UN Acts to Avoid Global Famine

Perhaps there won't be a "great famine of 2008 -2009."

If we do avoid mass starvation, much of the credit should go to the UN System. Here's what happened in the last few days:

The UN System's Chief Executive's Board (CEB) met in Berne, Switzerland, and agreed on a coordinated strategy with short, medium and long-term aims. Those were, respectively, to feed the hungry; improve food security; and address the "structural" problems responsible for precipitating the current situation. UN field staff will monitor and assess the impact of changes in food price and sound the alarm when necessary.

The meeting urged donors to ante up an additional $755 million for immediate relief by the World Food Programme, and $1.7 billion for the Food and Agriculture Organization to boost food production in poor countries. On longer term action, the meeting did not agree on much.

The incendiary Jean Ziegler, the "expert" on the Right to Food appointed by the UN Human Rights Council, called for a five-year moratorium on the production of biofuels from grain. He accused the United States and the European Union of having taken a "criminal path" by using food grains to produce biofuels. He claimed confidently that "speculation on international markets was behind 30 per cent of the increase in food prices," and that a third of the US corn crop had been diverted to produce biofuels; the EU, he said, planned on replacing 10 per cent of its petrol consumption with them.The US food multinational Cargill, he added, controlled "a quarter of all cereal production." Further, hedge funds were "also making huge profits from raw materials markets;" he called for "new financial regulations to prevent such speculation." The UN's News Service, which reported Ziegler's statements, did not mention if he attributed his statistics to any particular source.

UN Secretary-General Ban Ki-moon, in a long-winded "first lecture" in a series on global issues organized by UNITAR* made only a single passing reference to speculation as a cause of food inflation. "We are familiar with the causes" of the current crisis, he said in the 29 April speech: "rising oil prices, growing global demand, bad trade policies, bad weather, panic buying and speculation, the new craze of biofuels derived from food products and so on and so on." [*UNITAR stands for the UN Institute for Training and Research. As it draws on many ex-UN staff, it is also known fondly as the UN Institute for the Tired and the Retired.]

Neither Ban nor Ziegler mentioned agricultural subsidies doled out by the United States and the European Union to their own farmers as a major, perhaps even the most significant, reason for the low agricultural productivity of many poor countries. There is an extensive expert literature on that subject; for instance, this is what a 2005 report of the World Resources Institute had to say:

• "The United States, the European Union (EU), Japan, and other Organization for Economic Cooperation and Development (OECD) countries provide about $300 billion annually in support to farmers (Chigunta et al. 2004; OECD 2004). This is the equivalent of 1.3 percent of GDP in OECD countries and roughly six times all official development assistance (Greig-Gran 2003). The $300 billion figure refers to total support and includes payments to farmers as well as import restrictions and other government interventions such as research and development (Elliott 2004). Of support that is considered most trade-distorting, OECD countries are estimated to have spent approximately $180 billion a year between 2001 and 2003 (Elliott 2004)." [Subsidies have gone up since 2005.]
  

• "While agricultural subsidies’ original goals were to enable small family farms to operate and to ensure food security, their current use is far from this vision. The distribution of subsidies is uneven, significantly skewed in favor of larger farmers and agribusiness with capital-intensive, highly mechanized operations on vast commercial estates rather than small farmers considered poor by developed-country standards (Cline 2003). The WTO Annual Report (2003) estimates that in the EU, United States, Canada, and Japan the largest 25 percent of farms receive 70 percent, 89 percent, 75 percent, and 68 percent of total agricultural subsidies, respectively. In the United States, 60 percent of farmers are provided no support at all, while the biggest 7 percent account for 50 percent of government payments (Diao et al. 2003)."

• Overproduction of certain crops in developed countries, encouraged by subsidies, has led to dumping — selling at prices below those that would prevail in undistorted markets and, in many cases, at prices below the cost of production — of excess agricultural commodities on the world market (Diao et al. 2003). This has contributed to the general downward trend of world market prices for agricultural commodities over the past several decades. The impact of developed country subsidies is felt by agricultural sectors in developing countries. According to a WTO report (2003), these subsidies “constrain agricultural growth and development opportunities in non-OECD countries.” One estimate shows that trade distortions caused by agricultural subsidies cost developing countries $200 billion per annum (Akande 2002). Among the developing countries, those in sub-Saharan Africa have suffered the largest loss (in percentage terms) of about 10–15 percent of total agricultural and agro-industrial incomes (Diao et al. 2003)."

The report also said that subsidies to cotton farmers in the United States lowered prices globally, cutting the income of poor farmers in developing countries. "Estimates suggest that in West and Central African countries, where an estimated 10 million people rely on cotton for their livelihood, up to $250 million is lost every year as a result of these subsidies" it said. Citing a study by the International Food Policy Research Institute (IFPRI), the report said that "a 40 percent reduction in farm-level cotton prices leads to a 21 percent reduction in income for cotton farmers and a 6–7 percent increase in rural poverty."

As long as the world's food security depends on international markets that are deeply distorted and subject to a variety of speculative pressures, the dodging of the crisis of 2008 will be a temporary achievement. Not till we root food security firmly in local and subregional production-consumption cycles, with broader trade providing no more than an additional cushion against shortages, will we be able to say goodbye to the specter of global famine.