Industrial Level System

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Yet, subsistence and smallholder farmers are some of the poorest people in the world. Nearly 1 billion people go hungry everyday, and half of the hungry are farmers. Increasing the amount of food has always been a struggle, and each era in history has seen its own innovations and setbacks. Today’s major challenge is for agriculture to produce much more with fewer resources. For example, many regions experience water and resource scarcity, while agriculture accounts for 70 percent of water use on the planet. Rapid population growth demands that farmers must double their production by the year 2050 to keep up with the nearly 10 billion people who will inhabit our planet. By then, the planet will require 70 percent more food than it does today. It’s clear that the world needs a New Vision for Agriculture.

In 2009, a group of World Economic Forum partners and constituents, outlined a New Vision for Agriculture as a critical component to sustainably meet the world’s growing need for safe, nutritious food, using and preserving resources in sustainable way, and driving and helping to nurture local and national economies. The vision sets goals for improving food security, environmental sustainability and economic opportunity by 20 percent per decade until 2050.

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Fig 2.5 Promoting Food Security through Innovation & Partnership

(Source: Monsanto.com)

Achieving these goals requires a transformation of the agricultural sector in many world regions. The vision calls for a strong focus on the following:

- Country-level leadership driven by local stakeholders in partnership with global organizations.

- Multi-stakeholder focus, engaging government, the private sector, international organizations, civil society, farmers associations and others.

- Market-based activity, focusing on improving and expanding sustainable investments and working with farmers to improve the agricultural value chain from harvest to market.

- Alignment with national plans, regional strategies and global goals.

Seed and fertilizer producers are as far upstream as one can get in the agriculture value chain. When farmers combine the output of seed producers like Monsanto (NYSE:MON) and DuPont (NYSE:DD) with fertilizer producers like Potash Corp. (NYSE:POT) and Mosaic (MOS), they produce many crops, including corn, wheat, and soybeans. Recently the fortunes of these two types of agriculture producers have diverged as the seed companies seem poised for growth while the fertilizer producers struggle to regain pricing power. When Monsanto reported its 4th quarter and fiscal 2013 full year earnings there were no surprises to those that follow the industry closely. With 97.3 million acres of corn planted it was obvious that Monsanto would have a good year; corn seed sales make up the biggest share of the company's seed and genomics revenues.

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Fig. 2.6 Monsanto Seed & Genomics Revenues