Thursday, July 1, 2010

World Food Security

World Food Security

Food security exists when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life. Household food security is the application of this concept to the family level, with individuals within households as the focus of concern.

Food insecurity exists when people do not have adequate physical, social or economic access to food as defined above.

The right to sufficient food is enshrined in the Universal Declaration of Human Rights and in subsequent international law. A rights-based approach to food security would impose obligations on national governments to implement non-discriminatory and non-political strategies to enable their people to feed themselves. However, only 22 countries have embedded the right to food in their Constitutions.

Many of the world’s food security problems stem from disregard of the fundamental right to food. For example, the aim of world trade rules is to increase absolute volumes of trade; the aim of agri-business corporations increasingly active in poor countries is to make profit for their shareholders. Insatiable greed of the world's fishing industries has reduced 75% of the ocean's resources to the verge of collapse.

In response to the rising hunger figures, a series of high level meetings culminated in a World Summit on Food Security in November 2009. Countries were asked to re-assert the right to food through a resolution to eradicate hunger by 2025 at an estimated cost of $44 billion per annum. Most world leaders, though, refused to attend and the motion had to be withdrawn.

According to The State of Food Insecurity in the World Report, 2009, for the first time since 1970, more than one billion people—around one-sixth of all of humanity—are hungry and under-nourished worldwide. The latest food crisis overlaps the food crisis that in 2006–08 had pushed the prices of basic staples beyond the reach of millions of poor people. Although the food prices have retreated from their mid-2008 highs, international food commodity prices remain high by recent historical standards. Also, domestic prices have been slower to fall.

At the end of 2009, domestic staple food prices remained, on average, 17 percent higher in real terms than two years earlier. The price increases had forced many poor families to sell assets or sacrifice healthcare, education or food just to stay afloat. With their resources stretched to breaking point, those households will find it difficult to ride out the current economic storm.

While developing countries have been hit by many crises in the past, the 2008 economic turmoil was different in at least two important aspects. First, the crisis affected large parts of the world simultaneously, and, as such, traditional coping mechanisms at national and sub-national levels were less effective than they were in the past. This left developing countries with less room to adjust to the rapidly changing economic conditions.

The second key difference is that the current economic crisis emerged immediately following the food and fuel crisis of 2006–08. While food commodity prices in world markets declined substantially in the wake of the financial crisis, they remained high by recent historical standards.

The economic crisis has negatively affected large segments of the population in developing countries. The position of those who were hurt most by higher food prices (the rural landless, female-headed households and the urban poor) is particularly precarious because they have already approached, or in many cases reached, the limit of their ability to cope during the food crisis. Among these groups, the urban poor have experienced the most severe problems because lower export demand and reduced FDI caused employment to fall in urban areas, which are more closely connected to world markets than rural areas. But rural areas will not be spared—reductions in employment have caused back-migration from urban to rural areas, forcing the rural poor to share the burden in many cases. In some countries, declining prices for specific crops added to that burden.

The majority of developing countries have food deficits, exposing them to the vagaries of global markets. Ironically, the short-comings of trade in agriculture have their roots in the desire to support the pattern of small family farms which were dominant in Europe and US in the aftermath of the Second World War. Determined to achieve food security, the European Common Agricultural Policy and the US Farm Bill combined subsidies and tariffs to support the sector. These policies proved successful, generating colossal internal food surpluses.

Not surprisingly, the poorer countries of the modern world are keen to copy this approach. Such ambitions remain unfulfilled largely because in 1995 the richer countries were successful in their efforts to include agriculture in the system of open market rules governed by the World Trade Organisation. At the same time, they refused to unravel their own protectionist model.

This hypocrisy remains a fundamental barrier to development and food security. Developing countries find their domestic markets undercut by cheap food imports dumped by rich countries. Exporters encounter trade barriers erected in Europe and US. In 2009, the FAO quoted a figure of $365 billion per annum as the total subsidies for agriculture paid by the rich OECD countries in 2007, nearly ten times the annual cost of eradicating hunger by 2025.

Undernourishment estimates
In spite of the negative consequences of the food and fuel crisis on the world’s poorest and most vulnerable population groups, better-than-expected global food supply in 2007–08 has led FAO to revise its earlier estimates of under-nourishment for 2008 down to 915 million (from 963 million). However, based on projections produced by the United States Department of Agriculture (USDA) Economic Research Service, the economic crisis increased the number of food-insecure by about 9 percent in 2009, which comes on top of a projected baseline increase of 2 percent for 2009 even in the absence of crisis. When applied to the revised FAO under-nourishment estimates, these projections imply that the number of under-nourished in the world have risen to 1.02 billion people during 2009, even though international food commodity prices have declined from their earlier peaks.

This represents the highest level of chronically hungry people since 1970. While the number of hungry people has been increasing since the mid-1990s, the number of under-nourished in the world was actually declining in the 1970s and 1980s, in spite of relatively rapid population growth during those decades and the proportion of under-nourished in developing countries was declining quite rapidly. At that time, especially in the wake of the global food crisis of 1973–75, large investments in the agriculture sector (including for scientific research, rural roads and irrigation) led to rapid growth in cereal yields and lower cereal prices that, in turn, significantly reduced food insecurity. During those decades, the proportion of official development assistance devoted to agriculture was also relatively high.

During the 1990s and the current decade, however, the number of under-nourished has risen, despite the benefit of slower population growth. In the same period, the proportion of ODA devoted to agriculture declined substantially; in 2007, after adjusting for inflation, the level of ODA was 37 percent lower than in 1988. Rice and wheat yield growth has also slowed substantially. Maize yield growth has increased, but this may be attributable to the fact that a much greater proportion of research and development (R&D) for maize is in the hands of the private sector, as compared with rice and wheat.

Given the increased importance of bio-fuels and the new linkages between agricultural and energy markets, increased cereal yields, if achieved, may not necessarily continue to lead to lower cereal prices. Because the world energy market is so much larger than the world grain market, grain prices may be determined by oil prices in the energy market, as opposed to being determined by grain supply. Even if this proves to be the case, however, higher cereal yields will still help reduce poverty by raising revenues for small farmers and increasing demand for rural labour. Thus, it is time to learn from the past and re-invest in the agriculture sector to reduce food insecurity and poverty.

Agriculture as a macro-economic buffer
Economic crises have different impacts on various sectors, depending on the nature of the crisis, the size of the sector in terms of employment, and the trade structure of the sector. Agricultural employment also tends to expand during a crisis.

Why would agricultural growth be less affected than growth in other sectors? First, as income drops, demand for agricultural products, especially food, does not decrease proportionately—people will sacrifice other goods, such as industrial products and services, to make sure they can buy enough food (or as much as their income allows). On the supply side, other sectors may use credit more intensively, while agriculture, especially if it is dominated by small-holders, is more self-financed and thus less affected by sudden credit shortages. This latter argument would be less relevant for large and commercial farms where credit is a key input. Further, the supply of credit might be augmented by migrants who return from urban areas.

In many cases, crises may be accompanied by a depreciation of the exchange rate (e.g. Mexico in 1995, Indonesia and Thailand in 1997–98). This will tend to benefit agriculture because agricultural products are often considered to be relatively more tradable than output from the service sector. But not all economic crises are the same.

The importance of investing in agriculture and public goods
The present crisis is not a new crisis. It is the sudden worsening of a structural crisis that, over the past decades, has denied hundreds of millions of human beings access to adequate food for an active and healthy life.

The recent rapid increase in the number of hungry, because of first the food and fuel crisis and now the economic crisis, reveals the fragility of present food systems. The current situation points to the urgent need to tackle the structural, root causes of hunger. In addition to macro-economic stabilization policies designed to minimize the immediate impact of the current shock, governments should boost and encourage their investments in agriculture (including non-farm rural activities), expanding safety nets and social-assistance programmes, and improving governance.

The World Bank’s World Development Report 2008 clearly shows that agriculture can make substantial contributions to economic development and poverty alleviation in the least-developed countries. Even though this role is reduced substantially in middle-income countries, agriculture continues to play a crucial role in alleviating poverty, which remains disproportionately rural in spite of the falling relative importance of agriculture in national economies.

To fulfil its role as an engine of growth and poverty alleviation, however, agriculture itself needs to grow. And agricultural growth cannot be achieved and sustained without investing in agriculture. Unfortunately, in countries where the socio-economic role of agriculture is largest, public investment in agriculture tends to be relatively very low. Public investment in agriculture as a percentage of agricultural GDP is lowest in agriculture-based economies (around 4 percent) and largest in urbanized developing countries (around 15 percent).

The problem of under-investment in agriculture is compounded during times of economic turmoil such as the current global economic slowdown, because when both private and public budgets contract, investments tend to be cut to a greater extent than other expenditures in all sectors—including agriculture

It is therefore important that, during and following economic crises, investment in agriculture receives decisive support from both the private and public sectors. For investments in agriculture to fully materialize, a business environment that promotes private, domestic and foreign investment in not only agriculture but also all other sectors needs to be in place.

Private investment in agriculture requires accompanying public investment. For example, by integrating a fertile region, a public road makes private investments in that region more profitable. Research has shown that in countries as diverse as China, India, Uganda and the United Republic of Tanzania, investments in agricultural research and rural roads contribute substantially to poverty alleviation. A study from Latin America showed that, while government spending on public goods increased agricultural growth rates and accelerated poverty reduction, government spending on private initiatives such as credit subsidies or production promotion that benefits only a small group of large farmers were less beneficial. Thus, the public sector has a crucial role to play in promoting the overall investment in agriculture required to achieve the full socio-economic potential of agricultural growth.

Strengthening governance mechanisms for world food security
The persistence of under-nourishment and its aggravation during the recent food and economic crises underscore the need for improved global food-security governance to address fundamental weaknesses in the fight against hunger. The attention currently focused on global food insecurity should be utilized to tackle the root causes of hunger and show how future crises could be avoided by addressing long-term challenges to food security such as rural poverty, inappropriate policies and strategies, and insufficient investment in food and agriculture.

Such objectives would require coherent and coordinated action over the longer term. To be addressed in a sustainable manner, they require common policies, strategies and programmes and also strengthened capacity for implementation and monitoring of interventions. To that end, the governance of the fight against food insecurity needs to be consolidated at the global level, drawing and building on existing structures.

The Committee on World Food Security is a universal Inter-governmental body made up of Member Nations of FAO and UN Member States, which is mandated to review and follow up policies concerning world food security and to examine issues affecting the world food-security situation. It is currently undergoing reform, with the aim of enhancing its effectiveness in galvanizing political will and developing technical solutions for the alleviation of chronic hunger and food insecurity. By helping to coordinate the actions of all relevant stake-holders, and by being empowered to become more effective, the reformed Committee has the potential to generate momentum for timely, integrated, sustainable and effective responses to the challenges of food security.

To ensure a more effective and efficient global agriculture, food and nutrition system, the governance of world food security must:
  • Provide science-based analysis and advocacy concerning the key determinants and possible evolution of food security;
  • Help coordinate and strengthen international, regional and national strategies, policies and programmes for sustainable agriculture and food security;
  • Promote actions that encourage investment in agriculture while maintaining focus on equitable, broad-based sharing of resources;
  • Strengthen coherence among food security policies and related issues such as climate change, environmental sustainability and natural resource management;
  • Monitor progress and the results of past and present policy measures, as well as the effectiveness and efficiency of resource mobilization;
  • Influence governments and other key stakeholders to commit themselves to clearly defined, time-bound goals and actions to eradicate hunger and food insecurity and to develop ways to monitor these goals.
Key Challenges listed at World Food Summit, 2009
  • To eradicate hunger from the earth. Not only to ensure sufficient food production to feed a world population that will grow by 50 percent and reach 9 billion by 2050, but also find ways to guarantee that everyone has access to the food they need for an active and healthy life.
  • To put in place a more coherent and effective system of governance of food security at both national and international levels.
  • To make sure developing countries have a fair chance of competing in world commodity markets and that agricultural support policies do not unfairly distort international trade.
  • To find ways to ensure that farmers in both developed and developing countries can earn incomes comparable to those of secondary and tertiary sector workers in their respective countries.
  • To mobilize substantial additional public and private sector investments in agriculture and rural infrastructure and ensure farmers’ access to modern inputs to boost food production and productivity in the developing world, particularly in low-income and food-deficit countries.
  • Considering that 30 or more countries are currently experiencing food emergencies, to agree more effective mechanisms for early reaction to food crises.
  • To ensure that countries are prepared to adapt to climate change and mitigate negative effects.

Biotechnology and GM Crops
The great advances in crop yields since the 1970s, described as the “green revolution”, have to be weighed against their ecological consequences. The FAO says that 75% of food biodiversity was lost in the 20th century whilst 80% of the world’s dietary energy is now supplied by just 12 industrial crops. The green revolution has also been responsible for significant soil erosion, salinity and depletion of water resources.

Genetically-modified (GM) crops, in which a gene of desired characteristic is transposed from one plant to another, are the most extreme and controversial output of the biotechnology companies. Claiming higher yields, lower chemical inputs and higher nutritional value, GM crops sound like the answer to the challenge of population growth and adaptation to climate change.

However, GM technology is better suited to capital intensive farming and therefore at odds with the values of food sovereignty. In developing countries, there are further reservations over the capacity to establish regulatory frameworks needed to manage inevitable conflicts of interests between the local stakeholders (farmers, consumers, and governments) and global shareholders who control the intellectual property rights. Despite the enthusiasm of Brazil, South Africa, China and India, very few countries in Africa have adopted GM crops—which have so far concentrated on overcoming weeds and pests rather than the impact of climate change.

With the developing countries today being more financially and commercially integrated into the world economy than they were 20 years ago, they are far more exposed to shocks in international markets. Indeed, many countries have experienced across-the-board drops in their trade and financial inflows, and have seen their export earnings, foreign investment, development aid and remittances falling. This situation has conspired not only to cull employment opportunities, but also to reduce the money available for government programmes that are indispensable to promoting growth and supporting those in need.

To ensure that hunger is conquered in the years to come, developing countries must be assisted with the development, economic and policy tools. Stable and effective policies, regulatory and institutional mechanisms, and functional market infrastructures that promote investment in the agriculture sector are paramount. Investments in food and agricultural science and technology need to be stepped up. Without robust agricultural systems and stronger global food-security governance mechanisms, many countries will continue to struggle to increase production in line with demand, move food to where it is needed and find foreign exchange to finance their food import requirements.

There is, however, a risk that a pre-occupation with stagnating developed country economies and failing corporations due to the financial and economic crisis will shift resources away from the plight of the poorer countries. Indeed, if the food crisis is about higher prices, the economic crisis is about lower household incomes, which can be even more devastating, aggravating already unacceptable levels of food insecurity and poverty.

Food security is a function not only of production and market access, but also of the environment created by economic and political institutions at all levels. These institutions can facilitate or obstruct people’s access to essential livelihood assets. Understanding governance structures and institutional contexts is crucial for addressing food security as a policy issue that cuts across several sectors and has multiple dimensions. It is now well recognized that the institutional set-up and the processes that allow interactions among stake-holders are critical factors for success or failure when formulating, implementing and monitoring policies, strategies and programmes. The global food crisis and the commitment to address its structural causes should remain at the top of the international political agenda.