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Decisive Action Needed to Resolve Food Crisis

February 12, 2013

Tim Wise and Sophia Murphy: More than a billion people without food security need action on speculation, biofuels, land grabs, climate change and low levels of public food reserves



Story Transcript


A year ago, in a report titled Resolving the Food Crisis, the authors wrote, “‘We see neither the necessary urgency nor the willingness to change the policies that contributed to the recent crisis,’ we concluded a year ago, noting that global food security was ‘as fragile as ever’. We warned that another price spike was likely unless the real drivers of food price volatility were addressed.”

Well, now joining us to talk about all of this are the authors of that report, first of all Sophia Murphy. Sophia is a senior adviser to the trade and global governance program at the Institute for Agriculture and Trade Policy.

And the other author of the report is Timothy Wise. He’s the policy research director at Tufts University Global Development and Environmental Institute. He’s also, as I said, coauthor with Sophia of Resolving the Global Food Crisis: Assessing Global Policy Reform Since 2007.

So, Tim, you said there was lack of urgency. And I suppose the food crisis is not any better. Is there any more sense of urgency from various international institutions that are supposed to be dealing with all of this?

TIMOTHY WISE, DIR. RESEARCH AND POLICY PROGRAM GDAE, TUFTS UNIV.: I wish there was. I mean, you can certainly see some urgency from some of the international institutions associated with the UN, but the overwhelming finding of our assessment of the activities in the last year in the international community are that the structural causes of the food crisis, the same causes that produced what we saw as the third price spike in the last five years, have still largely gone on unaddressed. Those would be biofuels expansion, financial speculation, low levels of public food reserves, weak investment in developing country agriculture, and climate change.

JAY: Sophia, just how urgent is it?

SOPHIA MURPHY, SENIOR ADVISOR, INSTITUTE FOR AGRICULTURE AND TRADE POLICY: It’s urgent. A lot of these things will take time to change. But the numbers of people that don’t have access to food are hovering around the 1 billion mark, and a lot of their inability to get food is because of structures in the international market that are interfering with their local and national food systems.

JAY: For example?

MURPHY: So, for example, you see a lot of countries newly aware that just buying all their food on an international market is not a reliable source for them. And so countries across Africa have been building grain reserves, in some cases rebuilding because they used to have that infrastructure. And they’ve been investing in co-operatives to allow farmers to do shared marketing.

But they’re finding that at the international level, the efforts to create larger reserves and to stabilize the international supply through grain reserves is blocked by some of the largest exporters, who happen all to be G20 member governments. And so they’re unable to coordinate this work and make it more effective. They’re all working in small piecemeal ways, but they’re not able to meet and discuss and share experiences and set up some sort of structure that would allow coordination across regions and across oceans.

JAY: Tim, it seems like on one side you have the big commodity traders and financial institutions. They want open markets, especially the commodity traders. But the financial institutions all wantâ€”also want austerity measures imposed on the developing countries to make sure their loans are repaid. So on the other side, in terms of having new investment in agriculture and protecting, in some way, domestic food production, there’s an enormous weight being brought to bear to stop them from doing it.

WISE: Yeah, I think that’s true. And it’s certainly true that one of the more depressing findings of our survey of activities in the last year has been the G8’s backing away from its substantial commitment under the so-called l’Aquila commitments. The G8 had pledged $22 billion over three years for aid to agriculture and rural development, and that was a significant increase in public funding by the larger donor governments. But in May, when the G8 met to renew those commitments, instead we got the New Alliance for Food Security and Nutrition, which is largely a private sector led initiative that focuses much more narrowly on a smaller number of African countries and that really puts the multinational firms in the driver’s seat of what that development agenda is. So that’s a huge step backwards.

JAY: Sophia, the argument I guess you would hear from some of the big agro companies and commodity traders is that the scale of the problem is so big, you need companies of the scale of the big agribusiness and commodity traders to deal with it, and they’ve got the capital. So why shouldn’t you have these private company-government partnerships? ‘Cause the governments don’t have enough money to do it with.

MURPHY: For me it’s about how you understand food security, I guess. So, yes, that is an argument. And overall, in broad terms, do we want investment in agriculture? I would say yes. And should some of that investment be private-sector? Yes. I mean, farmer is the private sector.

What the problem is for me is, in the globalized system, you’re granting access to those resourcesâ€”the land and the waterâ€”in some of the world’s poorest countries to the demand of the handful of much richer consumers elsewhere. And so if that investment is about generating agricultural production in local markets and domestic markets, even regional markets, it’s doing one kind of thing. And if that investment is actually to, you know, suck out those resources in order to meet the consumer demand elsewhere, then it’sâ€”for me there’s enormous problems with justice, there are still enormous problems with food security, and you’re not doing anything to confront the challenge of meeting food security.

JAY: Tim, let’s go through some of the main big areas you mentioned. Start with biofuels, which, I mean, some people are saying this is maybe the greatest threat to food security and can lead to even more mass hunger. What would you like to see in terms of biofuels?

WISE: I mean, I think in fact this last year was not without progress, which is worth noting. I mean, on the one hand, we saw a price spike driven by the competition in the United States for limited corn supplies after the U.S. drought between corn ethanol and food and feed needs, and that’s really what drove prices higher. We saw no willingness on the part of the U.S. government to relax the renewable fuels standard, which was the mandates that were driving the consumption of corn ethanol and the demand for corn ethanol and, you know, just clearly putting fuel before food.

On the other hand, though, we did see at the end of 2011 the United States allowed to expire two of its support programs for biofuels. We saw the European Union acknowledge that food and fuel do compete and that they reduced their mandate from allowing only 5 percent, when it was 10 percent, of fuel to come from croplands.

So there are loopholes in those regulations. It’s not a solid, firm cap. There are dangerous trends in the United States toward of expansion of corn ethanol, actually, with the moves toward the EPA is allowing applications for so-called E15, an increase from 10 to 15 percent in the allowable share of gasoline accounted for by ethanol. And that could add to demand for biofuels instead of decreasing it.

What would we like to see? I mean, I think what’s needed is a muchâ€”a lot of people have called for if there are going to be mandates, there need to be flexible mandates, ones that areâ€”where a cutoff is triggered by low stocks-to-use ratios, meaning low levels of reserves where markets are vulnerable to price spikes or triggered by price spikes themselves, where the mandates would be relaxed immediately and automatically, not subject to political considerations. And in effect that’s a way of saying food comes first, people come first.

JAY: Sophia, in your report, one of the other areas you’ve highlighted is the issue of speculation on food. I mean, has there been any progress in terms of curbing that? And if not, what would you like to see?

WISE: Well, it’s a highly technical area. I think what we saw in 2012 was huge sums of money spent by the financial service industry to try and affect the outcome, mostly, in the United States, the implementation of the Doddâ€“Frank legislation, which is far from perfect, hugely complicated, but still contains some of the regulation we want to see. It’s really a reregulation. The system was working, we think was working fairly well, up until around 2000, when they began to relax a lot of their controls on how much speculation in commodity markets and what kinds of instruments investment companies and banks could use in order to invest.

And so what we’d like to see is just more transparency. There’s a lot of what we call dark trading, the things that go on under the counter that are never really measured. We need to limit how much speculative money is in the commodity markets as opposed to hedge money, the money that actual traders needs to [crosstalk]

JAY: But there’s a real problem. Every time they try to pass something like this, theyâ€”it either doesn’tâ€”the regulations get so watered down after all the lobbyingâ€”I think there was even a recent court decision that overturned the meager measure the Commodity Futures Trading Commission actually did impose.

MURPHY: They’re appealing. It’s true. I mean, they also spent 80 percent of their money on the Republicans last year, and the Democrats won the White House. So the money doesn’t always talk.

Yeah. There’s a huge way to go. I think this is one of those area where there’s a lot of fear. A lot of people don’t understand it. A lot of people are scared that even though they don’t like the banks, they don’t like the capital, they don’t trust what’s going on, they also aren’t sure what to do, because it has such a profound effect on the economy as a whole.

So there definitely needs to be far more done, and most of it in the U.S., some of it in the European Union as well. This isn’t one of those global issues like climate change, which is going to have everybody jumping together. This is something that we have to fight out. If we could fight it out within the United States, we’d be hugely ahead.

JAY: Tim, one of the other issues you highlighted in the report was land-grabbing. Is any progress on that? And if not, what do you want to see?

WISE: I think the progress that we’ve seen is in a way remarkable, in the sense that the institution that is widely considered one of the most slow-moving in the world, the UN, moved incredibly quickly to establish what are called the voluntary guidelines on land tenure. And those voluntary guidelines, while voluntary, are still very significant, and they were ratified inâ€”pretty much rushed through because of the urgency of the issue, and they were ratified in May by member governments of the Committee on World Food Security. That’s a real achievement. And now the effort is to try to implement them. I think we’ve seen quite a bit of progress there.

The downside is that with prices so high still, land is still very valuable. And so there’s a lot of money flowing into land grabs still. New reports keep coming out. It’s becoming more and more well-documented. And the trends are stark. A lot of it’s going into biofuels. So biofuels demand is a lot of the reason for the land grabs. Almost none of it goes into domestic food production. Most of it, 70 percent, according to one survey, is going into Africa. It tends to be concentrated in areas where states are relatively weakâ€”again, not surprising, but very worrisome, and very worrisome for food security, because, contrary, again, to the image or the argument that’s made by those who say no, this is a needed investment in agriculture, it’s not on land that is unused; it’s on land that is being occupied. The vast majority of these foreign land acquisitions displace people, displace small-scale producers. And that’s justâ€”that is not going to be good for food security.

JAY: Sophia, I know you’re not an expert in Latin America, but it seems to me in Latin America you do see some moves toâ€”at least modest moves to kind of break from some of these international systems and pressure that are enforcing laws thatâ€”or I should say stop laws that stop land-grabbing and some of the other issues we’ve been talking about. I mean, do you see in Africa any kind of move at the governmental levelâ€”and it seems to me if it doesn’t come from there, I don’t know where else it’s going to come fromâ€”to kind of break from this, you know, together? I mean, I don’t think one country can do it on its own without being picked off. But, you know, if there were governments that together would break from these international systems and start enforcing some kind of food sovereignty, then maybe there’d be more significant progress.

MURPHY: I think there are some signs of hope. It’s very hard. A lot of African countries have almost no discretionary spending. So they continue to be locked into this negotiation with donor governments.

And maybe one of theâ€”you know, ironically, one of the silver linings will be austerity in Europe, austerity in the United States actually, you know, changing that discourse. I think international development is undergoing quite a profound change. And it needs to change. Not all of it’sâ€”perhaps is the change we want to see yet, but I think it’s good that it’s changing.

It’s clear that the African Union is providing a forum for at least conversation and that the parliamentarians meet under the African Union forum, and they have been discussing investment frameworks that would begin to help governments develop national law to control foreign investment in their agriculture sectors. And some countries, like Tanzania, have acted unilaterally to say right now there’s a moratorium, we don’t want new foreign investment in our agriculture, in our land in particular, until we have a framework in place for how we’re going to govern that investment.

I think you see other countries, like Ethiopia, who’ve kind of opened the door very wide and said, if you’ve got money, bring it and we welcome you. And they’ve been getting investment from all over, from India, from Saudi Arabia, from a lot of different countries. And one of the new dimensions of this investment is it’s not just the, you know, G8 as was; there’s a lot of South-South investment and a whole lot of new thinking to be done around how do you discuss with China, how do you discuss with India what its responsibilities are abroad.

But I do think that the sign of hope is that the debate is live. I think it’s clear that all African governments have recommitted themselves to agriculture. And that investment has paid off in increased domestic production, which is not by itself the answer, but it is going to make a veryâ€”it makes a big difference.

JAY: Tim, just a final word, which isâ€”or final question, I should say: if there isn’t a real shift, either from the international organizations or from the African governments and developing countries’ governments, if there isn’t really a basic change in direction, what do you think the food crisis looks like in ten years?

WISE: I think the food crisis looks a lot like it’s looked for the last five, which is three price spikes and huge food insecurity. That’s only going to get worse if financial capital is sloshing around out there and messing with price discovery in commodities markets, if biofuels demand is jacking up the demand for land and other food-producing resources.

JAY: Okay. Thank you both for joining us.

WISE: Thank you, Paul.

MURPHY: My pleasure. Thank you.


