Todd's Take

15 Oct 2015

By Todd Hultman
DTN Analyst

Amid the noise of recent headlines, you would be excused if you missed the latest bombshell. No, I'm not referring to the latest poll numbers of presidential candidates, tragic string of school shootings, or Russia's bombing of Syria. This is actually good news.

On Oct. 4, the World Bank announced that, for the first time in history, "the number of people living in extreme poverty around the world is likely to fall under 10% in 2015..."* As World Bank Group President, Jim Yong Kim said, "This is the best story in the world today..." Given the lineup I saw on CNN last week, it is hard to disagree.

It is important to clarify that the World Bank is not talking about all poverty, but only those living on less than a $1.90 a day -- the poorest of the poor. Even so, this is an important marker which shows just how much the world is changing. Consider that Dr. Max Roser of the Oxford Martin School estimates 82% of the world's population were in extreme poverty in 1850 and 55% qualified as recently as 1950.** The World Bank expects 702 million people to fall in that category in 2015, down from 902 million in 2012.

Seven-hundred-two million people without access to basic necessities, like clean water and safe sewage disposal are still a lot of people and the World Bank has set a goal to eradicate extreme poverty by 2030, but acknowledges the task will not be easy. East Asia (mostly China) and South Asia (mostly India) have made significant progress and are expected to have extreme poverty rates of 4% and 14% respectively in 2015, down from 7% and 19% in 2012.

The more difficult regions showing slower rates of improvement are Sub-Saharan Africa and Middle East/North Africa where the World Bank acknowledges that conflicts are a problem. In 2015, 35% of those living in Sub-Saharan Africa were in extreme poverty, down from 43% in 2012. Also adding to the conflicts, those two regions are suffering a serious lack of water -- significant problems that don't have easy answers.

For modern China and India, market-oriented reforms have been powerful drivers of progress. For the more difficult areas, economist and senior U.N. adviser Jeffrey Sachs recognized ten years ago that economists were not likely to have the answers. "Listen to the entomologists, the hydrologists, the soil scientists, the others who grapple with the ground realities of staying alive and producing food and fighting disease and helping people to have safe drinking water. Listen to what their message is," he counseled.***

Here in the U.S., we are keenly aware of how China's growing prosperity has resulted in increased demand for pork, soybeans, and distillers grains -- all related to their increased desire for more protein in the diet as incomes have risen.

Last week's announcement from the World Bank reminds us that these dramatic changes are not confined to China. The growing trend of prosperity is having positive impacts throughout Asia, including India. In spite of the current state of low grain prices, world demand for grain has reason to grow beyond the rate of population growth -- a fundamental trend that will become more obvious the next time production gets hit with a weather problem.

* World Bank press release of Oct. 4, 2015, found at:

http://www.worldbank.org/…

** More explanation about Dr. Roser’s method is found in the fifth footnote at:

http://ourworldindata.org/…

*** Joanne Myers interview of Jeffrey Sachs on behalf of the Carnegie Council for Ethics in International Affairs, Mar. 30, 2005, at:

https://www.carnegiecouncil.org/…

Todd Hultman can be reached at [email protected]

Follow him on Twitter @ToddHultman1