thought for food

12 years ago, independent analysts warned that World Bank and FAO projections of today’s world farm output were higher, and price increases slower, than they should have been. The World Bank recently reported that overall global food prices increased by 83% in the last three years. Food price inflation could rapidly push at least 100 million people into poverty. Looking at Asia, since January this year, rice prices have gone up by 141%.

Naturally, rising food prices will have various effects on the different Asian countries, which are politically and economically diverse. Rising food prices should benefit farmers and, in the medium-term, spur agricultural production. A recent study by World Bank economists found that the short-run impacts of higher staple food prices on poverty differ considerably by commodity and by country. Nevertheless, they found that poverty increases are much more frequent, and larger in scale, than poverty reductions. For example, in Indonesia, more than 75% of the poor are net rice buyers, and an increase in the relative rice price by 10 percent will result in an additional two million poor people (or 1% of the population).

Even if recent news reports, as of this writing, indicate that an infusion of supply from countries like Cambodia, Vietnam and Pakistan will ease the rice crisis, this does not detract from three serious problems that the last few months have exposed: a resounding dissonance in government responses that does not auger well for the future; the failure of global energy security efforts to arrest the accelerating price of oil; and, the shocking gaps and tatters in the safety nets—especially for agriculture—that governments assured would accompany trade liberalization.

Firstly, the events have revealed fissures in East Asian integration and the limits of its crisis management capacity. Given government reactions such as a proposal to start a rice cartel or the imposition of rice export restrictions by key producers, it is obvious that governments might take policies seemingly in the national interest that hurt the region, and the world, economically. In contrast, regional coordination and sober management of export and import flows as an extraordinary and time-limited step could have buttressed confidence in the food market (instead of further driving prices upwards).

Secondly, Asia has been unable to curb its reliance on oil for energy security despite lessons from the oil shocks of the 1970s. Oil prices have again quadrupled over the last five years. While some headway has been made with renewable energy, Asia has been slow to develop such alternatives and attract large-scale investment in this sector. Surging fuel prices and, hence, transportation throughout the food supply chain, contribute to food price inflation. To complicate matters, incentives for biofuels—while part of climate change mitigation and improving energy security—divert land and crops like wheat, soy and maize from the food market. Governments should consider temporarily suspending subsidies or re-channelling crops to food supply.

Thirdly, trade liberalization in the developing economies of East Asia necessitate social safety nets. These should be designed to brace vulnerable sectors, like agriculture, for the crush of opening trade and globalizing competition. It seems that these safety nets have very wide holes through which the region’s poorest have fallen through. The current situation uncovers a disconcerting absence of effective mechanisms to attenuate trade-related disturbances. Direct cash transfers, food relief (as well as its variants) and hoarding are unsustainable options; medium-to-long term planning is required. Agriculture has weakened in some Asian economies; moreover, there has been an increasing shift from subsistence to cash crops. Policies to improve farm output and attain food supply targets will be integral to attaining food security for the future.

The potential human cost of unguaranteed food security is staggering. The current troubles have already sparked protests, work stoppages and other forms of civil disobedience as well as riots. With scarce natural resources becoming scarcer in the coming years, in the absence of any stunning technological breakthrough to feed the world’s hungry, the prognosis is bleak. Furthermore, East Asia needs to consider approaching future crises in a coordinated way at the regional level.


I'm still thinking about that half-eaten sandwich that I left for garbage last Friday...