase food production in Africa and Asia as rising demand and scarce resources leave millions of people vulnerable to hunger.

Only 13pc of Sub-Saharan Africa's total food demand in 2050 would be met without more investment in technology and infrastructure, according to the think tank.

East Asia would be able to satisfy 74pc of total food demand by 2050. That still leaves lots of space for companies such as Kerry and Glanbia.

"We cannot meet future global food demand unless agricultural productivity increases are achieved in every region," said the Global Harvest Initiative's executive director, Margaret Zeigler.

She said that more trade, public and private sector investments, and assistance programmes, were needed to help meet rising food demands.

The Global Harvest Initiative is organised and led by companies involved in food, agriculture and technology, including biotech seed and pesticide leaders Monsanto and DuPont and equipment maker Deere & Co.

Goals

Among its goals are reduced trade barriers for agriculture, broader acceptance of agricultural technology, including genetically modified seeds, increased investment in rural infrastructure, and more funding for agricultural research.

"No one particular solution is going to be the thing that solves it everywhere," said DuPont vice-president Jerry Flint, who chairs the Global Harvest Initiative.

Mr Flint said access, usage and sustainability of water resources all needed to be addressed over the long term.

Food demand in Asia is primarily tied to rising incomes and demand will outstrip supply, the report said. Food demand is expected to grow 3.64pc each year between 2000 and 2030. In South and Southeast Asia, food demand is estimated to grow annually by 2.75pc.

The report said in the Middle East and Northern Africa, agricultural production will be able to satisfy roughly 83pc of total food demand in 2050 if it maintains a current rate of "total factor productivity," or TFP.

The term reflects the amounts of total inputs used per unit of output, including comparisons of the growth of output to the growth of input use. Latin America and the Caribbean will produce a substantial food surplus by 2050 if the current TFP rate is maintained, the report said.

However, investment is needed in infrastructure and continued productivity improvements to maximise the region's prospects to become a net food exporter, the report said.

The report said areas in Eastern Europe and the former Soviet Union had "enormous agricultural production potential".

Given the wide global disparity in purchasing power, achieving necessary food production by 2050 required improving the productivity of farmers in every major region, and across all scales of agriculture, from smallholder to commercial exporter, and preserving those gains, the report said. (Additional reporting Reuters)

Irish Independent

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