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	The 21st Century Bleak Harvest by Asif Mehdi Al Jazeera - English Qatar   Feb 2009   As the world staggers from one economic crisis to another, it seems easy to forget the global food crisis that occupied centre stage in 2008. World prices for essential grains more than doubled between 2006 and 2008.   Rice, the staple food of most of Asia, doubled in price in just seven months. And, despite their commitments to trade liberalisation, a few significant grain-exporting developing countries rushed to protect domestic grain stocks by banning exports.   The poor, who typically spendup to 70 per cent of their meagre incomes on food, were most affected by the crisis.   According to the United Nations Food and Agriculture Organisation, the food crisis raised the number of undernourished people from 923 million to more than one billion by this year.   In late 2007 and 2008, the crisis caused food riots in at least 30 countries across the world, from Brazil to Bangladesh, and international media and forums spoke of little else. Then, as suddenly as it struck, declining prices relegated the food crisis to collective global amnesia.   However, while prices for grains and foods have declined in 2009, they are still higher than pre-crisis levels and the fundamental causes of their volatility have not disappeared. The international economic system has witnessed a dramatic disbanding of trade and investment barriers.   However, the international market for agricultural commodities, the nature of industrial agriculture, changing consumption patterns and international finance all threaten to make food price volatility and food insecurity a recurrent feature of the early 21st century.   Agriculture offers a textbook case of international market distortion. And in this case, the market distortion is created by precisely the developed countries that extol the virtues of free markets. The developed world protects its domestic agriculture with any number of subsidies and technical barriers to trade.   In 2006, for example, the Organisation for Economic Co-operation and Development (OECD) estimated that agricultural subsidies in OECD member countries were about $230bn.   In contrast to the magnitude of those subsidies, Official Development Assistance from OECD member states amounted to $120bn (the US alone had a military budget of $600bn in 2007).   The agricultural subsidies cover a host of measures - from domestic price support, to compensation to farmers for maintaining fallow land, to export price subsidies to dumping, some of which is disguised as food aid.   Paradoxically, international trade negotiations and, more importantly, International Monetary Fund (IMF) lending conditions expect developing countries to remove agricultural subsidies and liberalise domestic markets to imported foods.   While these measures allow for the increased availability of food, they have also eroded domestic agriculture and impoverished the rural economy, often in the most economically fragile states.   It was not surprising that the most impoverished countries were unable to meet the international price surge with increased domestic production, or the release of buffer stocks of staple food commodities.   In fact, those countries became ever more aid dependent as governments struggled to find the resources to pay the bills for imported food (and fuel), in the face of sharpened threats of hunger and undernourishment.   The opening of developing country markets does not benefit the average farmer in the developed world. The international agricultural industry is dominated by a few grain, seed, chemicals and oil companies.   Such is their market power that three companies control the global grain trade and one company controls 60 per cent of seed production.   The grain trading conglomerates have unchecked market power to hoard and influence world prices. Seed companies have employed breakthroughs in biotechnology to produce seeds that are compatible only with certain brands of pesticide or supply patented terminator seeds which germinate just once, and therefore the seed from a harvest cannot be used to grow a second crop.   This last feature of the seed business ensures a seed serfdom for the farmer, who cannot set aside part of the harvest for replanting. It is no wonder, then, that the profits of the grain traders soared to astronomical heights in 2007, in one case up by 60 per cent over the previous year.   And it is no wonder that small farmers are bankrupted by one crop failure because of their inability to afford to buy or finance the procurement of seed for a new crop.   The other facet of industrialised agriculture is its energy intensity and reliance on hydrocarbon resources, whether as fertiliser or as fuel.   During the heyday of the Green Revolution, one study noted that between 1945 and 1994 US energy input for agriculture increased four-fold while crop yields only increased three-fold. Since then, energy input has continued to increase without a corresponding increase in crop yield.   Barring a breakthrough in seed technology, industrial agriculture has reached a point of diminishing marginal returns from energy usage.   In addition, the fact that oil resource availability has peaked suggests that oil prices will be on a long-term increase, thereby increasing the costs of food production.   Given the nature of the financial crisis in developed countries, it is highly doubtful that governments will have the fiscal resources to increase subsidies to the agricultural sector, in order to contain the increase in prices.   For the developing world, fiscal constraints on governments and the likely drying up of development assistance will have the same impact.   The recent movement in the developed world to produce bio-fuels is yet another factor propelling the price of grains. A World Bank study, prepared in April 2008, pointed out that a third of US corn production goes to produce ethanol and half the vegetable oils produced in the EU to the production of biodiesel.   This diversion from food to fuel is subsidised extensively, while imports from Brazil (which has had the longest standing and most extensive bio ethanol production) are subjected to tariff barriers that effectively prohibit imports of Brazilian ethanol into these markets.   Commodity speculators, seeing the potential from increased demand for grains in these subsidised programmes, drove up futures commodity prices which in turn raised current prices in grain markets.   The same World Bank study contends that 75 per cent of the food price increase was due to bio-fuels, a figure hotly contested by the Bush administration at the time.   An International Food Policy Research Institute study asserts that the effect was somewhat less, at 30 per cent of the food price increase.   The financial crisis in itself was a cause for the food price hike. While prices rose steadily through 2006 and 2007, the latter half of 2008 saw a sharp increase in prices, in a so-called price spike.   However, little had changed in the fundamental conditions of supply or demand to cause such dramatic market adjustments.   By now it is clearly evident that as the unregulated and complex financial sector of the US was facing the unfolding effects of the real estate bubble, trillions of dollars moved across sectors and spaces and invested in food and primary commodities, causing another price bubble, this time of an altogether more serious consequence.   The simultaneous inflation of oil and food futures caused cost increases in the production of food while inflating its trading prices at the same time.   It seems that finance had run out of opportunities for profit, so it turned to the earth as a means of generating speculative profit, whether through real estate or primary commodities and food.   As the more recent financial crisis has shown, there is no regulatory capacity to stop such profiteering from reoccurring. These are the difficult prospects and consequences of a world run by the ideology of the rich and powerful.   There are development lessons to be learned here. First, food security is an issue requiring long-term international effort and food security demands that local agriculture be able to supply domestic needs wherever possible and that reserve stocks are garnered for difficult times.   Second, the developing nations are justified in holding out in the Doha Round of trade negotiations until real and tangible concessions are made with regard to trade in agricultural products.   Third, national development efforts need to be replenished with such "old fashioned" endeavours as investing in rural production, water availability and the empowerment of the small farmer.   Economic history shows us that industrialisation was preceded by agricultural transformations, with the state playing a heavy role. And economic history is a better guide to policy than the theorising of free marketers serving powerful corporate interests.   * Asif Mehdi works in international development with an international intergovernmental organisation and has worked extensively in Asia and Africa during his 29-year career as a development practitioner.
	Total Reform of Global Food System Urged by Ida Wahlstrom, OneWorld US   Hundreds of millions more people may yet fall victim to hunger due to a global food system badly in need of repair, said international humanitarian groups at a high-level conference on the food crisis this week in Madrid.   As officials from about 100 countries gathered for the UN-sponsored meeting, groups representing small farmers and providing aid to hungry people pointed out that the current system of producing and distributing food has not met the needs of 1 billion people who continue to face hunger each day.   Small farmers and social movements from around the world - not transnational companies and financial institutions - must be at the heart a new global food system, stated GRAIN, an international non-governmental organization that advocates for sustainable and community-based agriculture.   GRAIN was particularly alarmed by the marginalization of small farmers, who produce the majority of the world"s food, at the summit meeting.   The High Level Conference on Food Security in Madrid excluded the main stakeholders in the debate on the food crisis from meaningful participation. It is a forum dominated by the World Bank, IMF (International Monetary Fund), and WTO (World Trade Organization), as well as transnational companies such as Monsanto, and it is an outrage that they are given space on the panels of discussion while representatives of 450 million small farmers - who produce 80 percent of the world"s food - are left only a few minutes on the floor to give their position.   International agricultural policy has been dominated by the policies of these international institutions for the last 30 years, and in spite of their pledges to halve hunger by 2015 through the Millennium Development Goals it has continued to increase worldwide, reaching over 1 billion people this year. The policies of these various institutions and transnational companies have completely failed; it is time to implement the alternative -- food sovereignty.   Oxfam International warned this week that the long-term hunger outlook for many families remains grim despite recent dips in food prices. "Decades of underinvestment in agriculture coupled with the increasing threat of climate change mean that despite recent price falls, future food security is by no means guaranteed, and in fact the situation could get worse," said Oxfam on the opening day of the UN conference.   Two new reports, by Oxfam ("A Billion Hungry People") and the British think tank Chatham House ("The Feeding of the Nine Billion"), detail the severity of the ongoing hunger crisis and urge politicians and representatives from the private sector and civil society to collaborate in search of an effective solution.   According to Oxfam: Although global food prices have fallen in the last few months, they are not back to previous levels, and are likely to rise sharply again in the future. Furthermore, price volatility itself is a problem, and more needs to be done to address the underlying structural issues that cause the chronic hunger affecting 1 in 6 people in the world today....   Current severe food shortages in Afghanistan, Ethiopia, Kenya, Mozambique, and Zimbabwe are evidence that the global food crisis is far from over. Even before recent price rises, there were over 850 million people classified as undernourished. Now, there are nearly a billion, as a result of the price rises, alongside other factors such as political instability and conflict.   "Not enough has been done to tackle the situation. There is a lack of coordination at all levels and the opportunity for root and branch reform of the aid system has not yet been taken. International institutions and donors must reverse decades of under-investment in agriculture and scrap blatantly distortionary polices such as biofuels mandates that make things worse," said [Carlos Galian, agricultural policy expert at Oxfam].   Oxfam"s "A Billion Hungry People" includes recommendations for reform of the humanitarian aid system and makes a strident call to poor countries to do their bit by investing more in agriculture, targeting women and small-scale producers. Developing countries must increase social protection measures for vulnerable populations - including cash payments and employment creation programs for those at risk of hunger. Rich countries must ensure long-term predictable funding to developing countries for investment in agriculture and climate change adaptation.   The summit has also heard calls for reforming the 40-year-old treaty that governs the processes for distributing food aid to needy countries, reports the humanitarian news agency IRIN:   The treaty, the Food Aid Convention (FAC), first signed in 1967, does not ensure that aid will get to the neediest countries, or that it will be of the right kind, or that it will be made available at the right time, said Frederic Mousseau, policy advisor at Oxfam Great Britain, which called for reforms to the treaty.   The Convention operates under the auspices of the International Grains Council (IGC), a trade promotion body, and is "managed by a club of exporters serving the commercial concerns of cereal-exporting countries, rather than fighting hunger in poor countries," Mousseau stated. The FAC commits donors to providing 5 million metric tons of food per year, but "this figure was last revised in 1999," Mousseau pointed out.   Mousseau said the underlying problem was that food aid remained tied to the World Trade Organization (WTO) Agreement on Agriculture. "We need to separate the two."   Christopher Barrett, who teaches development economics at Cornell University, and another leading food aid expert, Daniel Maxwell, associate professor at the Friedman School of Nutrition Science and Policy at the Boston-based Tufts University, suggested a Global Food Aid Compact (GFAC) to replace the FAC. "The GFAC would encompass all stakeholders in food aid, not just the major donors, as is the case with the present FAC," he told IRIN.   "It would couple monitoring with enforcement, through a link with the WTO Agreement on Agriculture and the WTO"s Dispute Resolution Mechanism. Importantly, it would incorporate explicit codes of conduct for all parties: donor countries, recipient countries, and operational."   Medecins sans Frontieres (MSF) warned last week that food aid donors must reconsider the kinds of food they"re providing to hungry children around the world. The medical aid group noted before the summit began that if those assembled failed to produce a concrete implementation and funding plan focused specifically on nutrition, "55 million children under five will continue to face potential life-threatening malnutrition."   MSF added: While global prices for basic food commodities have fallen back to 2006 levels, childhood malnutrition -- caused by the lack of foods rich in nutrients, vitamins, and minerals - continues to claim the lives of almost 10,000 children every day.   "National governments, donors, and the World Health Organization need to urgently put new policies and funding in place to implement new food aid standards," said Olivier Longué, executive director from ACF (Action Agianst Hunger) Spain. "We cannot continue to provide food aid that we would not give to our own children."   * For more details visit the link below. Visit the related web page
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