World Economy

Global Hunger Causing $2t Loss in World GDP

Global Hunger Causing  $2t Loss in World GDPGlobal Hunger Causing  $2t Loss in World GDP

A total of 805 million people are chronically undernourished worldwide and hunger and under-nutrition reduce the global GDP by up to 3 percent, or the equivalent of $2 trillion every year, a report said.

The global population is expected to grow from 7.2 billion today to 9.6 billion by 2050 and 11-12 billion by 2100, added the study entitled “Feed the World: Global Food Security Primer” from Bank of America (BofA) Merrill Lynch, SyndiGate reported.

The combination of rising incomes and changing diets mean that by 2050, the world needs to produce 70 percent more food globally, it highlighted.

“In our view, all potential food security solutions should be considered given that we may have already arrived at peak production for many food categories,” said BofAML in the report.


Global challenges include: declining yields (1.4 percent pa today vs 3.2 percent in 1960), limited land remaining to be cultivated (1.4 billion hectares), the protein challenge (+2 percent meat demand to 2030), food waste (30 percent of edible food), peak water (agriculture is 70 percent of water use), and extreme weather and climate change (25 percent of wheat yields at risk), among others.

The food and agriculture sector accounts for 3 percent of global GDP, making the sector worth $2.3 trillion. Annual investments in food security and agriculture are estimated at $220 billion with 75 percent coming from the private sector.

Every dollar invested in agriculture R&D creates $20 in economic activity, with agriculture-related growth two to four times more effective at reducing poverty than other sectors.

Annual investments from 2015-30 would need to reach $480 billion to realize “zero hunger”, the report said.

BofAML highlights eight entry points for investors wishing to play the food security theme: (1) Agricultural Equipment; (2) Agricultural Inputs; (3) Agribusiness, Protein &  Dairy; (4) Farming; (5) Food Safety & Animal Health; (6) Water; (7) Healthy Eating; and (8) Reducing Food Waste.

One-Third of Food Lost or Wasted

An estimated one-third of global food produced is wasted (about 1.3 billion tons of edible food vs. 6 billion tons of all agriculture production (source: FAO). Some stakeholders estimate the amount of waste to be as high as 40-50 percent in the US and UK.

Food loss and waste result in direct economic costs of $750 billion based on producer prices alone. Vegetables are the largest contributor (23 percent), followed by meat (21 percent), fruits (19 percent), and cereals (18 percent).

Regionally, the major contributors are Asia (31 percent of total) and S&SE Asia (18 percent), the two regions that are also the largest contributors to food wastage volumes (source: FAO).

Positively, the global saving potential from reducing food waste is approximately 50 percent along the entire food supply chain (source: Lundqvist 2008).

Cutting the rate of food loss and waste in half by 2050 would close up to 20 percent of the potential food gap.

The combination of rising incomes and changing diets mean that by 2050, the world needs to produce 70 percent more food globally.