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Food security is back as a public issue. Worldwide, the issues are alarming for consumers, but they also hold the promise of higher rewards for producers. Prices of foodstuffs have risen 80 per cent over the last two years; rice is at a 19-year high, wheat is at a 28-year high, and global food stocks are low. One would expect farmers to have benefited from these high prices already, but paradoxically, poverty continues to prevail in rural areas in Asia, where some 70 per cent of the poor derive their living from agriculture.
The World Bank has recently warned that 33 countries run the risk of social unrest. China, Viet Nam and India have cut exports, while Indonesia has lowered its tariffs on imports. Kazakhstan, a major wheat exporting country, has increased its export tariffs. In many other countries, high food prices are the main contributing factor to current high inflation, spreading its effect in the wider economy. The wider global economy, though fed by high growth in China and India, is not free from shocks. The US is in recession, while many banks worldwide are still counting their losses from the US mortgage bubble.
We witness a truly unique event in the global economy. The long decline of prices for agriculture seems to have come to an end. Apparently the global food economy is now supply constrained, and World Bank president Zoellick has rightly made a plea for concerted action, indicating that a sustainable solution is outside the scope of individual countries. He points to a host of factors that have led to the current crisis: the use of maize for biofuel, peaking energy prices leading to higher costs of production, and population growth. Erratic weather patterns also have a profound influence. But there is one factor that should be mentioned as the main structural reason for global food shortages: the lack of assertive and rational agricultural and rural development policies, and the lack of investment in agriculture and its surrounding services. This was the carrying message of the World Development Report of 2008.
What can countries do? Very simple - in theory. Invest in agriculture, rural infrastructure including irrigation, education and health, and harmonize trade policies and tariffs applying to foodstuffs. And design and conduct research and development programmes, and use the results. But the effects of these interventions will only be felt after a while, and in the meantime policymakers have to deal with the here and now of food scarcity. By necessity short-term supply adjustment policies are needed.
It is in the interest of rice-producing and rice-consuming countries to get together and set short-term policy agendas. Regional and sub-regional consultations are necessary - bilateral negotiations alone will not provide the answers. It is very important that the starting points for these talks are well defined. For example, it is worthwhile to know how most countries in the region solved food security questions in previous years because future policies will by necessity be based on proven interventions.
One thing is very important to factor into policy-making and this is changing land use and the competition for land by the many different crops. Irrigated land is being converted to land for housing and manufacturing, while farmers take more cash from using irrigated land for horticulture crops. In the rainfed areas, where virtually all secondary crops are cultivated, the expansion of land under palm oil and rubber competes with the cultivation of maize and cassava, the main sources of fallback food security.
In virtually all countries of the region, there have been strong pressures to liberalize trading in foodstuffs, including rice, so as to induce an efficient private enterprise-driven market system.
As in all developed and developing countries, governments face pressure from producers to keep prices high while also facing pressure from consumers who benefit from lower prices. In view of the millions of smallholder rice producers in the region, producer support would seem to make good sense; but with the prospect of an increase of poor urban consumers, the horns of the dilemma will become more pointed in the near future. Steady policy-making and implementation is the main requirement and such policy should not only cover rice but also secondary crops as sources of food security. The current high prices offer a golden opportunity to use market-driven price development to stabilize prices with the long-term goal of reducing poverty in rural areas, and short-term goals of stabilizing rice prices for producers and maintaining rice prices for consumers at acceptable levels.
Written by Taco Bottema, Director, UNESCAP-CAPSA, Bogor, Indonesia.
(References available upon request) |
