Business | Opinion
Modest proposals to prevent famine
nations must liberalise agricultural trade, reward higher production and limit population growth
- By Victor Mallet, Financial Times
- Published: 23:50 April 20, 2008
Most of us are used to buying food when we want and it is disconcerting to find that no amount of money will buy you a meal.
It happened to me once near Quelimane in Mozambique in the 1980s. Even the offer of dollars in the midst of abject poverty produced only shrugs, because there was simply no food to buy. And it is happening now in the Philippines. Manila has not been able to buy enough rice abroad to secure food for its people, because no one has wanted to sell.
There is thankfully no famine in Manila today. Jollibee, the country's biggest restaurant chain, is offering half-portions of rice and the government has lionised a boxing champion who ate maize instead of rice before his latest victory.
But the global food trade on which the populous nations of Asia and Africa particularly depend becomes more dangerously dysfunctional by the day. The price of rice has more than doubled in a year. Yesterday, rice futures hit another record high after Indonesia became the latest producer to restrict exports.
The poor, who spend much of their income on food, suffer the most. Riots over food prices have erupted across Africa and led to the dismissal of Jacques-Edouard Alexis, the Haitian prime minister. Dominique Strauss-Kahn, who heads the International Monetary Fund, says more food price inflation would have "terrible" consequences, including starvation for hundreds of thousands of people and the risk of war.
It is tempting to assume that the problem is purely one of supply and can be fixed by genetically modified plants or investment in a new 'green revolution' to boost crop yields. The three most productive solutions, however, are all matters of policy.
First, there is an urgent need for a sustained liberalisation of agricultural trade. The immediate cause of this crisis is not - perhaps surprisingly - a shortage of food. The problem is the sudden reluctance of traditional exporters to sell their surpluses. As with credit providers in the seized-up credit markets, each producer is hoarding its own supply in case of hard times at home, because it suspects its trading partners will do the same. Trust in the efficiency and liquidity of the market has collapsed.
Farm protectionism is not new and international markets are grotesquely distorted by tariffs and subsidies. The main producers - particularly the European Union and the US - have jealously protected their farm sectors from foreign competition, partly on food security grounds.
International farm trade has nevertheless managed satisfactorily for decades to redistribute surpluses of staple foods. The current seizures in the markets are therefore a cause for general alarm. Singapore, one of the world's wealthiest nations, depends on food imports as much as Eritrea, one of the poorest.
The second level at which policies need to change is national. Like international trade, domestic trade in farm produce is often highly distorted. While developed nations tend to support their farmers at the expense of consumers, developing countries typically subsidise city-dwellers at the expense of rural smallholders, who receive low prices and have no incentive to increase their output.
As the Financial Times reported two weeks ago, Asian countries are among the worst offenders. Farming productivity growth has slowed drastically in the current decade. "The neglect of agriculture in Asia has got to be corrected," said Ifzal Ali, the Asian Development Bank's chief economist.
Asian governments could do much to boost food output by liberalising their domestic markets, helping to provide farmers with credit and giving them access to modern technology and advice they once received as a public service.
Third and last, governments need to examine their population policies and limit population growth. Although there is enough grain to go round at the moment, you do not need to be a neo-Malthusian to worry about the demand implications of a global population rising by about 80 million people a year or to notice that countries with fast-growing populations - India, the Philippines and Egypt, for example - are especially vulnerable to disruptions in the world's food trade.
Perhaps we should not worry too much that global rice stocks are expected to fall this year to the lowest level in 25 years. Some of the changes recommended above for international and domestic food trade regimes could reverse the decline, probably within a few years.
A more disturbing thought is that we may in the longer term be approaching the limits of our ability to exploit the natural resources required for food production - crude oil, cultivable land, soil fertility and available fresh water, to name a few.
Strains on one resource, furthermore, quickly lead to additional strains on another. To make fresh water, more cities are burning fuel to desalinate seawater, but that helps push up the price of oil. To make substitutes for crude oil, farmers are being encouraged to switch to biofuel production.
We must all hope that human ingenuity will foster another green revolution and provide us with the extra food we will need when our numbers top nine billion in the decades to come.
More from Business Opinion
More from Business
Business Editor's choice
-
Do unemployment figures flatter to deceive?
Jobseekers and recruiters give out mixed signals ranging from optimism to downright despair even as official data show recovery
-
Banks can increase their share
Longer opening hours, more locations outside cities and lower charges can help
-
Geepas idea blossomed in Dubai
The journey led from a small shop in Bahrain to a $1.27b company in the UAE
