crises of finance, food may prove catastrophic
Oct 28 2008
As world leaders
struggle to halt the crisis spreading across the global
financial markets, analysts and economists are attempting
to gauge the magnitude of this meltdown.
Will it rival
or surpass the Great Depression of the 1930s, the Black
October of 1987 or the Asian Economic Collapse of 1997?
In fact, it has
the potential to be far worse, and the reasons are high
food prices and food shortages, and the steady erosion of
agriculture and rural economies.
and affordability are the bedrocks of any society. During
the Great Depression, Black October and the Asian Economic
Crisis, food prices were at historic lows. No matter how
dire the situation, food was still plentiful and cheap.
Today, the story
Food is in shorter
supply; prices have been steadily climbing since 2001, and
have escalated dramatically since 2006. According to the
Food and Agriculture Organization, food prices rose by 9%
in 2006, 24% in 2007, and surged 51% in the past 12 months.
Although we saw some price drops for certain food commodities
in the past months, average prices are still much higher
than normal, and the international markets remain volatile.
During normal times, that level of "sticker shock"
would spell hardship for most working people and the poor.
Coupled with an economic crisis of the enormity taking place
today, the impact could be catastrophic.
The role of food
security in wider events should not be underestimated. Food
shortages and runaway food price inflation have a history
of leading to social unrest and political upheaval. The
current crisis has already sparked riots and social turbulence
in over 30 countries, and contributed to the fall of at
least one elected government. In 2007 alone, the food crisis
threw an additional 75 million people into the ranks of
the malnourished. Hard-won gains by many nations in their
battles against hunger and poverty may be reversed. The
ability of countries to meet the Millennium Development
Goals will be ever more doubtful. Over 60 countries are
receiving support and assistance from the international
community to boost food production.
have been aware of the growing threats to food security
for several years. Recently, they began taking steps to
address these looming perils. In June 2008, more than $11
billion was pledged at the Rome Food Security Summit, attended
by representatives from 181 nations including more than
40 heads of state. The money is to be used for immediate
food aid for those who need it, and for investing in and
revitalising the agricultural sector to boost crop production.
array of needs to be addressed, it was not an enormous sum,
but it was a good start.
The danger today
is that those commitments will not be kept. Governments
have few choices except to set aside hundreds of billions
of dollars to rescue ailing financial institutions. But
that may leave them with hard choices. Some may have to
cut funding from other programmes to pay for this bailout.
One of the least politically popular areas of government
expenditure is foreign aid. Citizens naturally ask: when
times are tough at home, why should we be giving money to
poor farmers in developing countries? It is a legitimate
question. Let us be clear about the answer:
This is not just
a problem of poor farmers in developing countries. This
is everybody's problem. In the modern world few, if any,
nations are self-sufficient when it comes to food security.
Even the wealthiest countries import massive amounts of
food. Countries that ship rice overseas may still need to
source wheat from outside their borders. In this respect,
the world truly is interconnected and interdependent. For
that reason, this is a problem that can only be addressed
at a global level, and so the pledges made in Rome must
be fulfilled - and fulfilled on time.
For food prices
to come down, food supplies will have to increase. And for
food supplies to meet the growing demands of the world's
population, an infusion of investment in agriculture is
essential. Climate change may already be a factor behind
increasing droughts and flooding in fertile, food-producing
regions. The lure of quick cash from growing crops suitable
for bio-fuels has reduced the amount of land devoted to
growing food. Subsidies and trade barriers distort markets
and reduce efficiency in production and distribution.
A critical factor
in the shortfalls in food supplies is that in much of the
developing world farmers are not anywhere near as productive
as they could be. They have the potential to grow a greater
variety of crops and increase the number of harvests each
year. Unfortunately, many lack the technical knowledge,
tools and infrastructure to achieve this. With investment
and support they can remedy these problems and begin producing
enough food for us all at prices we can stomach.
A thriving agricultural
sector provides another benefit for many societies; it serves
as a social safety net. As factories closed and jobs disappeared
in the wake of Asia's meltdown during the late 1990s, substantial
numbers of rural people who had migrated to cities to work
returned to their farms and villages. Resources were still
plentiful and food was there to be shared.
But with governments
focusing investment on industry, the lives of those engaged
in agriculture have become ever harder. There are 583 million
hungry people on farms and in villages across Asia and the
Pacific; 75% of the region's poor live in rural areas. These
days, there may not be much in the village for the jobless
to return to. The social safety net has been frayed.
developing countries, therefore, must also do their part.
The bulk of investment to improve infrastructure and boost
productivity must come from the developing countries themselves.
Policies that support agriculture, making it sustainable,
rewarding and sufficiently productive to support us all
must be adopted with urgency.
That said, no
country can do this alone. It requires partnerships, and
so donors must neither slow nor renege on the official development
assistance and other political commitments made in Rome
As a result of
the convergence of financial, food and fuel crises, a global
tragedy is rapidly unfolding. In our efforts to prevent
this, we must not be placed in a position of having to choose
between bankers and farmers when it comes to resources.
As costly and
painful as the mistakes of those engaged in finance have
been and will be, we must not short-change those engaged
in agriculture. For our own sake, we must provide them with
the tools for achievement and the seeds for success. Their
success puts food on our tables. And the fruits of their
labours are the very staples of our lives.
Dr He Changchui
is Assistant Director-General and the FAO Regional Representative
for Asia and the Pacific, based in Bangkok.