From liability to opportunity: How to build food security and nourish growth

How can public institutions, development agencies, investors, researchers, and producers work together to build a food sector that propels economic growth, meets demand, and helps to maintain social stability?

By 2050, the world will need to feed more than nine billion people, requiring nearly 70 percent more food than we consume today. Moreover, an expanding global middle class will demand more meat and other protein-rich foods, while extreme weather could slash yields in important agricultural regions. At the same time, prices of wheat, rice, and a number of other basic food commodities have been rising for a decade (Exhibit). Volatile food prices have repeatedly led to instability—and as the exhibit shows, the volatility continues to increase.

The prices of major food commodities are increasingly volatile.

One issue is that many countries devote resources they cannot afford to short-term approaches, such as subsidies, food and cash transfers, and emergency-relief plans. In such cases, food systems come to be seen as fiscal burdens. Reducing these in favor of strategic investments in the food and agriculture sector could turn such liabilities into sources of economic opportunity.

This is not theory. Some places are perpetually in crisis. Other countries and regions have launched effective transformations that improve food security and resilience and enhance economic opportunity. In countries large and small, rich and poor, wet and arid, a resilient food economy—defined as one that can adapt to change and cope with negative shocks—stands on four building blocks:

  • efficient agricultural production that takes advantage of innovative technologies and practices
  • tailored trade and investment approaches
  • well-functioning domestic markets
  • strategic reserves of food and water

We have reviewed hundreds of indicators to assess a country’s overall food availability, affordability, and quality. Our findings underscore the progress that has been made, as well as the enormous potential to do better. For example, the dozen most productive countries deliver corn yields that are ten times that of the dozen least productive ones. Despite advances in seeds, irrigation, crop protection, and other techniques in more than 20 countries, at least a quarter of the population is chronically undernourished. Countries in sub-Saharan Africa have more than four times the global average of arable land, but because of low productivity, some of them have to use their limited foreign reserves to import a high percentage of food requirements. According to the Economist Intelligence Unit, 28 of 109 countries surveyed had insufficient food stocks to withstand a crisis.

What is required is an “integrated food economy approach”: a cohesive strategy that strengthens the entire food system. This is a complicated topic, and there is no single right answer to define a nation’s ideal food system, but our findings show that many countries do not yet think holistically. Our goal is to present a structured way of thinking about sustainable food systems, including innovative ways to balance scarce natural and financial resources. Certainly some of the innovations will turn out more successful than others, but our main point is that it is worth thinking hard about the food system’s design. Every country can move toward a well-functioning food economy if the public and private sectors work together to plan and invest for the long term.

Read the full article on McKinsey Insights & Publications

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