Much of the human race lives with perpetual food shortages. According to the World Food Programme, 25,000 people die every day from simple hunger. Nonetheless, the media has summarised the current pressures on food prices with the convenient shorthand of “the food crisis”.
It is, however, true that current phenomena are quantitively different from the endemic hunger faced by so many. Indeed, the WFP has acknowledged that the current situation is the most significant challenge it has yet faced.
Is the crisis being used to justify protectionism in the name of food security? Without doubt. It is also being opportunistically manipulated by those in favour of concluding the World Trade Organization’s Doha Round as soon as possible.
Two recent articles fit these patterns in their discussion of the best way to address the crisis. Simply put, The Economist is – unsurprisingly – in favour of further liberalisation, whilst the Institute for Agriculture and Trade Policy’s Sophia Murphy argues for less.
First of all, The Economist’s repeated emphasis on the complexity of trade policy as related to food security and poverty must be commended. Too often these debates have been characterised by generalisation. A willingness to accept to subtlety and exceptions is a key hallmark of a mature analysis, whether one accepts that analysis or not.
However, neither of these articles sufficiently examines the relationship between agricultural capacity and productivity. Given that the majority of the world’s rural poor are not net food sellers, it seems that the gap between the potential and the reality of productivity should be addressed. The decreasing focus of international aid on rural farming may be implicated, as highlighted by WTO Director-General Pascal Lamy. The World Bank is now planning to almost double its agricultural loans to African countries.
Direct and short-term emergency food aid (that is, sending food itself, rather than money) can be even more problematic. Large-scale food donations can save lives in the short-term. Yet as Javier Pereira points out, floods of external produce into the local area can be extremely harmful to local agricultural capacity in the longer term, thus perpetuating structural weaknesses.
I’d like to address some specific concerns that struck me when reading Murphy’s article. It argues that “the first step for governments should be to shape trade according to their country’s collective preferences.” This essentially seems to be an attempt to suggest that the current crisis can be dealt with best if multilateral rules on trade policy were relaxed. But it is hard to see how this would not result in a collective action problem; individual countries’ preferences are surely bound to take the form of a knee-jerk resort to economic nationalism.
Indeed, many countries have succumbed to the temptation to reduce tariffs and restrict exports of foodstuffs, either via quotas or taxation, slowing trade in food and further harming many of those most in need. EU Trade Commissioner Peter Mandelson has called for the WTO to exert “pressure” on net food exporting countries to resist the temptation to cut exports, though it is hard to see how pressure from Geneva would outweigh domestic political expediency. See, for example, these accounts of public discontent and disorder. It would be nigh on impossible for any government to willingly maintain economically liberal trade policies on agriculture amidst this level of anger, even desperation, in their populations.
Murphy also scorns the Doha Development Agenda’s potential, writing that “the WTO has no mandate even to discuss, let alone tackle, the major sources of uncertainty in the food system”. On the other hand, she subsequently complains that the WTO “has little to say” about the causes of the crisis – identified here as climate change, commodity speculation, hoarding and oil prices, amongst other things. These latter factors are, of course, equally beyond the WTO’s remit and it seems unfair to criticise the organisation for engaging with the food crisis whilst complaining that it fails to address other issues that are also beyond its formal scope.
I cannot disagree, however, with Murphy’s sentiment that whilst “global trade benefits immeasurably from clear, strong rules… those rules have to pay attention to social, environmental and political realities or they cannot last”. Similarly, I must concur with The Economist’s conclusion that “first, the [World Bank], and others, should beware sweeping generalisations about the impact of food prices on the poor. Second, the nature of trade reform matters.”
Yet the crisis cannot simply be explained as the misapplication of international trade rules. Robert Paarlberg, writing in Prospect, takes an alternative line. The cost of rice tripled between January and April this year. Yet a mere 6% of global rice production is traded with other countries, according to The Economist’s article. As Paarlberg has it, “most of the world’s hungry citizens do not get their food from the world market, and most who rely on the world market are not poor or vulnerable to hunger.” He argues that, broadly speaking, much of the public dissent about food prices is coming from urban populations who, while feeling the pinch, are certainly not starving.
Again, the complexity of the crisis is manifest. The acute problem of rising food prices is part of the global market in commodities and as such, is embedded in patterns of global trade. The apparently connected but distinct phenomenon of domestic shortages and resultant chronic hunger is rooted in problems of infrastructure, governance and international aid. These matters are structural and any attempts to deal with them need to be appropriately extensive. Rather than being short-term, superficial and restricted solely to local solutions, they must be far-reaching and robust.
