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Where Will Demographics Take the Asia-Pacific Food
System?
Bob Krist, Corbis
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This article
presents findings from Where Demographics Will Take the
Food System, first released at the Asia Pacific Economic
Cooperation Forum Ministerial Meetings in Bangkok, Thailand,
October 2003. Fifteen Pacific Rim countries contributed to
the original report, which was jointly sponsored by the Pacific
Economic Cooperation Council, ERS, the Farm Foundation, the
East-West Center, and the College of Tropical Agriculture
and Human Resources at the University of Hawaii. |
The population of the Asia-Pacific region is projected
to rise by more than 400 million people in the next 2 decades, a
16-percent increase over 2000. This increase is equivalent to the
combined populations of Japan and the United States today. Although
economic growth and prices are closely monitored drivers of food
demand, demographic changes—urbanization, growth in populations,
and changes in the age structure of populations—will likely
have more profound long-term implications for the region’s
food system.
Demographic change was first connected to food demand and supply
200 years ago when Thomas Malthus asserted that “the power
of population is infinitely greater than the power in the earth
to produce subsistence for man.” He later amended his pessimistic
view about the earth’s capacity to produce food in acknowledging
the promise of technological change in increasing food supply. For
the intermediate term, population growth and other demographic changes
are more likely to define food markets than supply constraints.
In the Asia-Pacific region, an admittedly vast landscape, three
demographic trends leading up to 2020 will challenge the food system.
First, a more urban population will demand a more varied diet, with
a premium on convenience. It will also challenge the logistics of
the food supply. Second, as consumers migrate within the Asia-Pacific
region, primarily from lower income economies (for example, Mexico,
Philippines) to higher income destinations (for example, Australia,
Hong Kong, United States), individual food systems must tailor their
trade and production to new demographic realities. Finally, the
overall aging of the population will reduce the level (to reflect
less activity and fewer caloric needs) and change the composition
(for example, more fish and fruit) of food demand.
Rapid Urban Population Growth
The most significant demographic change in the Asia-Pacific
region in the next two decades will be the rapid growth of urban
populations. Some urban areas are already distressingly large and
are confronting poverty, pollution, and congestion. Future urban
growth will test the efficiency and capacity of the region’s
food system to deliver a continuous flow of safe, reasonably priced
fresh and processed foods.
Asia-Pacific’s urban population is projected to
grow by over 580 million people between 2000 and 2020, an increase
of about 45 percent. For the first time in history, the region’s
urban population surpassed its rural population in the last decade.
This rapid urban growth is due to high birth rates, migration from
rural to urban areas, and immigration into urban areas.
Urban growth rates are expected to be the most rapid
in China and Southeast Asia; more moderate in Latin America, North
America, and Oceania; and slowest in East Asia. The most rapid rates
of growth will occur in Vietnam, Indonesia, Singapore, and the Philippines.
China’s urban population is expected to grow by 300 million
people (67 percent) in the next 20 years, a staggering number.
In contrast, rural populations are expected to shrink in practically
all of the region’s countries. The largest rural declines
will occur in China, where outmigration and slower growth will reduce
rural population by more than 145 million people between 2000 and
2020.
The region’s rapid rate of urbanization is driven by technological,
social, cultural, and economic changes. Urban development is a natural
consequence of agricultural surpluses, economic specialization,
more efficient allocation of resources, and higher incomes.
Urban diets differ from those in rural areas, largely due to higher
incomes and the substitution of animal products, fruits, and vegetables
for more traditional food staples like grains. Diets in urban areas
tend to be more diverse, a function of both supply and income. Urban
dwellers tend to eat away from home more frequently and consume
more convenience foods. In developing and middle-income economies,
access to reliable electricity promotes greater consumption of perishable
commodities, and modern infrastructure allows food products to travel
farther in less time.
Work and lifestyles in urban areas tend to be more sedentary than
those in rural areas, leading to lower per capita energy expenditure
and lower per capita caloric requirements. Higher incomes, lower
food prices, and urban consumers’ propensity to eat more than
they need lead to a greater overweight problem in urban areas. Urban
and rural differences in work and lifestyles are more pronounced
in developing economies.
Marketing food products in the Asia-Pacific region will increasingly
focus on densely populated urban centers, such as the Hong Kong-Shenzen-Pearl
River Delta area, Shanghai, Jakarta, Bangkok, Manila, Santiago-Valparaiso,
and Lima-Callao. Many of these urban areas are coastal and have
modern port facilities, making them easily accessible to foreign
suppliers. In some instances, foreign suppliers are more competitive
in these coastal urban markets than are inland producers who face
inadequate infrastructure.
400 Million More People To Feed
Although the population in the Asia-Pacific region is
expected to grow from 2.6 billion in 2000 to 3.0 billion in 2020,
this rate of growth is slower than for the rest of the world. Asia-Pacific’s
share of the world population will decline from 43 percent in 2000
to 40 percent in 2020, as countries in Africa and the Middle East
grow faster. Since the 1960s, global population growth, including
the Asia-Pacific region, has slowed, marking a shift from the geometric
growth rates of previous decades. Currently, the number of people
added to the world and the Asia-Pacific region is declining each
year. The world population is projected to level off at about 9-10
billion after 2050, with the Asia-Pacific region leveling off at
about 3 billion before declining in the 2040s.
Population growth throughout the region will not be evenly
distributed. By 2020, the largest absolute increase will occur in
China (160 million), followed by Indonesia (60 million) and the
United States (50 million). In contrast, the Russian Federation’s
population has been declining, and by 2007, Japan’s population
will begin to decline.
Despite a declining rate of growth in China, the absolute increase
in its population over the next several decades will remain large
relative to other economies in the region. China’s population
is expected to decline around 2030, following the population declines
of Korea in 2027 and Taiwan in 2029. The United States, surprisingly,
will grow faster than some developing economies after 2020 due to
immigration and high fertility of recent immigrants.
Demographic
indicators for the Asia-Pacific region |
|
Total
population
|
Urban
population |
Economy*
|
2000 |
2020 |
Change |
2000 |
2020 |
Change |
|
Million |
Million |
Australia
|
19.2 |
22.4 |
3.2 |
17.4 |
21.4 |
4.0 |
Brunei
|
0.3 |
0.5 |
0.1 |
0.2 |
0.4 |
0.1 |
Canada
|
30.8 |
35.4 |
4.6 |
24.2 |
29.4 |
5.1 |
Chile
|
15.2 |
18.0 |
2.9 |
13.0 |
16.2 |
3.2 |
China
|
1,262.5
|
1,424.1 |
161.6 |
456.4
|
764.2 |
307.7 |
Colombia
|
39.7 |
52.2 |
12.5 |
29.8 |
43.2 |
13.4 |
Ecuador
|
12.9 |
18.0 |
5.1 |
8.1 |
12.8 |
4.7 |
Hong Kong, China
|
7.1 |
8.7 |
1.5 |
7.1 |
8.7 |
1.5 |
Indonesia
|
224.1 |
287.9 |
63.8 |
91.9 |
168.2 |
76.3 |
Japan
|
126.9 |
124.1
|
-2.8 |
99.9 |
102.5 |
2.6 |
Korea
|
47.3 |
51.5 |
4.3 |
38.7 |
46.0 |
7.3 |
Malaysia
|
23.3 |
34.4 |
11.1 |
13.4 |
23.6 |
10.2 |
Mexico
|
99.9 |
124.7
|
24.7 |
74.3 |
98.8 |
24.4 |
New Zealand
|
3.8 |
4.5 |
0.7 |
3.3 |
4.0 |
0.7 |
Peru
|
27.0 |
35.6 |
8.6 |
19.7 |
28.2 |
8.6 |
Philippines
|
79.7 |
111.3 |
31.6 |
46.7 |
79.5 |
32.8 |
Russia
|
146.0
|
139.0 |
-7.0 |
106.4 |
104.3
|
-2.2 |
Singapore
|
4.2 |
7.5 |
3.4 |
4.2 |
7.5 |
3.4 |
Taiwan
|
22.3 |
24.3 |
2.0 |
18.3 |
20.8 |
2.5 |
Thailand
|
62.4 |
71.9 |
9.5 |
12.4 |
19.2 |
6.9 |
United States |
282.3
|
336.0 |
53.7 |
218.0 |
276.3 |
58.3 |
Vietnam
|
78.5 |
99.9 |
21.4 |
18.9 |
34.7 |
15.8 |
Asia-Pacific region
|
2,615.4
|
3,031.8 |
416.4 |
1,322.3 |
1,909.8
|
587.5 |
World
|
6,078.7
|
7,516.5
|
1,437.8
|
2,872.2
|
4,201.7 |
1,329.5 |
*
Members of the Pacific Economic Cooperation Council.
Source: UN data (medium fertility scenario) from U.S. Census
database. |
Though population growth in the Asia-Pacific region
is relatively slow, patterns of immigration matter greatly in the
region. In 2000, 760,000 more people entered the region than exited;
that number is still small relative to the region’s average
annual natural increase of 24.5 million. However, there is significant
migration within the region. Migrants tend to favor economies with
higher per capita income: Singapore, Hong Kong (China), Canada,
New Zealand, Australia, Brunei, the United States, and Russia. Net
migration to the United States alone exceeds 1 million annually.
Although Japan’s economy has high per capita income, that
country’s strict immigration policies keep its population
homogeneous, as is true for Korea and Taiwan. Not surprisingly,
outmigration is most common in the lower income economies of the
Philippines, Peru, Ecuador, Vietnam, Colombia, China, Mexico, and
Indonesia. Net outmigration from China, Mexico, and Indonesia has
totaled 200,000 to 300,000 annually in recent years.
Population growth will undoubtedly challenge the food system, though
not equally across the region due to different rates and distribution
of growth. Japan’s declining population, for example, implies
lower food demand in this affluent nation, a leading importer of
food and agricultural products. Russia’s declining population,
when combined with its social and economic restructuring, could
recast the nation as a supplier in international food markets. More
rapid population and income growth in developing and middle-income
economies will increase their influence in the Pacific food system,
altering production, consumption, and trade patterns.
Immigration affects food demand in two ways. First, aggregate demand
in the receiving economy rises immediately. Since immigrants often
have higher fertility than native residents, they can boost population
growth in subsequent years. In the United States, for example, immigration
plus the higher fertility of recent immigrants accounted for about
60 percent of population growth in the 1990s. Second, the rise in
the immigrant share of a population can affect an economy’s
food preferences. This has occurred in Australia and Canada (with
a rising Asian share of its population), as well as in the United
States (with rising shares of Hispanics and Asians). These changes
may be short-term, with ethnic dietary differences becoming less
pronounced over time, as immigrant offspring adopt the food preferences
of their new country and as the new country’s cuisine is,
in turn, affected by the influence of successive waves of new immigrants.
A Graying Population:
Declining Food Demand and a Tax on the Economy
Between 2000 and 2020, average life expectancy in the
Asia-Pacific region is expected to rise from 72 to 77 years, and
the median age from 30 to 36 years. The population age 65 and older
will increase from 200 million in 2000 to 370 million in 2020. Virtually
all the economies in the region have shifted from high to low birth
and death rates, leading to a projected 8-percent decline in the
number of young people from 2000 to 2020, a modest 17-percent rise
in the number of working-age people, and a very rapid rise (almost
80 percent) in the number of older people. Japan’s population
is aging the most rapidly in the region. Population aging is not
unique to the Asia-Pacific region, but it is happening more rapidly
here and in Western Europe than in the rest of the world.
Countries in the region with the oldest age structures
are Australia, Canada, New Zealand, the United States, and those
in East Asia. These economies experienced the demographic transition—the
decline in fertility and mortality rates—a long time ago,
driven by income growth, medical breakthroughs, health care investments,
and public policy. Increased participation of women in the work
force has also contributed to lower birthrates. According to a Brown
University researcher, China’s family planning policies in
the 1970s—including later marriage, greater spacing between
births, and fewer children—facilitated the country’s
demographic transition. On the other hand, Asia-Pacific economies
with lower per capita income have younger age structures, their
transition occurred more recently, and in some cases, may not be
complete.
Advantages of slower population growth (resulting from the demographic
transition) include fewer dependent young people and a relatively
larger productive segment of the population. The declining share
of young people in the population, however, will eventually shift
to a greater share of older people as the working segment ages and
retires. Although older people may have savings, they may need health
and medical services, which can siphon family and societal resources
from other economic uses.
The changing age structure of the Asia-Pacific population affects
food demand directly and indirectly. One direct effect is lower
food demand. With an aging population, food demand declines as activity
levels and caloric needs decline. A second direct effect is change
in dietary composition and the frequency of eating out. Consumption
of livestock products is declining in the region’s developed
economies, while consumption of fruit and vegetables is increasing.
According to ERS research, older people eat more fresh fruit, fish,
eggs, lettuce, and nonfried potatoes. Japan’s food market
will feel the impact of an aging population more so than other Asia-Pacific
countries. Because of Japan’s rapidly growing share of older
people, for example, per capita meat consumption there is likely
to see a significant decline. Older Japanese tend to eat less meat
and more fresh fruit, rice, and fresh fish due to their established
eating habits.
Older people are also less likely to eat out than are younger people.
Consequently, Japanese retirees are clearly more likely to eat their
midday meal at home, which has important implications for lunchtime
food service. In general, older people tend to prefer convenience,
smaller servings, and, when they do eat out, full-service restaurants.
The indirect effects of demographic change are felt in the general
economy. Changes in the relative proportion of “economically
active” and “economically dependent” components
of a population influence economic growth, which in turn, directly
affects an economy’s food demand and supply.
The dependency ratio measures change in the relative proportions
of “economically active” and “economically dependent”
shares of a population. This is the ratio of the younger (age 0
to 14) and older (age 65 and over) populations to the working-age
population (age 15 to 64). In the Asia-Pacific region, the dependency
ratios for most of the high-income economies are projected to rise
over the next two decades due to population aging. On the other
hand, the dependency ratios for the lower income economies are projected
to decline, providing an opportunity for these economies to save
and invest resources for purposes other than raising/educating children
and taking care of the elderly. This may give these economies a
“demographic bonus,” or short-term economic boost.
However, demographers at the East-West Center are quick to point
out that this “boost to development is not automatic…because
there is no guarantee that governments, institutions, or individuals
will spend the savings wisely.” In the wealthier economies
where the dependent component of the population is rising, labor
shortages and higher wages may eventually lead to capital-labor
substitution, with more highly productive workers supporting a relatively
larger dependent segment of the population. Labor shortages, such
as Japan’s shortage of construction workers, may also lead
to less restrictive immigration policies.
Age structure also affects the propensity to save and invest, which
relates to an economy’s productive capacity. Recent research
suggests that population aging in Australia, Canada, New Zealand,
and the United States will reduce savings and investment rates over
the next 20 years, with spillover effects on growth, productivity,
and the food system.
Policy Implications
Powerful economic forces generated by demographic
changes require the close attention of food system participants
and policymakers. Some demographic changes—such as declining
fertility and mortality rates and the aging of a population—take
years to manifest themselves. Others, like urbanization, may have
more immediate impacts.
The food marketing system must adjust
to greater concentrations of people in urban areas.
Food system efficiency as well as agricultural
productivity must be a fundamental public policy goal if we’re
to feed growing urban populations. Public and private investment
in domestic food system infrastructure and more liberal food trade
policies will be essential to ensure cost- and operation-efficient
food systems to meet the food demand needs of urban populations.
Less centralized distribution systems will play a more significant
role in easing traffic congestion and help reduce other costs of
conducting business in densely populated cities.
Higher incomes and greater food demand in urban areas must be balanced
against more sedentary lifestyles and lower per capita caloric needs.
More affluent and health-conscious urban consumers will demand greater
quality, variety, and convenience from the food system.
The variability of size and growth of different
populations has important implications for food market development
strategies.
Food marketing and investment strategies will, more than
ever, require customization for each country. Japan is currently
the largest net importer of food in the world, but its population
is aging rapidly and will soon decline. Investment and marketing
strategies must address an overall reduction in food consumption
and changes in the types of food that consumers demand. In the United
States, where immigration is expected to result in more rapid population
growth, strategies must target many more consumers, as well as changes
in the racial/ethnic mix. The largest absolute growth in population
across the Asia-Pacific region will be in China. This, combined
with rapid urbanization, requires a focus on market logistics in
a densely populated area and on the changing preferences of higher
income consumers.
Aging populations require a lighter, healthier
food “basket.”
The aging of the region’s population will slowly
lead to lower per capita food consumption and a shift in the composition
of food demand. Changes in the composition of food demand are likely
to include more fresh fruits and vegetables, less red meat, and
less eating out. These changes will directly affect producers, processors,
retailers, and foodservice establishments.
Aging populations may have adverse effects
on economic growth, a leading driver of food demand.
A growing older and retired population, along with
a shrinking workforce, will probably have negative effects on income
growth in the Asia-Pacific region. Extending the working lives of
people, raising worker productivity so that fewer people can support
more retirees, and reducing public obligations for pensions and
health care services are some possible responses.
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