July 24th, 2008

What’s Behind the Global Food Crisis?

How Trade Policy Undermined Africa’s Food Self-Sufficiency

Introductio

The 2008 global food crisis is compromising the survival of 860 million undernourished people and threatens to push a hundred million people into extreme poverty, erasing all of the gains made in eradicating poverty in the last decade. Record high prices have put food out of reach for the poorest people in the developing world, many of whom already spend more than half their income on food. Growing food insecurity is undermining tenuous civil stability in at least 33 countries, about one sixth of United Nations member countries.

Read the full report.

Real food prices are at near-record highs — and are approaching the levels of the food crisis of the early 1970s. The UN’s Food and Agriculture Organization reports that grain prices jumped 88 percent between March 2007 and March 2008. Currently, high agricultural production costs, tight commodity supplies and increased demand have all contributed to food price escalation. All-time high oil prices increase fuel costs for freighters and farm equipment. Unusually poor weather conditions have undercut rice and grain production in Australia, Northern Europe, Central Asia and America’s wheat belt. The growing diversion of food crops to produce biofuel and increased demand in booming economies have helped drive up commodity prices.

But rising production costs are not the only culprits in the food crisis. The globalization model that prioritizes cash crop exports over food self-sufficiency has helped make Africa and other developing regions vulnerable to volatile global food prices.

In the last dozen years, the World Bank and the World Trade Organization encouraged developing countries to switch from growing food for domestic markets to growing cash crops for export to industrial countries. Traditional African food crops like sorghum, cassava, yams and millet are not traded internationally, so they typically were ignored by international agribusinesses and globalization proponents. Instead, farmers were encouraged to grow crops like coffee, sugar, cocoa beans, tea and cotton and then use the export earnings to purchase food, often low-priced imports from industrial countries. Globalization cheerleaders viewed food self-sufficiency as obsolete. Although imported food benefited consumers in the developing world when prices were low, local farmers were often displaced by low-priced imports. Now that imported food prices are rising, consumers cannot afford sustenance and there is too little local production to provide food for local markets in many countries.

While the WTO ostensibly offered “carrots” to entice countries to transition to export-oriented agriculture, the World Bank used its power as a stick. The WTO promised increased access to markets in rich countries, encouraging farmers in the developing world to shift to tradeable agricultural commodities instead of local food staples. At the same time, the World Bank invested in cash-crop enterprises in the developing world while it pressed developing countries to eliminate government programs supporting domestic agriculture, ultimately reducing the productivity of the food staple sector.

The shift to export-oriented agriculture has contributed to developing country dependence on imports of staple crops like corn, wheat and rice. Africa is at ground zero in the global food crisis in no small part because resources were diverted from food crop production to cash crop investments. About half (40 of 82) of the countries designated low-income food deficit countries by the FAO are in Africa. Africa is now more reliant on food imports than before the WTO went into effect, and food imports are more expensive than ever.