“There is a real risk of a ‘food crunch’ at some point in the future, which would fall particularly hard on import-dependent countries and on poor people everywhere.”
-- Alex Evans, Center on International Cooperation
ROME -- The many forces converging in world financial arenas create a particularly daunting context for humanitarian efforts to relieve hunger. Alex Evans is a Chatham House Non-Resident Fellow at the Center on International Cooperation (CIC) of New York University and has worked for years on issues of quality of life, climate change, energy supply and international policy.
In his new publication for CIC, “The Feeding of the Nine Billion: Global Food Security for the 21st Century,” Evans frames the issues of the global financial crisis and warns that amid other factors limiting the poor’s access to food, prices may even be poised to go back up. He also lays out a series of potential actions for leaders to take, both in developing countries and on the international scene.
Our thanks to Evans, CIC and Chatham House for special permission to publish this new work. For a look at Evans’ ongoing work on this and many topics of global risk and international policy, go to GlobalDashboard.org – which Evans co-edits with David Steven. Evans’ publications are downloadable from http://www.globaldashboard.org/documents
The Feeding of the Nine Billion:
Global Food Security for the 21st Century
By Alex Evans
The challenge we face
Global food prices have eased significantly from their record highs in the first part of 2008. As a worldwide economic downturn has gathered pace, commodity markets have weakened significantly. By October 2008, the UN Food and Agriculture Organisation’s Food Price Index stood at 164, the same level as August 2007 - 25 per cent lower than the Index’s high of 219 in June 2008.
However, this does not mean that policymakers around the world can start to breathe a sigh of relief. For one thing, even at their somewhat diminished levels current prices remain acutely problematic for low income food-dependent countries and for poor people all over the world. The World Bank estimates that higher food prices have increased the number of undernourished people by as much as 100 million from its pre-spike level of 850 million.
Looking to the medium to longer term, moreover, this report argues that food prices are poised to go back up. Although many policymakers have taken a degree of comfort from a recent OECD-FAO report on the world’s agricultural outlook to 2017 – which argued that food prices would shortly resume their long term decline, even if they remained on average higher than their pre-spike levels – the report largely overlooked the potential impact of long term resource scarcity trends, notably climate change, energy security and falling water availability. This report, by contrast, argues that these trends - together with competition for land and rising demand from increasing affluence and a rising global population - represent a major challenge for global food security.
- Climate change will result in an increase of 40 to 170 million in the number of undernourished people worldwide, according to the Intergovernmental Panel on Climate Change. While higher average temperatures may lead to yield increases in higher latitudes, lower latitudes – where most developing countries are located – will start to see negative impacts immediately. Increases in the frequency and severity of extreme weather and climate-driven water scarcity will also affect food production – as will the need to reduce greenhouse gas emissions from agriculture itself, which accounts for as much as 32 per cent of emissions if deforestation is included.
- Energy security affects food prices in multiple ways, from fertiliser, on-farm energy and transport costs to the more recent trend of using crops to produce biofuels - the single most important driver of food price increases in recent years. While oil prices have collapsed dramatically since the summer of 2008 (from a peak of $147 in July to around $50 at the time of writing), the ongoing lack of investment in new oil production, coupled with accelerating declines in existing oil fields, suggests that oil prices are set to rebound sharply when the world emerges from the downturn – pulling food prices up with them.
- Water scarcity is already becoming a major problem as population grows and per capita consumption rises. Half a billion people live in countries chronically short of water; by 2050, this will rise to more than 4 billion, not only because of climate change but also as a result of unsustainable extraction from rivers, lakes and groundwater. Agriculture, which accounts for 70 per cent of global fresh water use, will be particularly vulnerable.
- Competition for land is likely to become a major problem in the future. To meet rising global demand for food, yield increases alone may not be enough; increased acreage is likely to be needed as well. However, demand for land from other uses – such as biofuels, timber, carbon sequestration, forest conservation and the world’s growing cities, which tend to grow on some of the most productive land – is also intensifying. A significant proportion of land used to grow food now is already degraded.
- Demand for food will rise over coming decades as world population increases towards 9.2 billion in 2050 (although the rate of growth has slowed significantly since the 1960s, so that on current trends global population will stabilise in the year 2200 at 10 billion people). At the same time, growing affluence and rising expectations mean that ever more people are eating resource-intensive ‘western’ diets rich in meat and dairy products, increasing demand for crops as animal feedstocks. The World Bank projects that worldwide demand for food will increase by 50 per cent by 2030, and for meat by 85 per cent.
There is therefore a real risk of a ‘food crunch’ at some point in the future, which would fall particularly hard on import-dependent countries and on poor people everywhere. But this outcome is not inevitable – and it would be a grave error for policymakers or publics to fall into a Malthusian determinism, or to assume that the path ahead must lead to endless competition for ever scarcer resources.
Instead, policymakers should use the current period of easing in food prices as a moment of opportunity in which to identify and agree the key elements of a global food security strategy. They should start by bringing greater clarity to the question of what they are seeking to achieve. Many recent statements by policymakers have emphasised the need to increase world food production dramatically. While this objective is critical, it will also be essential to make the world’s food systems for producing and distributing food:
- more resilient, given that the next few decades will be hallmarked by pronounced turbulence as the result of shocks (such as extreme weather events or spikes in oil prices), slower-onset stresses (such as land degradation or steady price inflation), accident or ignorance (such as the unintended consequences of food export restrictions) or malicious action (such as intentional attacks on food systems by terrorists or guerrilla insurgencies);
- more sustainable, given that food production is as often a driver of scarcity issues as a victim of them – whether in poor husbandry (such as over-grazing or over-ploughing), inefficient use of resources (such as water, fertilisers or energy), or in its contribution to climate change (for example through on-farm energy use, transportation, meat production and deforestation); and
- more equitable, given that the reason why almost a billion people go hungry today is not that there is insufficient food to go around (a point also implied by the fact that about the same number of people globally are overweight) – but rather the fact that poor people lack access and entitlement to food.
To meet these objectives, a comprehensive global strategy for global food security is needed. The report makes ten key recommendations – five for action in developing countries, and five for action internationally.
What needs to be done: a ten point agenda for international action
Action in developing countries:
- Spend more on food and agriculture. The last twenty years have seen a disastrous decline in the proportion of foreign aid that goes to agriculture, from 17 per cent in 1980 to 3 per cent in 2006. Total aid spending on agriculture fell 58 per cent in real terms over the same period. Today, developed country donors urgently need to reverse this trend, and to start plugging the gap left by years of under-investment. The need to increase spending on agriculture also applies to developing country governments, who have similarly overlooked rural sectors in recent years (despite the fact that three quarters of the world’s poor people live in rural areas). In Africa, for example, the average government spends only 4.5 per cent of its budget on agriculture - despite an African Union target of allocating 10 per cent of public spending to agriculture by 2008.
- Invest in a 21st century Green Revolution. The 20th century Green Revolution achieved astonishing yield increases. Now, a 21st century equivalent is needed – one that not only increases yields, but that also moves from an agricultural model that is input-intensive (in water, fertiliser, pesticide and energy use) to one that is instead intensive in its use of knowledge. Genetically modified crops may have a role, but ecologically integrated approaches – such as integrated pest management, minimum tillage, drip irrigation and integrated soil fertility management – often score higher on resilience and equitability, as they put power in the hands of farmers rather than seed companies. Additional funds for public research and development are also vital: the budget of the Consultative Group on International Agricultural Research has fallen by 50 per cent over the last 15 years, for example.
- Get the basics in place. In order to thrive, farms in developing countries need access to five key resources: assets (such as land, machinery, or renewable resources like water); markets (for example adequate infrastructure, communication networks that give farmers access to up-to-date price information, or the capacity to meet supplier standards for supermarkets); credit (to prevent small farmers from falling prey to predatory lending, and to improve access to inputs such as fertilisers); knowledge (where there is an urgent need to invest in agricultural extension services to help disseminate R&D findings in the field); and risk management (for example through social protection systems, mechanisms for hedging against bad weather, and improved crop storage systems). Developing country governments and donors alike need to focus on supporting these outcomes.
- Focus on small farmers. 1.5 billion people live in households that depend on small farms. While arguments for supporting small farms are sometimes dismissed as based on a romantic attachment to peasant agriculture, the evidence shows that small farming can be a viable route out of poverty with the right policy framework. In Vietnam, for instance, small farmers have been able to benefit from high food prices through accessing export markets and to participate in the country’s impressive growth. A key part of the puzzle is mechanisms that can aggregate small farmers’ output and help them to meet supplier standards for supermarkets and other large buyers. In the past, this role was often played by government-run marketing boards, many of which were dismantled in the 1980s and 1990s. Today, the gap they left needs to be plugged – but private companies, NGOs or farmers’ organisations may be just as capable of fulfilling the role as government agencies.
- Improve access to social protection. Many poor countries have tried to deal with high food prices through subsidies or price controls. Both approaches come with a cost: the former can wreck government budgets, while the latter reduces farmers’ incentive to produce more. Social protection systems represent a better alternative, but only 20 per cent of the world’s people have access to them. Although more experimentation is needed on what kinds of system work where, the main obstacles are political rather than technical: affluent groups in developing countries often oppose social protection systems for fear they will encourage dependency (although the evidence suggests the opposite). In these circumstances, the challenge for foreign aid donors is to support local advocates of pro-poor change to open up political space – a challenge that is more about influence than about spending money.
- Consider an IEA for food. After the first oil shock in 1973, the International Energy Agency was created. Its core mission: to co-ordinate collective action in future oil crises, above all through an emergency response system based on strategic oil reserves in member countries. Today, an equivalent function is needed for food. Part of the reason for the current food price spike is that worldwide food stocks had fallen to unsustainably low levels: the recent easing in prices gives governments an opportunity to build those reserves back up. A global system of food reserves need not entail the creation of a new agency, but to be credible the system would need to be overseen by a disinterested party, such as the World Food Programme. It would also be essential to be clear that the role of any system of reserves would be limited to emergency assistance: not to act as a price support for producers, or a permanent system for managing food aid.
- Improve technical assistance on long term security of supply agreements. The trend for major food importers such as China, South Korea and a number of Gulf countries to seek long term food purchase agreements, land leases or land purchases in third countries risks disadvantaging poor countries that lack the capacity to negotiate a fair deal. (Madagascar, for example, is reported to have leased half its arable land to a South Korean company for 99 years with no compensation other than jobs created on the farms). Yet such agreements could in principle provide a win for both sides, allowing import-dependent countries to increase their security of supply at the same time as bringing much-needed capital, infrastructure and know-how to countries that have the potential to produce much more food than they currently do. In order to move towards this more positive scenario, developing countries need better technical assistance in negotiating these complex and innovative deals. International donors should gear up to provide such advice as a matter of urgency.
- Push ahead with developed country agricultural liberalisation. Although agricultural liberalisation may have the effect of raising food prices in the short term, the underlying fact remains that reform of US farm support and the EU’s Common Agricultural Policy is essential for improving poor countries’ food security. By subsidising food production and then exporting it, developed countries introduce a dynamic in the world trade system that structurally disadvantages developing countries by eroding the capacity of their agricultural sectors to compete. Accordingly, reform of developed country support remains essential. On the same basis, developed countries should move towards giving food aid in cash (which can then be used to purchase food in developing countries, thus investing in their agricultural sectors at the same time) rather than in food (a form of tied aid that subsidises producers in the donor country). Countries with support regimes for biofuels (above all those for corn-based ethanol in the US and biodiesel in the EU) also urgently need to review those policies in the light of their impact on food security.
- Integrate security of supply into global trade rules. A lapse into protectionism would be a serious step back for global food security. But after recent convulsions in agricultural trade (above all the export restrictions introduced by more than 30 countries), many governments are unsure whether they can trust world markets – to the extent that some of them are even flirting with autarchy, despite warnings from the UN food task force that self-sufficiency and food security are not the same. For liberalised trade in agriculture to command support, importers’ legitimate security of supply concerns need to be addressed. Policymakers should use the Doha round as an opportunity to explore the potential for new WTO rules on export suspensions on food, as already exist in the context of the NAFTA agreement.
- Agree on a comprehensive global deal on climate change. The projected impacts of climate change alone mean that a global plan for stabilising greenhouse gas concentrations is a sine qua non for future worldwide food security – but they are not the only reason. Analysts from Goldman Sachs to the World Bank and the IMF now agree that biofuels have been one of the most important (if not the most important) driver of rising food prices in recent years. If oil prices resume their volatile upward march – as recent analyses from Chatham House and the International Energy Agency suggest they will – then food prices risk being pulled up with them. The best way of avoiding this scenario is through greatly increased investment in new oil production infrastructure, which in turn depends on a more stable and predictable outlook for oil prices. By limiting future carbon emissions, a global deal on climate change would also provide predictability on the shape of future oil demand - allowing oil producers to invest with more confidence while at the same time reconciling this goal with the need to tackle climate change seriously.