How to Feed the Poor

How to Feed the Poor May 3, 2008

As I’ve noted previously, food prices are increasingly rapidly throughout the world, leading to civil unrest, and threatening to significantly increase malnourishment, if not outright starvation, in the developing world. Paul Collier, author of The Bottom Billion: Why The Poorest Countries are Failing and What Can Be Done About It, has some thoughts on how to help solve the problem, and why doing so might not be very popular:

The remedy to high food prices is to increase food supply, something that is entirely feasible. The most realistic way to raise global supply is to replicate the Brazilian model of large, technologically sophisticated agro-companies supplying for the world market. To give one remarkable example, the time between harvesting one crop and planting the next, in effect the downtime for land, has been reduced an astounding thirty minutes. There are still many areas of the world that have good land which could be used far more productively if it was properly managed by large companies. For example, almost 90% of Mozambique’s land, an enormous area, is idle.

Unfortunately, large-scale commercial agriculture is unromantic. We laud the production style of the peasant: environmentally sustainable and human in scale. In respect of manufacturing and services we grew out of this fantasy years ago, but in agriculture it continues to contaminate our policies. In Europe and Japan huge public resources have been devoted to propping up small farms. The best that can be said for these policies is that we can afford them. In Africa, which cannot afford them, development agencies have oriented their entire efforts on agricultural development to peasant style production. As a result, Africa has less large-scale commercial agriculture than it had fifty years ago. Unfortunately, peasant farming is generally not well-suited to innovation and investment: the result has been that African agriculture has fallen further and further behind the advancing productivity frontier of the globalized commercial model.

While the policies needed for the long term have been befuddled by romanticism, the short term global response has been pure beggar-thy-neighbour. It is easier for urban slum dwellers to riot than for farmers: riots need streets, not fields. And so, in the internal tussles between the interests of poor consumers and poor producers, the interests of consumers have prevailed. Governments in grain-exporting countries have swung prices in favour of their consumers and against their farmers by banning exports. These responses further politicize and fragment an already confused global food market. They increase the risks of investing in commercial-scale food production and drive up prices further in the food-importing countries. Unfortunately, trade in agriculture has been the main economic activity to have resisted being subject to global rules. We need stronger and fairer globalization, not less of it.

More. (HT: Marginal Revolution)

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  • TeutonicTim

    But Corporations are all corporationy!

  • jonathanjones02

    Ethanol mandates should be halted immediately…

  • RR

    The economist’s preoccupation with efficiency isn’t so bad after all so you distributists can stop telling me to grow my own vegetables!

  • My understanding is that growing food on large, highly automated farms using industrial methods is the most economically efficient (that is, profitable) way to grow food: growing food in small plots using sustainable techniques yields the most food per acre.

  • G. Alkon

    From the current issue of The Tablet:

    Water is running short and there are droughts, some harvests have been poor, and growing demand for meat is increasing the use of grain for animal feed. Meanwhile, the increase in rice yields from the use of high-yielding hybrids requiring more water and pesticides is levelling out and biofuels are taking up more and more agricultural land, especially in Africa. Taken all in all, world cereal stocks have been declining in proportion to demand for several years.

    ….All the factors listed above explain rises in price, even quite sharp ones. But a 56 per cent increase in world rice prices in the first quarter of this year? Where did that come from?

    This is where the world’s other crisis comes in – the one that rich countries have worried about. The “credit crunch” prompted financial investors to take their funds out of stock markets, financial derivatives and commercial property, and place it instead in wheat, rice, oil and other essential commodities. This is all made easy by the futures markets that exist for such trade in London, Chicago, New York and elsewhere.

    There are funds that simply track average commodity prices – and this means pure speculation. The sums invested in them are estimated to have increased from $46 billion (£23.3bn) to $250bn (£126.7bn) in the three years to March this year. That is just one out of numerous forms of commodity investment. By the end of April, market reports suggested that the rice price might have reached a peak, at least for now. Reports of increased spring planting in the US led to a sudden fall in price on the highly speculative Chicago futures market.

    But this is all dangerous for vulnerable, poor countries. For the last 20 years governments in Africa and Asia have been told that they must bring down trade barriers, which used to protect their farmers and inhibit food imports. According to the aid donors, developing countries should get their economies into shape by concentrating on goods for export. With the proceeds of this trade, governments were told that food could be purchased on international markets and everybody would be better off: no need to waste money on inefficient support for farmers, or on food reserves that would sit idly in warehouses for years on end. The market worked more efficiently than that. If a country exports enough other goods, it can always import the food that its people eat.

    If only life – and the world economy – were that simple. These theories reckoned without the credit crunch, mobile investments and commodity tracking funds.

    For most developing countries, exports mean other agricultural products for which there is overseas demand, or a mineral such as copper and in a few cases oil. In Ghana – known as the Gold Coast in colonial times – there has been a revival of gold exports from the ancient Ashanti mines. But in recent years more and more of the rice eaten in Ghanaian cities such as Accra, Takoradi and Kumasi has been imported. It is cheaper than local rice, partly because exporting countries such as the United States and Thailand, the biggest exporter, subsidise it. Higher crop yields in major exporting countries can make it cheaper to produce. And more of it is long-grain and less is broken rice, which also helps it to sell.

    But instability in demand and supply, as well as financial speculation, makes the prices of rice unpredictable – and those of cocoa and cotton and copper and oil and gold too. Ghana’s main agricultural export is cocoa, and between 1980 and 2000, world cocoa exports more than doubled from 1.1 million to 2.5m tons. But, with production persistently exceeding demand, their value fell from $2.8 billion to $2.5bn.

    When these market-opening policies were introduced to cope with the debt crisis of the 1980s, most poor countries produced enough food for their people to eat. Ghana was one of them. Their governments provided various forms of support to their farmers, just as in developed countries. There were two big countries, India and China, that had particular trouble with food supplies in the 1950s and 1960s. As their industries later expanded and their economies opened up, they were determined that their new export revenues would go on things other than food. In recent times both countries have made sure they remained broadly self-sufficient in basic foods.

  • I don’t pretty sure about this idea.

  • Katherine Hutchinson

    Actually because of the falling housing market, the ARMs and the rent prices increasing, the next looming issue for the poor is housing – causing the number of homeless people to increase. How should we address that?

  • But what about the rain forests??? The rain forests!!! Doesn’t anyone care about the rain forests, those pristine microcosms of floral and faunal diversity?!?!?!?!