WASHINGTON (MarketWatch) — The United Nations on Wednesday stuck to a prediction that the world population will grow by roughly a third by 2050, underscoring the worries about population growth that have contributed to rising prices of agricultural commodities.
The United Nations’ State of the World Population report released Wednesday estimates that the world population will grow to 9.15 billion, up from 6.91 billion now. As with a similar report released last year, the U.N. expects India’s population to grow to 1.61 billion to become the world’s most populous nation, overtaking current number-one China, which the report expects to have a population of 1.41 billion.
China currently has a population of 1.35 billion, and India has 1.21 billion people.
The U.S. population is expected to grow to 403.9 million from 317.6 million.
Agricultural commodity prices have increased greatly since the beginning of the year. Wheat futures (WZ10 677.75, +6.25, +0.93%) increased about 21%, corn (CZ10 547.50, -9.25, -1.66%) has increased 43% and soybeans (SX10 1,201, +20.75, +1.76%) have increased 19% at the CME Group Inc.’s Chicago Board of Trade. With prices rising, some analysts are concerned about the future of the agricultural sector.
“I am of the belief that agricultural commodities prices are upward biased because demand is going to grow faster than supply longer term,” said Akshay Jagdale, an analyst at KeyBanc Capital Markets Inc. “It’s partly driven by how much land is available.”
In preparation for the future, analysts are wondering what needs to be done now.
“We’re faced with the need to triple per acre yield on the world’s current crop land,” said Dennis Avery, the director for the center of global food issues and senior fellow at the conservative Hudson Institute. “We have to have another green revolution on top of the one that tripled yield after 1960.”
However, according to the World Agricultural Production document published by the USDA for October, projected yield per acre for 2010-2011 for certain agricultural products has actually decreased since the 2009-2010 year for India and China, such as rice and wheat.
“The real food problem at the moment is biofuels,” Avery said. “And it’s not only causing more corn planting in the U.S., it’s also clearing large amounts of tropical forests and land. Unless we start backing…[new] kinds of research in a new surge, then food prices will skyrocket.”
Besides agricultural commodities, protein prices may also be of concern. According to a research note, KeyBanc analysts Jagdale and Adam Josephson suggest that global red meat production will decrease next year, causing a rise of demand for U.S. chicken.
The response has already taken on a global scale. The World Bank Group approved extending its global food crisis program on Monday until June 2011 over fear of heightened food price volatility and its impact on poor countries.
“We’re going to have to rely heavily on productivity gains to keep up with demand, and that would require additional investments,” Jagdale said.