Struggles for 'food security'

Despite expanded food trade, the last decade has seen effectively no progress in reducing the number of hungry people in the world. Sharply rising food prices are lifting the 850 million malnourished towards a billion. Yet there is no shortage of food in the world.

On this strange paradox the main contribution from Australia - a major food exporter - has been to back more monoculture cash cropping and attack all forms of agricultural protection. Silence might have been more sensitive.

The immediate cause of the food crisis is rising prices, but deeper structural forces are at work: biofuels, agricultural liberalisation, and arguments over the means by which countries achieve food security.

There was no consensus on these deeper issues at the recent food summit in Rome. Powerful interests drive the debates.

Food price rises, now at a 30-year high, were especially strong in seed oils, grains and dairy. The big food exporters (including Australia) are not unhappy about this, but millions of poor and marginalised people have been hard hit.

Longer term pressures behind the price rises are the limits of new arable land, climate change and the demand for richer diets in the wealthier economies. The immediate causes are the rising price of oil, affecting fertiliser and transport, and competition for land from the biofuel industry.

Head of the UN’s Food and Agriculture Organisation (FAO), Jacques Diouf, hit out at the diversion of 100 million tonnes of cereals from human food into biofuels - food for cars.

Jean Ziegler, the UN’s food security expert, calls biofuels a “crime against humanity”, and proposed a moratorium on their production. He makes the graphic point that the 230kg of corn that would feed a child for a whole year is being used to produce just 50 litres of ethanol - one car tank full.

The Rome Summit papers say there is “growing international consensus” that biofuels have “contributed significantly” to the current food price rises, but countries such as the US and Brazil still have big stakes in this lucrative industry.

Agricultural liberalisation - the idea of a “free market” in food - is a deep rooted debate. Australia was one of the main advocates of placing an Agreement on Agriculture (AOA) in the agreements of the World Trade Organisation (WTO). Australian agribusiness has long sought new markets, especially in the US and Europe.

Yet the AOA was a key factor in the breakdown of WTO talks in 2006.

Lower tariffs and reduced export subsidies had reduced food import bills, but cheap grain had damaged domestic production. Farmers would not plant for the next season while cheap grain was around. Yet local production is always a “buffer” in case of a disruption to trade.

International trade in food is quite small compared to local production. Rice trade, for example, is only about 5 per cent of the global production of 400 million tonnes. Yet trade affects prices and domestic markets. When Indonesia and China each import 2 million tonnes of rice, then that has an impact.

What were the WTO disagreements? The wealthy countries foresaw a move on tariffs and export subsidies. The AOA was concluded in 1994, and between 1992 and 1999 the Europeans moved E1.3 billion out of export subsidies, but promptly added E2.1 billion to “green boxed” domestic subsidies. They moved ahead of the regulatory frontier.

The WTO’s “green box” on agricultural subsidies refers to subsidies that are paid for by the government and are “minimally trade distorting”. President Bush’s Farm Bill of 2002, for example, added US$7.5 billion a year to agricultural subsidies; all allowed by WTO rules. Similarly, Australian Government diesel fuel rebates, sugar and milk restructuring schemes, land care, salination and drought relief schemes are all allowed by WTO rules. But they certainly assist agribusiness, and reduce its operating costs. Developing countries usually cannot afford such schemes and find tariffs a more convenient form of protection.

The “Cairns Group”, set up in the late 1980s, allowed Australia to align itself with developing countries. All Cairns Group members wanted the US and EU domestic subsidies reduced or removed. Australian governments argued that farmers deserved higher prices and that US and European subsidies keep food prices artificially low.

But Cairns Group members such as Indonesia and the Philippines saw things differently on tariffs, and on special treatment for developing countries. They split from Australia in the final stages of the WTO’s Doha Round.

Volatility in food prices is damaging. Both low and high prices can hurt, and agricultural liberalisation has only worsened many countries’ exposure.

Differences over agricultural liberalisation are reflected in differences over food security and foreign aid. In 2000, for example Australia and the World Bank refused Timor Leste access to aid moneys to rebuild rice fields and grain silos. This was not “export oriented”. Undeterred, the Timorese got help in rice production from the FAO and the Japanese.

The UNDP tells us that Timor Leste reduced its dependence on imported rice from 2/3 to 1/3 of local requirements. Then came the political crisis of 2006, followed by the food crisis of 2008.

A new round of World Bank “food security” loans, linked to liberalisation, has already been announced. But past World Bank loans, the WTO debates and the current crisis are likely to harden developing country views on western hypocrisy and generate a variety of schemes to stabilise and protect domestic food production.