World Food Day: Let’s cooperate

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Last year, the world spent the equivalent of $2000 on arms for every one of the planet’s 870 million malnourished people.  Other than giving the gun money (or guns) to the hungry, how else could we fight malnutrition? On its annual World Food Day, the FAO argues that agricultural cooperatives are the “key to feeding the world”. Co-ops are far more important than most of us realise. According to the FAO, around 1 billion people worldwide are members, and cooperatives provide over 100 million jobs across all sectors, 20% more than multinationals. In 2008, the top 300 cooperatives were responsible for an aggregate turnover of $1.1 trillion, roughly the size of the world’s tenth largest economy, Canada.

Agricultural cooperatives (the main type in many countries) can offer their members a range of services, including credit, training, marketing and access to information, as well as improving their bargaining power when buying inputs or in policy making. That can help them take advantage of opportunities like the surges in food prices seen in 2007-2008, that in fact left many poor farmers worse off because they couldn’t increase their own production but still had to pay higher prices for things they didn’t produce themselves.

People in this situation can become trapped in a vicious circle, where food insecurity is not just an immediate tragedy, but a threat to longer-term wellbeing. As Joe Dewbre explains in the OECD Observer, faced with hunger, families first tend to reduce consumption of higher quality foods, such as meat or vegetables. But if the crisis continues, they may have to sell the means by which they normally earn a living – their animals or tools for instance – or take out loans that will leave them impoverished and indebted for years to come. Or even worse. Earlier this year, the Indian media reported on a wave of suicides among farmers in Bengal unable to repay loans.

Dewbre argues that historical evidence – and common sense – suggest that as a society becomes richer, food security becomes less of a problem. An OECD working paper shows that developing countries with very different levels of economic development, population size and geographical location have succeeded in reducing poverty and improving nutrition. Despite the significant differences among them, they share some characteristics. During the period when they had the greatest success in reducing poverty, the macroeconomic context became progressively more favourable. Their own governments were lowering export taxes, reducing overvalued exchange rates and dismantling inefficient state interventions in agricultural markets. Meanwhile, the governments of rich country trading partners were reducing the kinds of support to their farmers that distorted production and trade the most.

As we discussed in this article, hunger exists in rich countries too, but the main food-related problem here is obesity. According to the OECD Obesity Update 2012, obesity rates in OECD countries have doubled or tripled from 1980, when fewer than one person in ten was obese. Now, the majority of the population is overweight or obese in 19 of the 34 OECD countries, and OECD projections suggest that more than two out of three people will be overweight or obese in some OECD countries by 2020. The good news is that the progression of the epidemic has effectively come to a halt for the past ten years in some countries, including Korea (where obesity rates have stabilised at 3% to 4% of the population), Switzerland (7% to 8%), Italy (8% to 9%), Hungary (17% to 18%) and England (22% to 23%).

However, the epidemic isn’t regressing anywhere, and it’s also becoming a problem in developing countries. Data from the WHO show that overweight and obesity are now on the rise in low- and middle-income countries, particularly in urban settings. Close to 35 million overweight children are living in developing countries, compared to 8 million in developed countries. The WHO ranks overweight and obesity as the fifth leading risk for global deaths. At least 2.8 million adults die each year as a result of being overweight or obese. In addition, 44% of the diabetes burden, 23% of the ischaemic heart disease burden and between 7% and 41% of certain cancer burdens are attributable to overweight and obesity.

That said, hunger and malnutrition are still the number one risk to the health worldwide — greater than AIDS, malaria and tuberculosis combined. That $1.738 trillion used to buy arms last year could have been better spent.

Useful links

OECD work on food security and nutrition

OECD work on agricultural policies for poverty reduction

Immediate action and long-term approaches for food security and food price volatility

Click to see the OECD-FAO Outlook

This post is contributed by OECD Secretary-General Angel Gurría, following his address to the agriculture ministers of the G20 countries meeting in Paris on June 22.   

The OECD-FAO Agricultural Outlook to 2020 published this week expects commodity prices for cereals to be 20% higher over the coming decade compared with the 2000s, and meat 30% higher. That’s good news for farmers the world over, but for the one in seven of the world’s population who goes to bed hungry, it could spell disaster.

Moreover, price volatility could make matters worse.

So what should we do?

The immediate priority is to address the severe consequences of hunger and malnutrition, whose root cause is poverty. Undernourishment rapidly leads to underweight babies and prevents young children from developing properly, both physically and cognitively. The related problems generally last for life.

In a report including contributions from 10 international organisations OECD coordinated with FAO, we make a number of recommendations to deal with the consequences of high and volatile prices on the most vulnerable.

Working closely with the UN World Food Programme, we propose setting up small strategic food reserves for rapid deployment through safety net programmes in situations where countries find it impossible to procure supplies for themselves.

We also outline a number of market-based financial instruments to assist vulnerable countries and households, including measures designed to help farmers manage unavoidable risks.

In brief, we propose a wide range of safety nets that can come to the aid of the most vulnerable, quickly.

The long term priority – the sustainable solution to price volatility and food insecurity – is to improve the productivity and resilience of global agriculture. Doing so requires action on a number of fronts.

OECD and FAO have a joint proposal for a new Agricultural Market Information System (AMIS). Associated with AMIS is a proposal for a Rapid Response Forum to improve international coordination of government responses to food emergencies, preferably before a situation becomes a widespread crisis.

Better information and transparency on financial markets is also important, as is consistency between regulatory regimes. This would help reduce opportunity for market manipulation and ensure that the farm and food sector has instruments at its disposal to help smooth price fluctuations and to manage risk.

Agricultural trade will be even more important in the years to come. Food has to flow more easily from surplus to deficit areas and humanitarian food purchases and shipments must not be caught up in export restrictions or be taxed. Most of the future growth of supply – and demand – will come from developing countries, but supply growth will be stalled if competitive suppliers around the world are not able to access regional and global markets.

Even if WTO trade negotiations are currently in great difficulty, we must reduce the import and export barriers to trade in food, feed and fuel that add to price volatility and constrain global food security.

We have also made tough recommendations on biofuel policies that subsidize production, mandate blends, and restrict trade.

Let’s be very clear about this. We support the development of a wide variety of renewable fuels, including biofuels. But our analysis has shown that there are higher costs and lower benefits than anticipated, as well as unintended negative impacts, from current biofuel policies.

Finally – and arguably most importantly – in our report, the international organisations make a strong case for various actions to improve farm productivity. This is an essential ingredient in a sustainable and long-term solution to the challenge of increasing food production between 70% and 100% by 2050.

For many developing countries, greater use of existing technologies offers immediate and significant opportunities. For all countries, new science and technology offers further promise.

Returns to investment in agricultural research are enormous: generally over 20% and as high as 80 % a year. But the lead times are very long – often 20 years or more. The investment that will bring those long-term benefits has to start now.

Required investments are way beyond what can be achieved with public funds or development aid, although both are important. National governments have to create an enabling environment that encourages private and public-private investments to flow.

OECD will focus more on this, drawing upon its agriculture, science and development communities to highlight best policy practices for increased innovation in agriculture.

Can the global food and agriculture system meet the challenges of the coming decades? I’m optimistic. Throughout history, farmers have demonstrated again and again their capacity to adapt to new circumstances, adopt new methods and technologies, and supply safe and nutritious food for growing populations.

Since 1960, cereal production world-wide has doubled, and fruit and vegetable production has tripled. The increases in meat production have been even more dramatic – pork production has more than tripled and poultry has increased sevenfold.

The G20 is giving agriculture the importance it deserves. And acting now will position the sector well for a profitable future in the service of us all.

Useful links

OECD work on agriculture

Hunger is a problem of poverty, not scarcity

You can’t expect the public to stay interested in hunger for more than about 40 days. That’s what experience had taught the impresario in Franz Kafka’s The Hunger Artist. Getting the media along and a couple of pretty girls to hold the starving man’s hand helps to get attention of course, but the fact is, after a while, people lose interest completely.

Kafka’s short story has sinister echoes today, except that 40 days is far longer than any story stays on the front page now. The last time hunger hit the headlines was in 2007-2008, with food riots in a number of countries because of sudden price rises.

Prices have since fallen, but the benefit was wiped out for millions of people by the crisis, and the number of hungry people in the world grew from around 850 million before the food crisis and recession to a billion today.

There is no such thing as an apolitical food problem

There are fears that hunger will never be eradicated and that the situation will continue to get worse, with demand for food commodities accelerating while the increase in per capita food supply slows.

It’s true that several factors are combining to boost demand.

For a start, there’s the mechanical effect of population growth. Output will have to double over the next 40 years to feed a world population of 9 billion in 2050.

Added to that, although there will be crises and recessions in the future, the trend is for the world to get richer, and for more people to adopt Western-style diets rich in meat, dairy and other foodstuffs that demand higher inputs than diets based on cereals or tubers.

Food production is facing competition for land from other uses, including biofuels.

Finally, environmental pressures on agriculture are growing, with climate change introducing a number of uncertainties, and expected to have the worst impacts on countries least able to cope.

Yet, when you look at the facts, there is no “agricultural” reason for hunger today. Global food production has increased more quickly than population over the past half century, and the EU and USA even had to bring in policies to get rid of “mountains” and “lakes” of food and drink.

If people are hungry, it’s because they can’t afford to buy food, not that there is no food to buy. There are many reasons for this. Politics, policies and poverty all intertwine, and as Nobel-prize winning economist Amartya Sen said “There is no such thing as an apolitical food problem.” 

Useful links

Food security is one of the issues on the agenda at this week’s meeting of agriculture ministers at the OECD. You can find a background note prepared for ministers on markets and food security here.

Fueling hunger? Biofuel grain “could feed 330 million”

Over a billion people already suffer from hunger, and food security in 70 developing countries is projected to deteriorate over the next decade according to USDA’s Economic Research Service.

It’s not that there isn’t enough food. A new study by the Earth Policy Institute  shows that the grain grown by US farmers in 2009 to make biofuels was enough to feed 330 million people at average world consumption rates.

The report argues that in a fight between cars and people, the cars would win. The amount of grain needed to fill the tank of an SUV with ethanol just once could feed a person for a year. Even if the entire US grain crop were converted to ethanol, it would satisfy at most 18% of US automotive fuel needs.

The grain needed to fill an SUV’s tank with ethanol just once could feed a person for a year

So are people going hungry to keep cars running? Biofuels push up prices for agricultural commodities, but as an OECD report  points out, this is only part of the explanation.

Food is a relatively minor item in the spending of most families in OECD countries. It represents only 10% to 15% of the household budget, and as this post shows, much of the food bought is thrown away. (That said, the USDA estimates that 14.6% of US households were “food insecure” at some time during 2008.)

In developing countries, food represents half to three-quarters of budgets, so anything that pushes up prices has a more dramatic effect. Moreover, the diets of lower income families have higher shares of cereals, roots and tubers. Prices of these staples tend to increase more strongly due to biofuel expansion than meat and dairy products.

On the other hand, most of the poor in developing countries live in farm households, so higher prices for agricultural commodities  can create new opportunities, at least for farmers with a surplus to sell and the means to get it to market.

The increase in the prices farmers get for their products, whether due to biofuels or not, may help some rural households. But for most people, especially in rapidly expanding urban centres, it’s bad news, and being poor makes it even worse.

Useful links

OECD Agricultural Outlook 2009-2018 on food, feed and fuel

OECD on bioenegy