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The world’s food crisis: time to move

The international response to the food crisis of 2011 is less energetic and coherent than during the last emergency, in 2008. Both economic understanding and political impetus need to be improved, says Simon Maxwell.
Simon Maxwell
8 September 2011

The world is in the middle of a food crisis. But both the economic understanding and the political impetus are less than they were in 2008. They need to be improved as the basis on an effective response. 

The famine in east Africa dominates the headlines, and rightly so. After all famine, wherever it occurs, is a charge on the global conscience. But the situation in southern Somalia and environs is essentially a localised problem, not one caused by food shortage on a global scale. All the more reason to make sure that the response agencies have the resources they need to help.

In global terms, prices have begun to ease a little, but they remain very close to levels last seen in 2007-08 - when the food crisis was centre-stage, until it was displaced by the financial meltdown of August 2008. The World Bank’s food-price index of August 2011 remained 33% above the level of a year previously, and only about 10% below the 2008 peak. Similarly, the FAO price index shows that prices are more than twice the level reached before the 2007-08 spike - itself justifying the FAO’s “initiative on soaring food prices”.

Moreover, high global prices are mirrored at country level: unevenly, but in some cases with startling clarity. In countries as widely dispersed as Uganda, the Dominican Republic and Kyrgystan, staple prices have doubled (or nearly so) in 2010-11. Elsewhere, they have gone up by a half or more.

The national and international responses have varied: from increasing food subsidies (as in Egypt, where food and energy subsidies together account for a third of government spending) to initiatives from the G20 (such as the multi-agency report on price volatility it commissioned, published in June 2011 and the Paris communiqué of agriculture ministers which will inform the Cannes summit in November).

A range of other bodies is also active. They include the World Development Movement, with its work on speculation; Oxfam UK’s campaign on food justice  (through its GROW campaign); the ODI’s programme on food crises; the International Centre for Trade and Sustainable Development (ICTSD’s) analytical review on food-price volatility (prepared by Stefan Tangermann of Gottingen University); and the International Food Policy Research Institute (IFPRI’s) seven steps to combat the food crisis.

A comprehensive issue

But all this energy and engagement notwithstanding, there are two problems - which can be highlighted by reference to what was happening in 2007-08. 

First, estimates of the impact of the crisis seem less visible and more muted than last time (when, for example, the then World Bank president Robert Zoellick warned that the crisis would drive 100 million people below the poverty-line, and reverse seven years’ worth of gains in poverty-reduction). And macroeconomic issues are less to the fore than in 2008 (when the IMF, for example, published reports on the balance-of-payments, inflation and fiscal problems associated with food imports and social-protection programmes such as food subsidies).

Second, there is less political urgency. True, Nicolas Sarkozy has made food-price volatility a G20 priority; and Robert Zoellick and Josette Sheeran (of the WFP) are consistently vocal on food issues. But the food crisis is not as high a priority as when Ban Ki-moon established a high-level task-force on the global food-security crisis, which produced a respected comprehensive framework for action.

Again, food security was a headline issue at the G8 summit in l’Aquila (Italy) in 2009; and many agencies designed special programmes: for example, the European Union launched a 1 billion euro food facility, and the World Bank the Global Food Crisis Response Programme (as well as overseeing the new Global Agriculture and Food Security Programme, launched formally in 2010).

This time, the G20’s agriculture ministers seem to be in the lead. That is a worry, insofar as a basic truth of food crises is that their implications go well beyond agriculture - and reach  into social welfare, macroeconomic management, and trade policy.

After the world food crisis of 1972-74, the United Nations set up a World Food Council to try to prevent future crises; but it had foundered by 1993, partly - as documented by John Shaw - because it was owned by agriculture ministers who lacked the remit to tackle such a comprehensive issue. At the FAO, policy discussions of food suffer from a similar problem.

An enduring priority

There are various possible explanations for the difference in the level of attention in 2008 and 2011, from the west’s financial crises to the legacy of a possible earlier over-reaction (when, arguably, the positive benefits of higher food prices for poor producers and others employed in agriculture were ignored; it is interesting here that increased wages and increased incomes for net food producers reversed between a quarter and a third of the first-round impact on poverty caused by the price spike in 2008).Yet food-security issues remain a priority: feeding a growing population, with higher incomes and changing tastes; tackling malnutrition; preventing famine; adjusting to water scarcity; and both preventing and dealing with the consequences of climate change.  .

If these are to be tackled in a systematic way, both the macroeconomics and the politics of the food crisis need to be improved. Again, the macroeconomics, including the fiscal cost of social protection, have dropped off the agenda in an alarming way. There has been a lot of work since 2008 on the provision of facilities to deal with shocks - from the ODI, the EU (VFLEX), the IMF, and the World Bank (through the IDA Crisis Response Window - but no one knows enough about how well these work to help poor countries cope with food-price increases, especially when the numbers could be very large.

A new effort

The political reality too is problematic at a time of uncertainty and price spikes, and when the conventional wisdom - as represented in agency and G20 reports - is that countries should strongly be discouraged from measures that obstruct world trade (such as export restrictions and precautionary buying by food-importers worried about future supply).

Yet it is hardly surprising that during the 2007-08 crisis, many states (sixty-eight of the eighty-one surveyed by the FAO) either reduced import taxes or banned exports (or increased taxes on them). Indeed, rising food prices helped to trigger the unrest in Egypt that overthrew Hosni Mubarak in February 2011. increase in subsidies  In April, the new Egyptian government allocated 168m wa  allocated to food subsidies to cover just the period to end-June; and the FAO reports that many states (including Argentina, Mexico, and Tanzania) are in different ways now attempting to manage grain markets. commitment to increase rice prices to producers

In Egypt and elsewhere, the connection between domestic food policy and the threat of social unrest is obvious. If this issues is to be addressed, then governments in the global south need international guarantees that resources and sufficient support - such as large-scale, immediate and effective compensatory mechanisms - will be available to help them manage the consequences of food-price spikes. In this sense, the macroeconomic and political issues are linked. 

A big responsibility here devolves on G20 leaders, to think anew about the food crisis of 2011. That means recognising its importance; acknowledging the economic and political risks; supporting investments in agriculture, improvements in transparency, and guarantees of  locally managed stocks; moving at least a little on speculation and (especially) biofuels; and then facing the need for much larger and more reliable shock mechanisms. All this would be good economics and good politics. The millions made vulnerable by food-price fluctuations around the world - actual and potential - deserve no less.

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