Cambridge, Mass: Will the food
crisis that is menacing the lives of millions ease up - or grow worse
over time? The answer may be both. The recent rise in food prices has
largely been caused by temporary problems like drought in Australia,
Ukraine and elsewhere.
Though the need for huge rescue operations is urgent, the present acute
crisis will eventually end. But underlying it is a basic problem that
will only intensify unless we recognise it and try to remedy it.
It is a tale of two peoples. In one version of the story, a country
with a lot of poor people suddenly experiences fast economic expansion,
but only half of the people share in the new prosperity. The favoured
ones spend a lot of their new income on food, and unless supply expands
very quickly, prices shoot up. The rest of the poor now face higher
food prices but no greater income, and begin to starve. Tragedies like
this happen repeatedly in the world.
A stark example is the Bengal famine of 1943, during the last days of
the British rule in India. The poor who lived in cities experienced
rapidly rising incomes, especially in Calcutta, where huge expenditures
for the war against Japan caused a boom that quadrupled food prices.
The rural poor faced these skyrocketing prices with little increase in
income.
Misdirected government policy worsened the division. The British rulers
were determined to prevent urban discontent during the war, so the
government bought food in the villages and sold it, heavily subsidised,
in the cities, a move that increased rural food prices even further.
Low earners in the villages starved. Two million to three million
people died in that famine and its aftermath.
Much discussion is rightly devoted to the division between haves and
have-nots in the global economy, but the world's poor are themselves
divided between those who are experiencing high growth and those who
are not. The rapid economic expansion in countries like China, India
and Vietnam tends to sharply increase the demand for food. This is, of
course, an excellent thing in itself, and if these countries could
manage to reduce their unequal internal sharing of growth, even those
left behind there would eat much better.
But the same growth also puts pressure on global food markets -
sometimes through increased imports, but also through restrictions or
bans on exports to moderate the rise in food prices at home, as has
happened recently in countries like India, China, Vietnam and
Argentina. Those hit particularly hard have been the poor, especially
in Africa.
There is also a high-tech version of the tale of two peoples.
Agricultural crops like corn and soybeans can be used for making
ethanol for motor fuel. So the stomachs of the hungry must also compete
with fuel tanks.
Misdirected government policy plays a part here, too. In 2005, the
United States Congress began to require widespread use of ethanol in
motor fuels. This law combined with a subsidy for this use has created
a flourishing corn market in the United States, but has also diverted
agricultural resources from food to fuel. This makes it even harder for
the hungry stomachs to compete.
Ethanol use does little to prevent global warming and environmental
deterioration, and clear-headed policy reforms could be urgently
carried out, if American politics would permit it. Ethanol use could be
curtailed, rather than being subsidised and enforced.
The global food problem is not being caused by a falling trend in world
production, or for that matter in food output per person (this is often
asserted without much evidence). It is the result of accelerating
demand. However, a demand-induced problem also calls for rapid
expansion in food production, which can be done through more global
cooperation.
While population growth accounts for only a modest part of the growing
demand for food, it can contribute to global warming, and long-term
climate change can threaten agriculture. Happily, population growth is
already slowing and there is overwhelming evidence that women's
empowerment (including expansion of schooling for girls) can rapidly
reduce it even further.
What is most challenging is to find effective policies to deal with the
consequences of extremely asymmetric expansion of the global economy.
Domestic economic reforms are badly needed in many slow-growth
countries, but there is also a big need for more global cooperation and
assistance. The first task is to understand the nature of the problem.
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