Seeds of wrath, seeds of change
After the ‘hunger riots’ and the initial shockwaves they created, the analysts are taking stock. Yes, prices have reached record levels but, in reality, they had been markedly low for the past 30 years. Certainly, some regions of the world have an agricultural deficit, but the notion of a global shortage is an illusion. Here, The Courier makes a brief survey of the current situation using FAO figures as supporting evidence.
First there are the figures, and they are indeed jaw-dropping:
- A tripling of wheat prices since 2000, with a 130 per cent increase in 2007 alone.
- A doubling of rice and maize prices during the same period, with rice prices in Asia doubling again in the first quarter of 2008 and reaching record highs on the Chicago futures market in May.
Then there are the estimates. The United Nations Food and Agriculture Organisation (FAO) puts the total cost of food imports from the world’s poorest countries in 2007 at 107 billion dollars, up by 25 per cent against 2006.
Finally, there is the guesswork. Just how high can oil prices go? The barrel price already topped the US$100 mark at the beginning of 2008. This represented a 72 per cent increase during 2007 alone, bringing equivalent increases in the cost of fertilisers and pesticides. Then there is the ‘biofuel effect’ – the desire of Europe and the United States in particular to develop these energy crops has created an alignment of food and oil prices.
The soaring food prices have hit fragile economies hard. Almost 40 countries now face a food crisis, including traditionally self-sufficient countries like the Côte d'Ivoire and exporting countries like Egypt. In Haiti, Bangladesh and Cameroon, citizens have taken to the streets to vent their anger. And we must not leave out Guinea, Ethiopia and Mauritania; or even Mexico, where the price for maize tortilla, their staple diet, rose by 14 per cent in 2006. Then there is Indonesia where rice prices doubled in a year.
Is it a temporary phenomenon?
“No”, say most experts. Some also stress that the present dramatic price increases follow 30 years of particularly low – even extremely low – prices on world markets. “The era of low food prices on the international market is over,” the European Development Commissioner, Louis Michel, declared in a statement at the European Parliament on 22 April. “Food prices will not return to their former levels and they threaten to become more volatile if measures are not taken quickly.” And although they are expected to drop back from present levels, “it will be a slight fall,” explained Marc Debois, Head of Sector, Natural Resources Unit at the European Commission Development Directorate-General. He added that “price volatility is likely to reach more frequent peaks, sort of like what we are seeing with the climate.”
Is there a food shortage?
No. In its report , ‘World agriculture: towards 2015-2030’, the FAO said that: “In recent years the fall in growth rates of world agricultural production and yields (…) has occurred not because of shortages of land or water, but rather because demand for agricultural products has slowed.” Why is this? According to the FAO, world population growth rates have started to decline but at the same time, “fairly high levels of food consumption per person are now being reached in many countries, beyond which further rises will be limited.” However, to this the FAO adds, “it is also the case that a stubbornly high share of the world’s population remains in absolute poverty and so lacks the necessary income to translate its needs into effective demand.”
In short, demand has peaked, either as a result of reaching saturation point – in the rich countries – or, more basically, because a sizeable share of the world’s population lacus the means to buy their daily bread. The FAO therefore expects the growth in worldwide demand for agricultural products, which was running at an average of 2.2per cent a year over the past 30 years, to fall to 1.5 per cent a year over the next 30 years. In the developing countries this slowdown will be even more dramatic – from 3.7 per cent to 2 per cent. This is partly because China will have moved out of the rapid growth phase for food products. However, that still leaves the “stubbornly high share” of the world’s population who lack the resources to buy food at a price that ultimately reflects the commercial practices of the major exporters. That is a price sufficiently low over the past 30 years to stifle local production, therefore forcing populations to become dependent on imports of basic products, but which is currently too high to allow them to buy this same food.
“Globalisation in food and agriculture holds promise as well as presenting problems,” says the FAO in its report.” It goes on to say “It has generally led to progress in reducing poverty in Asia.” But, it recognises “it has also led to the rise of multinational food companies with the potential to disempower farm workers in many countries.”
It concludes that “developing countries need legal and administrative frameworks to ward off the threats while reaping the benefits.” Today, the notion of food self-sufficiency is finally being regarded with the merit it deserves.
