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Agribusiness vs. food security: The food crisis and
The food crisis has decisive implications for the
future role of international financial institutions - and is calling
into question the basis of their approach to development, argues the
Bretton Woods Project.
21st June 08 - Bretton Woods Project
The causes of and remedies for the food crisis are hotly contested; how
this rupture in the status quo is resolved will have decisive
implications for the roles of the IFIs as well as more broadly for
global food security and ecological sustainability.
The UN estimates that the recent food price increase will add 100
million to the over 850 million people who were already short of food.
The IFIs trace 15 per cent of the increase to higher energy and
fertilizer costs linked to skyrocketing oil prices, and another 15 - 30
per cent to the impact of biofuels. They have been silent on the role
of speculative financial capital, which Peter Rosset, researcher at the
Centro de Estudios para el Cambio en el Campo Mexicano, calls "one of
the most important" short-term causes. Other short-term factors include
record-low food stocks and severe weather events such as last year's
Commentators are agreed that food production, especially in many
developing countries, has failed to keep pace with rapidly growing
demand. One factor being blamed for this failure is a two-decade-long
across-the-board decline in support for investment in agricultural
productivity. Multilateral aid to African agriculture, for example,
fell from 32 per cent of total aid in 1981 to a mere seven per cent in
2001, as highlighted by the Bank's evaluation unit (see Update58).
US and EU food subsidies, combined with WTO and IFI pressure for import
liberalisation are being blamed by numerous NGOs, academics, and
southern governments for hurting countries' abilities to feed
themselves. Henk Hobbelink of NGO GRAIN said "many countries became
dependent on food imports, as local farmers could not compete with the
subsidised products from the North. This is one of the main factors in
the current food crisis, for which the IMF is directly to blame."
Indian UN ambassador Nirupam Sen blamed IFI advice encouraging
countries to shift from domestic food crops to cash crops for exports.
In a paper for the Nordic Africa Institute, Oxford University
researcher Deborah Bryceson describes the IFIs' approach as
"de-peasantization" - phasing out of a mode of production to make the
countryside a more receptive site for intensive capital accumulation.
Harvard University economist Dani Rodrik counterargues that the
retention of import restrictions would have lowered the global supply
of food, not raised it. He surmises that import protection would have
led global production to be reallocated "from efficient exporters to
inefficient importers". He concludes that "if you are for
self-sufficiency, you must be willing to live with high prices".
This reflects the complexity of the relationship between food prices,
the nature of development, and poverty reduction efforts. The latest
World Bank research by Maros and Will paints a mixed picture:
"short-run impacts of higher staple food prices on poverty differ
considerably by commodity and by country, but, poverty increases are
much more frequent, and larger, than poverty reductions". Other
analysts believe that in the longer-term, higher prices could begin to
benefit rural producers, slow the exodus of farmers from rural areas,
and improve environmental sustainability.
The World Bank has swiftly seized upon the crisis to broaden its
mandate. A $1.2 billion "rapid financing facility" has been created to
address immediate needs, including $200 million in grants targeted at
the poorest countries (grant operations have been approved for Haiti,
Djibouti and Liberia; operations are being processed for Togo,
Tajikistan and Yemen). This is not new money but has been re-allocated
from existing budgets.
The Bank is also working with the UN's Food and Agriculture
Organisation (FAO) to get seeds and fertilizers to those developing
countries where smallholder farmers could expand production this
season. The Bank says it will boost overall support - including loans,
grants and technical assistance - for agriculture to $6 billion next
year up from $4 billion. It also promises to launch new risk management
tools and crop insurance.
For its part, the IMF has doubled lending to four low-income countries
(Burkina Faso, the Kyrgyz Republic, Mali, and Niger), and is discussing
increases with another eleven. The Fund's board was to review in June a
proposal for improving the effectiveness of the Exogenous Shocks
Facility (ESF), a low-interest fund for low-income countries suffering
the painful short-term impacts of events beyond their control (see
Update 49). As with the Bank, it will be critical to monitor the
conditions that accompany these funds and the increased debt levels
Meanwhile, the IFIs have published a list of dos and don'ts for
developing country governments responding to the crisis. On the do
side: scaling up social safety nets; eliminating tariffs on key food
items; and the temporary use of subsidies on food items vital to the
poor and inputs for poor farmers such as fertilisers. The latter
recommendation represents a 180 degree shift from previous efforts to
eradicate the use of such subsidies in countries such as Malawi. On the
don't side are export controls, price controls and general subsidies.
The IFIs have proposed a package of medium-term measures including:
* doubling investment in research and
development over the next five years (conceding the inadequacies of the
global network of Consultative Group research centres);
* investing one per cent of sovereign
wealth fund (see Update 57) assets across Sub-Saharan African, some of
which may go towards agricultural productivity;
* easing bio-fuel subsidies;
* completing the Doha trade round; and
* a 'green revolution' for Africa - the
Bank is considering joining the Alliance for the Green Revolution in
Africa, a body that is funded jointly by the Melinda and Bill Gates
Foundation and the Rockefeller Foundation.
While most civil society organisations would agree both on the need for
increased investment in research and the need to end bio-fuel
subsidies, that is where the similarities end. NGO Institute for
Agriculture and Trade Policy insists that the Doha round would lead
both to increased dependency of poor countries on food imports, and
increased volatility in food prices.
There is also enormous skepticism about the benefits of the current
agribusiness model. The International Assessment of Agricultural
Knowledge, Science and Technology for Development (IAASTD), a
three-year high-level exercise, came under "enormous pressure"
according to one high-level insider to conform with the findings of the
Bank's World Development Report on agriculture (see Update 58). In
contrast to the WDR, the IAASTD emphasises food security, environmental
sustainability, and traditional knowledge. It criticises trade
liberalisation for undermining the agricultural sector and stresses the
need to "preserve national policy flexibility".
La Via Campesina, an international peasant movement, proposes replacing
the current model with one based on the notion of food sovereignty -
the right of a country to determine its production and consumption of
food and the exemption of agriculture from global trade regimes. They
are one of the signatories to a global civil society statement on the
world food emergency. It calls for: the UN Human Rights Council and the
International Court of Justice to investigate the contribution of
agribusiness to violations of the right to food; the establishment of a
UN Commission on food production, consumption and trade; and the
restructuring of multilateral organisations involved in food aid and
agriculture, including the World Bank.