The Hindu Business Line : When food becomes feed

While the food summit underscores the need to quickly expand food production and increase investment in agriculture, implementation ideas are missing.

The recent World Food Summit convened by the United Nations Food and Agriculture Organisation (FAO) in the backdrop of spiking global food prices rapidly escalating into a food crisis in the poorest countries has, expectedly, called for more investment in agriculture. The summit declaration is an unequivocal recognition of the urgent need to help developing countries and countries-in-transition to expand agriculture and food production and to increase public and private i nvestment in agriculture, agribusiness and rural development. In addition to demanding more funding for UN agencies to enhance food assistance and safety-net programmes to address hunger and malnutrition, the declaration calls for building increasing resilience in the world’s food system to climate change, more dialogue on the link between bio-fuels and food security and the early conclusion of WTO talks on agricultural trade.

Despite capturing such salient issues, policy researchers and others believe that the declaration could have been more aggressive on issues that can exert an immediate positive impact, especially on market prices. Among other factors, large-scale diversion of traditional food and feed crops (corn, wheat, oilseeds) as feedstock for bio-fuels has contributed to the global food price rise. While the debate over the techno-commercial and environmental desirability of bio-fuels remains inconclusive, it has to be recognised that the bio-fuel policies of governments actually distort the global food market. Mandated blending of ethanol or bio-diesel with mineral oil and grant of financial incentives across the supply chain in countries such as the US and the EU skew the demand-supply equation and prevent food prices from finding their natural levels. For food crops that have become feedstock, there must be a level playing field between food/feed demand on the one hand, and fuel needs, on the other. Withdrawal of incentives for diversion of food crops for fuel is one step that can quickly lower food prices. Will the US and the EU take note?

Another aspect that has escaped serious attention is the role of speculative capital in the agricultural futures market. The market deserves tighter regulatory oversight to rein in speculative excesses. The US regulatory authority CFTC has begun investigating the issue. Lastly, as the International Food Policy Research Institute points out, the declaration fails to pin responsibility for implementation of recommendations. The fight against poverty, hunger and malnutrition is far from over. If anything, the situation is worsening. Strongly emerging economies such as India, still largely agrarian, have the natural endowments to augment food output but have failed to feed their people adequately, primarily because of a lack of focussed attention to agriculture. The time to act is now.

Related Stories:
World Bank’s 10-point plan for the food crisis
UN bid to defuse world food crisis
Way to tackle agrarian crisis, food security
No short-term relief in world food prices: FAO

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