Food crisis: different tune

The World Food Programme, the food aid arm of the United Nations, is the canary in the coal mine. It alerts the world to clear and localised food crises -- and harvests that fail because of war, drought or the folly of authoritarian leaders (such as North Korea's Kim Jong Il and Zimbabwe's Robert Mugabe). This week's World Food Security summit in Rome will acknowledge that this crisis is different.

The food scare of 2008 mainly reflects changes in demand, not the disruption of supply. The middle-class in China and India have developed a taste for grain and meat as they have grown rich. Greed and irrational exuberance have also played a part. Rising oil prices encourage biofuel production from maize and other crops; fat US government subsidies for doing so are a further incentive. Institutional investors who aim to maintain long positions in soft markets also reinforce agricultural prices. These demand shifts have not been matched by comparable changes down on the farm.

A threat to world food security emerged in the 1960s, but was staved off by the intensification of wheat and rice cultivation in Asia -- the 'green revolution'. This new threat may be harder to shake. Agriculture has entered a potentially unsustainable and politically risky period in several countries simultaneously. Rice prices have doubled, causing food riots to erupt in Niger, Senegal, Cameroon, Burkina Faso and Ivory Coast. The Cambodian government has called for calm. Similar worries exist in the Philippines, foreseeing severe rice shortage. Violent food demonstrations in Haiti have left people dead, and kicked Prime Minister Jacques Edouard Alexis out of office.

The most vulnerable

The first priority is helping those who are most vulnerable: the urban poor in food-importing countries. Even a moderate increase in food prices clobbers low-income households, because the poorest people spend 50-60% of their income on food. Poor people living in rural areas are partly shielded from the loss of real income as food prices rise, because they can increase their own food production. This is not so for the poor in urban areas: in many developing countries, roughly half the population is now urbanised.

A report by the UN Food and Agricultural Organization (FAO) lists 22 countries that are particularly vulnerable due to a combination of high levels of chronic hunger -- more than 30% undernourishment -- and being net importers of both food and fuel. Countries such as Eritrea, Niger, Comoros, Haiti and Liberia are particularly affected.

Boosting agriculture

This week's summit will call for national governments and international agencies to increase investment in the agricultural sector, focusing more on irrigation, rural roads, research, clean drinking water and education, and reversing past relative neglect from agencies such as the World Bank. Obstacles to international trade in foodstuffs could also be removed. This includes the long-standing European and US restriction of access for certain agricultural products, which should have been negotiated away in the now-stalled WTO Doha round. It also includes trade restrictions that many developing countries have inflicted on each other. Policies promoting the production of biofuels could be re-examined.

Yet there is feeling the world has missed a trick.  High food prices also represent an excellent opportunity for increased investment in agriculture by both the public and private sectors to stimulate production and productivity. Some governments have softened the impact of price rises on domestic markets, imposing price controls, consumer subsidies, export restrictions or lower tariffs. Yet the high food prices would have incentivised farmers to grow more food.

A silver lining? 

History tells us that the food crisis may not be intractable. Until the late eighteenth century, Western countries were in a similar situation. Economist Thomas Malthus argued that population pressures would limit food consumption per person to the level of bare subsistence. Yet tilling the huge swathes of uncultivated land in the Americas and Antipodes allowed Western countries to escape this Malthusian trap while they industrialised.

A recent study by the FAO suggests that, despite many reports to the contrary, growing additional food to meet increasing future demand should be possible. Millions of hectares of land lie fallow or are under-utilised in areas such as central Asia, Africa and South America.

As the rate of population increase appears to have peaked, and the proportion of the world's population consuming less than the minimum amount of food needed for health has been trending down, the increase in demand may plateau. Research aimed at producing renewable energy from weeds grown on land unsuitable for food production is also intensifying. The price of many commodities should stabilise, and perhaps even fall in the medium term. Yet the transition to the new equilibrium will prove costly, prolonged and painful.