Farmland 'peak' reached?

Farmland 'peak' reached?

- Global crop yields have kept vast acreage out of production. - Population growth, changing diets will stifle acreage needs. - U.S. f

FLOUTING conventional wisdom that feeding 9 billion people by 2050 will require at least another 173 million acres, a new study from Rockefeller University's Program for the Humane Environment suggests that the amount of farmland necessary to feed the world has already peaked (Figure).

Published in the journal Population & Development Review, the study concluded that, due in part to historical advances in crop yields and productivity, an area equivalent to 10 times the size of Iowa will return to nature or to uses other than agriculture.

Rockefeller's findings are surprising on two fronts. First, the study contradicts a June 2012 report by the U.N. Food & Agriculture Organization that projects that farmers will need an extra 70 million hectares in the next 40 years to feed the growing population.

Second, a recent study published by researchers from the University of Minnesota and Canada's McGill University suggested that crop yields have stagnated in many parts of the world despite the best efforts of the "Green Revolution" (Feedstuffs, Dec. 24, 2012).

What the "peak farmland" study determines, however, is that the success of the Green Revolution, along with a moderation in population growth and changes in the global diet, has allowed the portion of landmass dedicated to cultivation to be scaled back. In fact, the authors argued that since 1960, shifts in birth rates, appetites and yields have allowed India and China alone to set aside productive area more than three times the size of France or a dozen times the size of Iowa.

"Absent the slowing population growth, evolving tastes and improving agricultural practices, unimaginable destruction of nature would have occurred," the report concludes. "Another 50 years from now, the Green Revolution may be recalled not only for the global diffusion of high-yield cultivation practices for many crops but as the herald of peak farmland and the restoration of vast acreages of nature.

Examining changes in acreage and productivity for wheat production in India and corn production in China, the authors found that the promise of the Green Revolution -- diffusion of yield and productivity-enhancing technologies and practices -- paid off in spades. For example, while the harvested area of corn in China doubled from 1960 to 2010, each harvested hectare became more than 4.5 times more productive.

The report based its projections, in part, on an assumption that the rest of the world would "catch up" with the U.S. in terms of yield and productivity, something the Minnesota/McGill study found is not happening uniformly around the globe.

Rockefeller's researchers projected that global corn yields would increase at a rate of 1.7% per year until 2060, putting the global yield roughly on par with current U.S. yield trends.

The authors acknowledged that they made assumptions regarding the continued increase in global affluence and attendant meat consumption, as well as the growth of biofuel production. Should any of those factors change drastically in coming years, the authors noted, the findings of the study could change dramatically as well.

 

Hot commodity

While a global farmland "peak" may or may not be nearing, the appetite for acreage in the U.S. has yet to be satiated. Farmland demand continues to be strong, with experts at The Ohio State University and the University of Illinois both recently reporting that values continued to grow in 2012 and will likely do so in 2013 as well.

A survey of bankers conduct by the Federal Reserve Bank of Chicago, Ill., for example, found that farmland values in the bank's region grew 13% in 2012. Though down from 14% growth in 2010 and 22% in 2011, the rate indicates that demand for farmland remains strong.

Ohio State Extension production business management expert Barry Ward noted that farmland values in Ohio grew 13.6% last year, averaging $5,000 per acre for bare ground.

"With many dollars and buyers chasing farmland, it isn't surprising to see (that) land values increased substantially in 2012," Ward said. "Crop profitability (and) low interest rates have been the primary drivers in the run-up in cropland values."

Another underlying factor that is often overlooked in discussions of farmland trends is the relatively low rate of "turnover" in the farmland market.

A recent analysis of Illinois farmland statistics and sales data conducted by University of Illinois economist Bruce Sherrick noted that over the past decade, the turnover rate by county typically ranged between 1.0% and 2.5% per year, with rates exceeding 2.5% in only 15 of 102 counties.

"Many are surprised at how little farmland actually sells in any year and how long holding periods are, as a result, for most farmland owners," Sherrick wrote. "In any case, it is clear that the Illinois farmland market turns over very slowly and displays features that likely qualify as a 'thin market.'"

Volume:85 Issue:01

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