182 International Journal of Biotechnology for Wellness Industries, 2013, 2, 182-195 ISSN: 1927-3037/13 © 2013 Lifescience Global World’s Agricultural Production and Trade: Food Security at Stake? Miklós Somai * Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, Budaörsi út 45, 1112 Budapest, 1535 Budapest Pf. 936, Hungary Abstract: The extraordinary events of the last couple of years, like the surge and the topsy-turvy movement in oil, raw material and food prices, or the development of a so far unprecedented global financial and economic crisis, have been heavily testing the endurance of those earning their living from agriculture and related activities. All these troubles have not been beneficial to the ongoing trade liberalization process within the framework of WTO. Answers to the challenges at national level and the continuing proliferation of inter- and intraregional free trade agreements make the early global liberalization even less probable. The situation is further complicated by those really divergent changes of agricultural policy that are about to develop on the opposite sides of the Atlantic. In this paper, we describe the recent development of world’s agricultural production and trade; offer an insight into the evaluation problems of worldwide food insecurity; and briefly compare the upcoming agricultural policy reforms in Europe and the US. Keywords: Agricultural policy, agricultural and food production and trade, food security. 1. INTRODUCTION Since the end of the first decade of this century, the media has become more and more inundated with reports and articles warning of growing hunger in the world, a joint consequence of rising demand in protein of some highly populated developing countries, the climate change with all its repercussions on agricultural production and prices, and a new spread of poverty and homelessness, as a by-product of the global financial and economic crisis. Since 1995-1997, the Food and Agriculture Organization of the United Nations (FAO) regularly reports on the growing number of the undernourished, with consolidated data for 2008 and estimates for 2009 and 2010 clearly above 900 million people. The total number of undernourished people in the world was even estimated to have reached more than 1000 million in 2009, and their proportion within the population of the developing countries to have risen again since 2008, the latter being not only a reversion of a decades’ long tendency but also opposite to the Millennium Development Goal (MDG) target of halving the prevalence of undernourishment by 2015 [1]. Under such circumstances, it is interesting to examine whether developments in agricultural and food production and trade can explain such tendencies in world hunger, or if not, what could be the cause of the phenomenon. *Address correspondence to this author at the Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, Budaörsi út 45, 1112 Budapest, 1535 Budapest Pf. 936, Hungary; Tel: +361- 309-2643; Fax: +361-309-2624; E-mail: somai.miklos@krtk.mta.hu 2. AGRICULTURAL PRODUCTION AND TRADE As one can clearly see from the image given by FAO statistics, world agricultural production – the net output, i.e. net of seed and feed costs – has continuously been increasing over the last 20 years (Figure 1). Moreover, this growth even speeded up in the second half of the period, which could be seen in the growing steepness of the diagram. Fortunately, this speeding up was faster in those regions where it was the most needed: in least developed and net food importing developing countries, while in Africa, the production growth rate could be maintained at a relatively high level for most of the period (Table 1). By contrast, in developed countries, and particularly in Europe, the production growth has been much slower for the whole period, due to differences in demographic path of the two worlds. Indeed, the agricultural sector, unlike the processing industry, is mostly driven by the internal demand (and the need for maintaining a certain level of security stock), and the world export market is rather viewed as residual market to absorb the redundant supply after the domestic demand has been satisfied. That’s why world market prices for agricultural products are relatively low, as traders seek to getting rid of their perishable goods which cannot be stocked for long without degradation of quality. From the aspect of food security, per capita rather than total agricultural production is of primary importance for the people (Figure 2 and Table 2). The best results were achieved by Asia and South-America, while the least developed and net food importing developing countries followed the world tendency. The same was true for Africa until 2006, but since then its