A crisis in food policy rather than food capacity

The current global food “crisis” comes at a fascinating time in history, when, despite the views of the born-again Malthusians, the world is not running up against natural resource constraints, but rather is experiencing the consequences of poor food policy decisions by governments. Further, current and future government policy decisions run the very real risk of making the problems worse, rather than better.

Looking first at so-called “human carrying capacity” concerns, the reality is that global food production capacity is currently being tested due to some unusual circumstances - such as a prolonged drought in Australia - rather than absolute capacity constraints.

Evidence in support of this argument can be found in the as yet untapped agricultural capacity of nations such as Brazil which is estimated to have 60 million hectares of non-rainforest fertile land available for development, and in the underutilised capacity of nations in eastern Europe and Africa, where agricultural productivity levels per hectare are dramatically lower than those being achieved by farmers in developed nations.

Governments in Europe and North America have also very actively discouraged agricultural production over recent decades by providing incentives for farmers to convert arable land into conservation areas. The USA, for example, has about 16 million hectares of crop land (almost two thirds of Australia’s total crop area) enrolled in the Conservation Reserve Program, and the EU has until very recently required that 10 per cent of all arable land be withheld from production. Most of these areas could be brought back into agricultural production very quickly.

This is not to argue that sustained increases in global food output will be simple to achieve, although there is no doubt that the current bout of high agricultural commodity prices will have a very strong stimulatory impact. This is already being reflected in increased crop plantings in many countries, and the resulting very high levels of global demand for fertilisers.

A key factor in achieving sustained future increases in global food output will be renewed public investment in agricultural research and development by developed nations, something which has lagged in recent decades.

Rather than natural resource constraints, it is government policy decisions that are probably the biggest contributors to the current situation, and some future policy decisions have the potential to make things worse, rather than better.

A prime example of policies that are exacerbating the current situation are bans by some governments on the production and importation of genetically modified (GM) crops. These bans have been maintained despite the continuing absence of any reputable evidence of human health or other risks associated with these crops. GM varieties may not yet have superior yields, but their ease of cultivation and potential drought and heat tolerance means annual production will be more certain, despite variable climates.

Farmers and consumers should have the right to produce or consume these crops if they so desire, just as they have the right to produce or consume crops grown under other different production systems.

Government policies mandating the use of food crops for fuel production also need careful examination, because of their potential future impact on global food supplies. Current policies are probably sustainable under normal circumstances, however future projections of a substantial additional diversion of food crops to produce fuel may not be. Rather than simply mandating higher biofuel use, governments should be much more aggressively investing in research into second and third generation biofuel technologies that use biomass or agricultural wastes as feedstocks. This could eventually mean sustainable biofuel production without exacerbating food inflation.

A third area of government policy exacerbating the current situation is the agricultural trade policies of many governments around the world. Australia and New Zealand have the lowest-subsidised and most trade-exposed agricultural sectors of virtually any nation on earth. However, both nations are exceptions, and agriculture is still the most restricted sector of international merchandise trade.

The continued failure of the Doha round of trade negotiations to make any progress in reducing agricultural trade barriers means global food shortages will continue for longer than they need to. Recent actions of many governments in imposing additional restrictions on agricultural exports (Kazakhstan, Argentina, Egypt and India to name just a few) will also make the global situation worse, rather than better.

Continued restrictions on agricultural imports into Europe and the USA have also meant that developing nation farmers have been locked into poverty, and not able to afford the farm inputs or technologies that could rapidly improve agricultural productivity.

The imminent introduction of greenhouse emission mitigation policies in Australia and New Zealand also has the potential to adversely impact global agricultural capacity, and to simultaneously increase global greenhouse emission levels unless managed very carefully. Australian and New Zealand farmers will be uniquely impacted by these policies due to their high level of trade exposure, which means they have no capacity to demand higher prices in response to the higher farm input costs that greenhouse mitigation policies will create.

The result of such policies is very likely to be the “leakage” of both economic activity and greenhouse emissions to nations without greenhouse mitigation policies. This is particularly the case given the Kyoto Protocol emission accounting rules which both Australia and New Zealand have now agreed to observe, and which ignore the cyclical nature of greenhouse gases in agricultural systems, counting agricultural emissions but not sequestrations. Unless changed, they have the potential to divert agricultural land to permanent carbon sink forests (which operate under different greenhouse accounting rules) and reduce agricultural output by two of the world’s major agricultural exporting nations.

In conclusion, a re-examination of Malthus’s writings highlights that he actually identified humans and the decisions they make as the main issue in efforts to secure long-term food security, rather than natural resource constraints. It seems over the ensuing centuries, little has changed.