Intersection: Most of the world's grains are produced in just a few regions. What will it take to hedge against risk?

DELIVERING ON DIVERSITY, GENDER EQUALITY, AND INCLUSION

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In this issue, we look at vulnerabilities in the global food system and a Nobel economist’s take on inequality.

THE FACTS

Four grains—rice, wheat, corn, and soy—make up nearly half of the calories of an average global diet, and production of these four key crops is highly concentrated geographically. In fact, 60 percent of global food production occurs in just five countries: China, the United States, India, Brazil, and Argentina. Even within these countries, food production is concentrated in a few regions, such as the Midwestern United States and the Brazilian state of Mato Grosso. The world’s grains, in other words, are produced mainly in a few breadbaskets—which means that a few geographically concentrated extreme weather events in these regions could affect a large share of global production.

Extreme weather events are becoming less and less rare. According to an analysis by the McKinsey Global Institute, a multiple-breadbasket failure has an 18 percent likelihood of occurring at least once in the decade centered on 2030. In the event of such a shock to production, grain commodity prices could more than double. Those most hurt by the attendant spike in global food prices would be people living in extreme poverty—the more than 700 million people worldwide who are currently living on less than $1.90 per day.

Increasing grain storage in years when prices are low (and releasing it when prices go up) is one way governments could preempt such a price hike. But getting to the root of the matter: better safeguarding the world’s breadbaskets would require global action to limit warming to 1.5°C above preindustrial levels. Here’s an interactive look at what that would take—including the changes we’d need to make to our diets.

THE VIEW

“If you look at it from a long point of view, at least in America, we have adverse distributional trends that go back at least 20 years, probably more. I think the Biden administration is serious about rectifying the distributional aspects of growth patterns, or at least tackling it. Now, what they get through Congress is a different question. But if the test is ‘is anybody paying attention?,’ I think the answer’s yes.”
— Michael Spence

In a recent episode of the McKinsey Global Institute’s Forward Thinking podcast, Nobel economist Michael Spence discusses the ongoing rise in inequality—and renews the call for a more equitable distribution of the benefits of growth.

Editor’s note: This week, America’s lead pipes are back in the media spotlight. Here’s our latest look at the pipe problem—and why it’s an issue of equity.

— Edited by Julia Arnous, an editor in McKinsey’s Boston office

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