IS THE WORLD PREPARED FOR THE NEXT FOOD CRISIS?

By Frederic Mousseau Reprint | | Print |

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OAKLAND, Sep 15 2010 - Two years after the peak of 2007-2008, international food prices are on the rise again. With poor crops in Eastern Europe, international wheat prices have jumped more than 50 percent this summer -a harsh reminder that international food markets remain highly volatile, subject to a variety of factors, like unfavourable climate conditions, decisions over food stocks or exports by governments or private actors, fluctuations of oil prices (determining the level of food being used as fuel) or financial speculation.

Food riots that took a toll on a number of developing countries in 2008, now appear to be repeating, with thirteen people killed in Mozambique in the wake of rising bread prices in early September. One must thus ask whether the world is better prepared today to deal with high international food prices and to prevent their adverse impact on the poor.

According to a review of the responses to the 2007-2008 crisis, conducted jointly by the Oakland Institute and the U.K. Hunger Alliance, the answer is both yes and no.

We have learnt a lot from what happened three years ago. Starting with identification of the factors that influence global food markets, it is now recognized that volatility is here to stay. We also know a great deal about the effectiveness of different responses put forward to respond to high food prices.

Research shows for instance that the 2008 global food crisis was less “global” than generally thought. A number of countries were successful in preventing price transmission to domestic markets. For example, the price of rice actually decreased in Indonesia in 2008 while it was escalating in neighbouring countries. Public interventions to prevent this transmission were a mix of trade facilitation policies and trade restrictions or regulations (such as export bans, use of public stocks, price control, and anti-speculation measures).

With uneven success, a number of governments have tried to protect their poor citizens through large-scale safety net systems. Countries such as Bangladesh, India, Brazil, or Indonesia have found important synergies between social protection for the poor and support provided to food production -generally tied to the management of public stocks. Cash transfers, generally considered as an effective alternative to imported food aid, have been increasingly used as safety nets. However, high food prices undermined the value of the transfers and ultimately the effectiveness and relevance of the instrument. Thus some national programmes could not be adequately adjusted to high prices, which resulted in a dramatic drop in beneficiariesÂ’ purchasing power. This was the case for the Ethiopian safety net, the largest in Africa, where the value of cash transfers only increased by 33 percent, far from matching the 300 percent increase in the price of the food basket. This mismatch required the set up of a massive humanitarian operation in parallel.

Overall, responses have failed to prevent the dramatic increase in the number of people identified as being chronically malnourished, which jumped from 850 million in 2007 to over a billion in 2008 as a result of high food prices. This represents very worrying backwards progress on the first Millennium Development Goal of halving hunger by 2015.

The food crisis marked a time of substantial increase in the number of malnourished children treated worldwide ­ from an estimated 260,000 in 2004 to some 1.8 million in 2008. However, this represents at most 9 percent of the 19 million severely malnourished children in need of specific treatment worldwide, a gap due to the cost of treatment, people’s limited access to adequate health services in developing countries, as well as restrictions imposed by several governments on international humanitarian agencies. Furthermore, the fight against child malnutrition tends to focus primarily on treatment and feeding with little attention given to some essential questions like the role of agricultural practices and policies to ensure a durable reduction of malnutrition.

The above is well illustrated by the nature of the reinvestment in food production that high food prices triggered in the developing world. The most used response was the provision of agricultural inputs, especially chemical fertilizers, often for the benefit of better-off farmers. Relatively little investment was made in favour of sustainable agriculture, diversification of production, local seed production, and preservation of natural resources, all considered long-term solutions to hunger, climate change, and environmental degradation.

Structural problems like inequitable land distribution were ignored overall by the responses. They were actually aggravated by the rush to lease or purchase land in developing countries by wealthier nations and private investors. According to the World Bank, 45 million hectares worth of large-scale farmland deals were announced in 2009, compared with annual average expansion of agricultural land of less than 4m hectares before 2008. This constitutes a serious concern for future food security in many countries already affected by hunger – like Ethiopia and Mali.

The review of the responses shows that the defence against high food prices was easier for countries with resources, institutions, and public mechanisms in place to support food production and manage domestic availability of food. It also demonstrates that providing aid to the poor was important but far from sufficient to prevent hunger in countries unable to limit domestic inflation. High food prices have thus shaken the Washington Consensus, which has advocated cuts in public support for agriculture and promoted the withdrawal of state regulation of the food economy.

But is the world better prepared today? Certainly not, given that free trade is still upheld by the world leaders, as strongly stated at their last G20 meeting in Canada. Certainly not, because many governments and international institutions have focused their efforts on a short-term supply response, ignoring the fact that supply was less the problem than access (2008 was a record year for global food production) and that durable solutions were needed to address structural causes. And lastly, certainly not, because the massive rush of foreign investment in the land of the poorest countries is now aggravating the main cause of hunger and poverty – the inequitable access to land and natural resources which still prevails in the world. At the end of the day, beyond affordable prices of bread, justice and equity are the real demands of the food rioters. (END/COPYRIGHT IPS)

(*) Frederic Mousseau, a Senior Fellow at the Oakland Institute, is an internationally renowned food security consultant who has worked for almost 20 years with international relief agencies such as Action Against Hunger, Doctors Without Borders and Oxfam International.