The head of the United Nations World Food Programme (WFP) described the world food shortage thusly; a situation which is fast becoming top priority for world leaders, with UN Secretary General Ban Ki Moon holding meetings in Switzerland with aid organisations, international financial institutions (IFIs), finance and aid experts as well as UN leaders to discuss the issue.
The high price that comes with the food crisis is now reaching new heights. The WFP suggests that it is not famine, which is the real problem but the level of malnutrition and the pain that comes with it. With the world’s poor living on less than 50 US cents a day, it is a very real issue which needs to be solved immediately.
Prices for basic foods such as maize, wheat, bread, rice and dairy produce have been soaring; as a result, reports the UN Food and Agricultural Organisation (FAO), there has been an 18% food price inflation in China, 13% in Indonesia and Pakistan, and 10% or more in Latin America, Russia and India.
The price of wheat has doubled, maize is 50% more expensive and the price of rice has gone up by 20% over the last year; global food reserves are at their lowest in 25 years, and the situation can only get worse from here unless some serious policy changes are made.
The World Trade Organisation has argued that this problem can be countered by opening up markets in the third world; that is, taking their economies from being either entirely government controlled or partially so, to being controlled by global price and demand fluctuations.
This will ensure that it adapts and grows with the global economy but at the same time, is as vulnerable to price dips and crashes as other countries.
Opening up markets is an especially risky move to make for developing countries, as their heavy reliance on primary commodities – such as agriculture – as an export tool means that should demand or price change even slightly, the repercussions will be disastrous.
In a world where 100 million of our poorest cannot afford to buy food, and with food riots in over 37 countries, a more tailored approach needs to be taken to ensure long-term stability of the economies in the developing world.
One such solution is to donate aid, and the WFP estimates that an extra $755 million will be sufficient to bridge the gap for some time.
A criticism of this approach is that much of the aid that goes to developing countries lines the pockets of its bureaucrats; very little is seen by the people who need it most. Critics of the ‘aid approach’ argue that if money is to be lent to developing countries, it should be handed straight to the poor, much like Mohammed Yunus is demonstrating in Bangladesh with his micro-credit lending schemes.
Another alternative is to set a global price floor on the prices of basic food commodities – that is, a minimum price for trade – to ensure that such dips are less frequent. The problem with this approach however, is that this price floor is determined by the global economy, which is in turn controlled by the richest countries of the world.
Prices can be lowered or increased to benefit those in power; unless this price floor is controlled by an international body based on a price agreed upon by world leaders, this approach would not work.
There are however, simpler ways to go about dealing with the global food shortage. Prices are booming because consumption of food outweighs its production. There is a simple solution to this: what do we do when we find our pantry does not have enough food supplies for the rest of the week, and we don’t have the money to buy more? We start eating less.
A simple idea, but maybe it would work. Costco, a supermarket chain in the United States, has reduced the number of fifty-pound sacks of basmati rice available to each customer to four. Just think about this: does every household really need to eat that much rice?
Japan has recently been hit by a domestic food crisis: a shortage of butter. Formerly self-sufficient, the country has found that its protectionist methods to prevent such a shortage have failed. In 2006 when Japan overproduced milk, the government wasted 1,000 tons of milk and ordered the slaughter of dairy cows, in an attempt to protect local farmers from going out of business. The government then took control over the prices of dairy products and managed them to control the import and export prices of dairy produce, which were previously controlled by tariffs and other protectionist measures.
This brings up another point about the dangers of self sufficiency in light of the global food crisis: at what point does a country decide to control its self sufficiency? And why?