Liberal rations

Robert L. Thompson, Merlinda Ingco and Lynn R. Brown
say that developing countries must devote more attention to agriculture,
and the whole world must liberalize its markets, if a growing
population is to be fed in the new century

There are 1.2 billion people in the world who live on less than $1 per day. Around 800 million go to bed hungry every night, one-third of all pre-school children are clinically malnourished, and 2 billion people are deficient in one or more micronutrients such as iron, vitamin A and zinc. The bottom line of these abject statistics is that more than 6 million children a year die of causes related to malnutrition.

Yet between 1960 and 1990, world cereal production more than doubled, per capita food production increased 37 per cent, daily caloric intake increased 35 per cent, and real food prices fell by almost 50 per cent. Today world food prices are at historic lows.

How do these two sets of apparently paradoxical statistics exist side by side?

Food security is achieved when everyone has sufficient food to sustain a healthy and active life. For nations this is the result of producing enough food domestically and/or importing it. For households, it comes from producing enough and/or having the income to buy food. For individuals, it is determined by how food is shared within the household. Except in time of war, natural disaster or politically imposed famine, food security is now a problem for the poor. The rich do not go to bed hungry at night.

Poverty is largely a rural problem, although urban poverty is growing: most of the poor are farmers. Solving it, therefore, requires broad-based agricultural and economic development to empower several hundreds of millions of low-income people with enough purchasing power to improve the quality both of their diets and of their lives in general.

Reducing poverty
Experience in recent decades has shown that the market-driven approach to development, maintaining an open economy, has been the most effective one for reducing poverty. It has been much more so than a protectionist approach concentrating on import substitution. Agriculture is both the engine of growth for many developing countries, and the sector where they could compete, with comparative advantage, in a fair global trading system.
Developing countries need to invest in their own agriculture

Priming the pump of economic development in agriculture begins by sustainably increasing productivity – increasing the value of what is grown on each hectare by improving crop yields and management practices. Developing countries have too often put neither enough resources nor a sustained commitment into agricultural and other rural development to solve the problem of rural poverty.

The end result is that in many cases agriculture in developing countries has still to reach its potential. There has been progress on liberalizing their markets in the last decade or so, but many are still artificially depressing incentives to their farmers and agriculture through such policy distortions as putting ceilings on prices, using food aid, and underinvesting in rural infrastructure. These lower overall food production, and thus farmers’ incomes. The net effect of the entire constellation of public policies in these countries is effectively to tax agriculture, ensuring that its performance does not match its potential.

Price volatility
Many developing countries that import more food than they export are rightly concerned about the volatility of international commodity prices. This volatility preceded the last, Uruguay, round of trade negotiations and many analysts then argued that the problem was the prevalence of non-tariff barriers, such as export and import quotas, that cut the link between domestic and international prices. The outcome of the round, however, did little to re-establish that link. Limited changes in the agricultural policies of the United States of America and the European Union (EU) have resulted in governments reducing the stocks of grain that had previously buffered the volatility of international commodity prices; as a result this has actually increased following agreement on the Uruguay round.

When prices are so volatile, countries can be led to seek national food security by pursuing self-sufficiency so as to avoid relying on global grain markets. This can be costly in terms of both economic waste and environmental damage. Recently The World Bank proposed an insurance scheme to help low-income food-importing countries deal with the risk inherent in the volatility of global grain prices – particularly the longer term risk which cannot be handled by present futures markets.

Fair play
We have more than enough food today, but we cannot afford to be complacent. More than half as many people again are forecast to join the world’s population by 2050. As Professor Gordon Conway, President of the Rockefeller Foundation, puts it in a recent book, we need a ‘Doubly Green Revolution’, one which increases harvests without damaging the environment. Given the fact that the world’s people and its arable land are not always in the same place, increases in purchasing power generated through successfully reducing poverty will mean that a higher proportion of the world’s production will need to move through international markets. So the global market place must be a fair playing field for developing countries.

Developing countries need to invest in their own agriculture and to remove biases against it in their policies. As partners in the development process, we need to assist them in securing liberalized domestic markets. More importantly, we need to make sure that the policies advocated for developing countries are reciprocated in developed ones so as to ensure a fair global trading system. It is unreasonable to expect market liberalization in the developing world while the United States of America and the EU maintain such highly protectionist policies for their own agriculture

Robert L. Thompson  is Director of Rural Development; Merlinda Ingco  is Trade and Agricultural Policy Specialist; and Lynn R. Brown  is Food Policy Specialist, at The World Bank’s Rural Development Department.

PHOTOGRAPH: Dayo N. Gaston/UNEP/Topham

This issue:
Contents | Editorial K. Toepfer | Time to act | A climate of change | Melding heart and head | Looking through green glasses | Multi-local business | World Environment Day 2000 |
At a glance | Competition | The greening of Goliath | Unfair trade | No sleeping after Seattle | Disproportionate effects | Liberal rations | New millennium, new regulation | Secretary-General’s Report | Pachamama: Our Earth, Our Future


Complementary articles in other issues:
Issue on Food 1996, including:
Jules N. Pretty: Sustainability works
Gordon Conway: Genetically engineered crops: who benefits? (Biodiversity) 2000
James D. Wolfensohn: Collaboration makes a difference (Freshwater) 1998
James D. Wolfensohn: Crucibles of development (Human Settlements) 1996