Reversed trend in agricultural markets threatens the needy
The number of hungry in the world is on the rise once more. Millions in poor countries can no longer afford to buy enough food. Nor can they hope for as much food from aid agencies, because the helpers themselves are hit by the price hikes. The UN World Food Programme (WFP), for example, recently reported that it will need around € 330 million over and above its budget for 2008. Without the extra money, rations may have to be cut, or some relief programmes stopped. Overall, WFP Director Josette Sheeran estimates that food prices have climbed by 40 % since the middle of 2007. According to the UN Food and Agriculture Organisation (FAO), 37 countries currently depend on food aid.
Food stocks are dwindling worldwide. Last year, according to the FAO, they reached an all-time low. In the case of key food crops like wheat, maize and rice, consumption has been exceeding production for years. Many countries are already starting to introduce rationing. India, for example, has largely banned the export of rice.
The turnaround in world markets is due to trends that are likely to continue. The one with the biggest impact is driven by thirst for energy, especially in the advanced world. Vast amounts of farmland are being taken out of food production to grow maize, sugarcane, rapeseed and other crops for biofuel. Brazil has spearheaded energy farming for decades; in recent years, the United States and Europe have followed suit. The International Grains Council estimates that a total of around 100 million metric tons of grain was consumed last year to produce fuel worldwide. In developing countries today, says Wolfgang Hees of the Catholic charity Caritas International, the most fertile land is often used to grow energy crops. Food for the local communities is grown on poorer soils.
Another cause of rising prices is the increased demand for meat in emerging markets, where affluence is growing. Global meat consumption has doubled in the last 25 years. The area of land needed to produce animal feeds has expanded accordingly. Producing a kilo of pork takes three kilos of grain; a kilo of beef requires seven. China has become a major food importer. India also has a growing prosperous middle class and has thus become an expanding market for high-quality food.
The situation has been further aggravated by failed harvests in Australia due to drought. Experts consider this a consequence of climate change, which is making harvests less reliable in many parts of the world. Another area affected is Sub-Saharan Africa, the poorest region on the planet.
The trend towards high prices is likely to continue because there is little scope for increasing harvests in the short and medium term. Most of the land suitable for agriculture is already being farmed, and the extent to which production can be intensified is limited.
Food-price inflation is a serious setback in the fight for the UN Millennium Goal of halving hunger in the world by 2015. In its 2006 Millennium Development Report, the United Nations had stated that progress had been made, but not on a sufficient scale to reduce the number of people malnourished as intended. According to the WFP, those worst affected are small farmers and the landless in rural areas – but urban poverty is growing too.
Does the present development at least give small farmers a chance to get a reasonable price for their produce? Many non-governmental organisations in the past have complained about subsidised cheap exports from developed countries putting small farmers in Asia, Africa and Latin America out of business and destroying their markets. If there are no more farming subsidies, such exports should really become a thing of the past.
Nonetheless, relief agencies are skeptical about new opportunities arising for small farmers in developing countries now. While some small farmers may indeed find better markets for their products, many have given up their land and live on aid they can no longer rely on, Caritas International’s Wolfgang Hees argues. Moreover, he says, any scope for expanding production is severely curtailed by rising prices for fuel, fertiliser and other essentials.
Wilhelm Thees of Misereor, a catholic agency, does see some new chances for African countries whose governments have acted on the need to improve transport infrastructures and have not relied too heavily on world market products like cotton. But as Carolin Callenius of Brot für die Welt, a charity of German Protestants, adds, production in those countries cannot be stepped up fast. Where traditional structures have been destroyed, it takes time to rebuild them.