Averting tomorrow's global food crisis

4 November 2011

Almost twelve million people are in desperate need of food in the Horn of Africa. The severe drought has undoubtedly led to the huge scale of this disaster, but this is not, at its root, an issue of weather. This drought has only come on top of a deeper crisis of poverty, conflict and marginalisation. The resulting food crisis is an extreme example of our broken global food system. In 2011, the number of hungry people may pass the one billion mark again, where it last peaked in the food crisis in 2008. The crisis in the Horn of Africa is a wake-up call for decision-makers to save lives, not only by funding a swift humanitarian response but also by addressing the root causes of food insecurity globally.

The challenge

We are sleepwalking into a global disaster as the current broken food system is collapsing. The food system is buckling under intense pressure from climate change, ecological degradation, population growth, rising energy prices, rising demand for meat and dairy, and competition for land from biofuels, industry and urbanisation. As a result, food prices are forecast to more than double by 2030. Flat-lining yields and depletion of natural resources means that meeting the growing food demand will be increasingly challenging. Inequalities will be exacerbated further as natural resources are squeezed. People without the incomes, savings, or social insurance enjoyed in industrialised countries, will be the first to suffer from the continued fragility of the food system and external shocks.

Yet, this disaster can be avoided if governments take urgent measures to transform our global food system. Three big shifts are needed. Firstly, international leaders need to agree on a new global governance to help avert food crises, promote food security and reverse damaging policies which are making the situation worse. Secondly, small-scale food producers should be a priority for investment, which will contribute to increasing productivity, poverty reduction and resilience in developing countries. Last but not least, reaching a fair global deal on climate change, including support for developing countries to adapt to a changing climate, will pave the way for a more sustainable and ecological future.

This article will focus mainly on the reforms that are needed in the field of agricultural trade policies and particularly in improving international governance for a food secure world.

Reforming agricultural trade policies

Trade rules remain unfair and driven by national vested interests. Big players like Europe should ensure that their trade policy does not undermine the right of poor countries to regulate their own economy. Free Trade Agreements between developed and developing countries must respect the right to food. It is essential that developing countries have the right to use tariffs and other trade policy instruments to protect small-scale food producers and local markets against unfair and ruinous competition from over-subsidized agricultural products from the EU and other rich countries. Two kneejerk trade policy reactions have come up in response to recent food price volatility, making the situation worse rather than better.

Export restrictions inflate food prices even more

At the height of the food price crisis in 2008, big food producers resorted to imposing export restrictions on key commodities such as wheat (Russia) and rice (India), with food prices spiraling further as a result. To reduce the risk of global zero-sum games and food price hikes arising from governments panic-buying and hording on food commodity markets, current global rules on food export restrictions should be revised. While quantitative restrictions are forbidden under the General Agreement on Tariffs and Trade (GATT) of the World Trade Organization (WTO), in practice they are often vaguely worded and untested exemption clauses allow countries to impose them whenever they like. Improving international trade rules will take time but major food exporters should publicly commit to refrain from imposing sudden export bans, and exempt humanitarian aid from any such bans.

Northern agricultural subsidies make global food security worse, not better

While agricultural subsidies in the North have been around for a very long time, they recently have been justified as a way to help meet the global food production challenges. But that is just dressing up wolves in sheep's clothing. Food needs to be produced in developing countries, where food insecurity exists, and by smallholder farming families.

Where agricultural subsidies distort trade - by restricting market access or by incentivizing over-production and dumping - they directly undermine the development of resilient agricultural sectors in poor countries. Small-scale farmers in poor countries have been driven out of their own markets due to artificially cheap food imports and people in those countries have become increasingly exposed to highly volatile food prices. To prevent subsidised exports competing with local agricultural production in poor countries, the EU should strive to eliminate their remaining export subsidies, and quotas should strictly match European market demand in order to avoid overproduction and dumping. Current proposals to reform the European Common Agricultural Policy by 2013 do not pass that test.

A new international governance to achieve food security

Agricultural trade policies are only a part of what is needed to achieve food security worldwide. The multitude of challenges facing the world food system require new and multiple responses. Today's international system - fragmented, ad hoc, low on legitimacy, and high on gaps and friction between governments and institutions - is not yet up to the task of co-ordinating and delivering a more just, resilient and sustainable globalisation. Three reforms of international governance are needed.

First, building a system of food reserves, at local, national, regional and multilateral levels, will help cope with situations of food price volatility. It will restore confidence in commodity markets and allow for the provision of sufficient food in case of emergencies. To address previous criticisms, the institutional capacity, accountability and transparency of food reserves must be enhanced and a "rule-based" management approach implemented.

Second, governments ought to financially and politically support the UN's Committee on World Food Security (CFS) in order for it to become the main forum for negotiating food security measures internationally. The CFS is the only space which encompasses all governments, civil society, international institutions, and the private sector. Doing so will enable governments to act collectively in the global interest, will reduce risks, build trust and ultimately help save lives.

Finally, damaging policies that contribute to the food price crisis need to be tackled urgently. Excessive speculation on agricultural commodity derivatives should be curbed, by imposing price and position limits as well as by increasing transparency in the markets. Europe, as one of the main centres where such trading is taking place, should use upcoming processes, such as the review of the Markets in Financial Instruments Directive, to rein in damaging speculative activity. Similarly, biofuel mandates in rich countries should be abolished, as evidence is now firmly established, including by international bodies like the World Bank and the Organisation for Economic Co-operation and Development (OECD), that they are a major cause of food price volatility.

Preparing for the future

It is clear that any progress made in the fight against hunger will be wiped out if no action is taken on climate change. Research conducted for Oxfam finds that climate change alone will account for half of the doubling in food prices of important food staples by 2030 through devastation of harvests and reducing yields. As part of a food security strategy, governments need to act urgently to cut greenhouse gas emissions and help developing countries with the finance needed to develop in climate friendly ways and increase resilience to climate change, including for smallholder farming communities. The world needs to prepare for a situation that is likely to increase resource scarcity and volatility.

A key question is: who will sustainably generate the products needed to feed a growing population and how can this be done in ways which respect the carbon and other resource constraints? The question has often led to a polarised debate between advocates of large-scale commercial agriculture and those who support small-scale self-sufficiency. As far as agriculture is concerned, it is not the case that ‘big is beautiful' nor is it that ‘big is bad'. However, exporting the Brazilian model of large-scale farming to Africa combines bad economics with a detachment from social reality. For instance, in the absence of an unprecedented and implausible level of job creation in urban centres, a single large-scale farm imported from Brazil into Tanzania could displace 12,500 small-holder farms resulting in a dramatic increase in poverty, rural hunger and urban slums.

The huge untapped potential to increase yields among small-holder farmers is where the real opportunity lies. Investing in small-holder food producers, particularly women, will boost income and food availability in hunger hotspots, while building resilience against future shocks.

The food crisis in 2008 has sparked a renewed interest in investment in agriculture, from donors, country governments and the private sector. But a real sea-change is needed in the level and nature of support, ensuring that the opportunities of small-holder agriculture are realised, and that national and international policy frameworks governing land and natural resources deliver social and environmental returns.

An age of crisis: Seizing the opportunity

Historically, crises have led to systemic changes. The current crisis is a unique opportunity to change the system as it is collapsing. Both in key international fora and at home, governments need to drive the required step change, in order to transform the broken food system as well as to shift from an age of competition to strengthened cooperation whereby the well-being of the many is put before the interests of the few. The crisis in the Horn of Africa is a deadly reminder that measures need to be taken urgently, to fix the broken food system and make sure that this will be the last avoidable crisis.

Authors:

Marc-Olivier Herman and Lies Craeynest are policy advisors at Oxfam's EU Advocacy Office, in Brussels, working on food security and climate change. Laetitia Tremel works as a policy assistant in the same office.

A broken food system and environmental crises are now reversing decades of progress against hunger according to new Oxfam analysis. Spiraling food prices and endless cycles of regional food crises will create millions more hungry people unless we transform the way we grow and share food. On June 1st 2011, Oxfam has launched a new global campaign "GROW", to ensure everyone has enough to eat, always.

More information on Oxfam's GROW campaign: www.oxfam.org/grow

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