News & CommentaryArchive
May 22, 2008
Silver Linings and Dark Clouds Surround the Food Crisis
It seems that everyone except for the US Congress has woken up to the food crisis. The topic has made the cover of The Economist and several other magazines, and is featured almost daily in major national newspapers. Most debate has now turned to the causes and solutions, if any, to the situation.
Stories this week in both the Washington Post and the New York Times point to the long-term downward trend in investing in agriculture in the developing world. Agriculture topped the development agenda for both public and private donors in the 1960’s and 1970’s—the Green Revolution in Asia may be private philanthropy’s greatest accomplishment. Since that time, the share of funds devoted to agricultural research and development has dropped dramatically—with blame shared by national foreign aid groups, multinational agencies like the World Bank and private foundations.
As both articles point out, the current situation is just one of the consequences of neglect in agriculture. Agricultural yields have plateaued as a result of a lack of research into improved varieties. This has contributed to the supply crunch. At the same time, many pests and diseases have adapted to the innovations of the 1970s and pose a significant threat, which may further reduce yields in the future. Norman Borlaug, generally known as the “father of the Green Revolution”, recently wrote in the New York Times about the growing threat to global wheat harvests from stem rust, a fungus that spreads rapidly and can reduce yields by more than 20 per cent. Similarly, the brown plant hopper and the leaf-folding moth have reemerged as a major threat to rice crops. Many weeds have also developed resistance to the most commonly used herbicides at the same time that there are no new options currently being developed.
Unfortunately none of the articles follow the causal chain back to the foolish domestic agricultural policies employed in the US and EU over the last 30 years. One of the main reasons that support for agriculture was scaled back was that there didn’t seem to be any need for agricultural aid. In the 80’s and 90’s the world was awash in cheap food because agricultural subsidies in the developed world encouraged dramatic overproduction. The overproduction was dumped on world markets in various forms, including food aid. In an environment of such overabundance it made no sense for individual farmers, governments, donor agencies or foundations to invest in increasing food production even more. These agricultural policies not only locked many developing world farmers into poverty, but they essentially hollowed out the world’s agricultural capacity. Today we find ourselves years away from being able to increase food production enough to make an impact on the current supply crunch—at the same time that we are at significant risk of increasing supply disruptions.
There are some silver linings. The recognition that the current food situation is not a temporary blip is encouraging renewed investment in the sector. The Financial Times reported last month that hedge funds are buying farmland and farming companies. A British fund, Emergent Asset Management, is raising a 1 Billion Euro fund to buy land in Sub-Saharan Africa, rightly believing that capital investment in farming in that region can generate incredible gains in yields. Other investors are pushing into farming-related commodities like potash, a key ingredient in fertilizer. Even China seems to be shifting some of its pursuit of foreign resources to the agricultural sector.
From a policy perspective, the silver lining is that both the EU and Japan have opened debates on changing some of the policies that have put us in such dire straits. The UK government is leading a charge in Brussels to radically change the structure of subsidies there. The British government, apparently with support from several other EU nations, argues that the current policy keeps highly inefficient farms in business which ultimately reducing market incentives to sustainably increase food production around the world. Japan, meanwhile, is debating opening its rice reserves to international sales—a reserve created to take rice off the market and thereby subsidize domestic rice production.
The biggest dark cloud hovers over Washington, DC this week, however, where the US Congress is preparing to overturn a presidential veto on a new farm bill. Apparently deaf, dumb and blind to the global food situation and to the systemic evils both at home and abroad created by American agricultural policy, a large majority in both the House of Representative and Senate voted for the 2008 farm bill. At a time when global food prices are at their highest in decades, the new farm bill will incomprehensibly increase subsidies to American farmers to do all the wrong things. If ever there was an example of the need for philanthropy to fund policy advocacy, the farm bill is it.