World food crisis - An Asian perspective

By Chandran Nair
Formiche

This article was written for the July 2008 issue of Formiche magazine, an Italian current affairs publication.

The Neglect of Agriculture

The food crisis confronting Asia today whilst triggered by recent trends such as rising consumption patterns, environmental degradation, climate change and demand for bio-fuels, actually has its origins in flawed policies of the past. Lured by promises of a fast-track road to prosperity, Asian policymakers shifted their focus from a development path traditionally dominated by agricultural self-sufficiency to one mandated by the industrial and manufacturing sector. The common belief was that Asian countries could “manufacture their way out of poverty”. This led to policies that unwittingly perpetuated the crisis that is looming today by not recognizing that manufacturing-led economic growth would push agriculture to the background and also result in growing rural-urban disparities as well as over consumption in many instances.

The critical role of the rural economy in terms of being the breadbasket that feeds the nation as its people consume more, together with the consequences of dis-incentivising the agricultural sector’s workforce were ignored by leaders due to the conviction that the rural sector represented the backward population and that agriculture was a “poor cousin” of industry. The waning of agriculture was due to policy and institutional neglect. In particular, a lack of public investment in rural infrastructure (irrigation, roads, electrification, and communications), social infrastructure (basic education and health care), and agricultural services exacerbated rural poverty and increased rural-urban migration, not to mention degradation of arable land which is vital to the survival of any nation.

Apart from the emphasis on manufacturing, other strategies unfavorable to agricultural development have continued whilst politicians have paid lip service to the needs of the rural poor. On the supply side increasing amounts of arable land has been usurped for the construction of factories, housing developments, resorts and golf courses. In China for example, during the 10th Five-Year Plan (2000-05), the annual loss of arable land was an alarming 1.23 million hectares. Measures have been taken to reduce this shrinkage but experts have warned that China's arable land might drop below the "red line" of 120 million hectares (the figure that is essential to maintain food security till 2020) in five years time because of unchecked illegal use. This threat has led the Chinese to even consider the seemingly implausible prospect of leasing agricultural land in Australia, Latin America, Africa and other countries.

Compounding Factors

To add to this, all across Asia watersheds have been destroyed and soil has been degraded through inadequate attention to natural resource management. At the same time the indiscriminate use of fertilisers and pesticides to increase productivity in the “green revolution” has had long-term detrimental impacts on agricultural land and areas like the state of Punjab – India’s bread basket - are struggling with this problem.

Another factor is that conglomerates have been allowed to take over agriculture often shifting production to cash crops or grain for meat production. According to the United Nation’s Food and Agriculture Organization an estimated 30% of the earth’s ice-free land is directly or indirectly involved in livestock production. Although arguments on the pros and cons of industrial agriculture are widespread, there is evidence that the dominance of conglomerates has resulted in food shortages for the less privileged, and a marginalized role for small farmers.

On the demand side, urban biased policies remain rampant. In addition to social services, infrastructure and wages being of much higher quality in cities, the maintenance of artificially low prices for essentials such as rice for the purpose of reducing inflation and sustaining political harmony in urban centers has created undue stress in the rural economy. The result is a state of affairs where the local farmers that help feed nations remain among the poorest having not benefited from the “Asian economic boom”. Improving the lot of the Asian farmer should not be treated by policy makers as romantic attempts at helping the poor but as critical policies that are linked to national security and economic development.

But national urban biased schemes aside, the current predicament can also be attributed to a number of trends that are impacting development on a global scale. The first is the continuing growth in population figures. In Asia, the population grew from 1.4 billion in 1950 to 2.4 billion in 1975 and again to 4 billion or 60% of the world population in 2007. Increasing prosperity has also resulted in a consumption binge amongst the growing number of middle class Asians. About 30 years ago, the United Nations estimated that up to 40% of Asians were chronically undernourished. Huge progress has been made in food production and access since then, and in 2004 that number was reduced to 16%. However, with growing prosperity, hundreds of millions of other Asians now enjoy a new life of abundance steeped in over consumption and wastage. In India, where a significant number of undernourished people reside, 55% of women between 20 and 69 years old were overweight in 2004. The number of obese Chinese had also doubled to 60 million between 1992 and 2002. This adoption of Western consumption habits means richer Asians are eating away at their own resource base.

Consumption- led economic growth has also created a vast departure from traditional values of moderation and put much pressure on the food supply chain. The growing availability of affordable meat is of concern because of its inherent inefficiencies as a food source. To produce a kilo of meat takes six kilos of grain, as a result, livestock reared for meat are now eating the grain that would previously have fed the poor.

Other precursors of the food crisis are climate change impacts and ecological stress. According to the UN's World Food Programme 57 countries, including 19 in Asia, were hit by catastrophic floods in 2007. Also, harvests have been affected by drought and heat waves in some markets putting pressure on supply and resulting in the current crisis. But even in areas where supply has been plentiful, hungry people are being forced to eat less due to skyrocketing prices fueled by hoarding and market speculation.

Prices have also increased due to the rush to cash in on bio-fuel production. The rising demand for subsidized bio-fuels in the US and Europe, further stimulated by soaring oil prices, boosts demand for grains and edible oils that are an alternative to food crops. According to the IMF, corn-based ethanol produced in the US has largely been responsible for almost 50% of the increase in consumption of major food crops between 2006 and 2007 even though bio-fuels only account for 1.5 percent of the global liquid fuels supply. This diversion of food crops to fuel is not only inefficient but could prove catastrophic for world food supply. Asian regulators, meanwhile, have for the most part just stood by and watched without intervening.

Another global trend that is aggravating the problem is the unfair international trade rules which shield local farmers in rich countries leaving developing countries agricultural sectors unable to compete on the world market. India is the strongest opponent to WTO rules and has taken issue with the United States in particular because the trade rules favored by the US benefit less than six million American farmers versus over three billion people who depend on agriculture for their livelihood.

What can be done?

To move towards alleviating this crisis, one major focus of Asian governments should be to re-channel resources to agricultural and related policy issues so as to rid the sector of the “poor cousin” tag it has endured over the last 30-40 years. Part of making agriculture central to economic development entails integrating in parallel the rural non-formal sector with reforms in the industrial, manufacturing and services sector. There has to be a dramatic shift towards this parallel integration so that agriculture is not seen as separate from everything else, but as central to economic vitality and independence.

Integration must also focus on improvements in the existing supply chain inefficiencies which currently result in significant food wastage -over 30% of fresh produce is estimated to be wasted in markets like India due to inadequate infrastructure such as transport and storage systems. Reforms on land ownership rights, access to loans for farmers, availability of insurance and price controls need to be part of the rural economic transformation that is well overdue in many countries. It was these reforms that changed the rural sector and increased agricultural productivity in Taiwan, Korea and Japan. This should also then be closely tied to an economic policy that makes resource conservation and environmental management in rural areas a central tenet of economic planning.

At the top of the agenda needs to be massive investments to protect soil, water resources and biodiversity. Very few countries have linked public sector spending to the protection of these vital resources- arguably the life-blood of any country -which are key to a vibrant rural and therefore agricultural sector. If anything conservation initiatives have been seen as impediments to development, the cost countries must bear to develop, rather than the other way around.

Governments in Asia must also ensure that all farmers have access to the tools (seeds, irrigation, and fertilizers), needed to improve productivity which requires allowing farmers access to capital on fair terms.

In addition, investments in improved education and health with the aim of providing opportunities for the rural poor are vital. Along these lines, opening up the rural sector to private investments by encouraging investors to capitalise on smaller profitable rural projects would unlock a new area of economic activity.

With regards to bio-fuels and the current profiteering that is causing much harm, Asian governments must put in place policies to ensure that food prices and production are secure from fuel production. In addition, Asia could lead the world in starting a certificate scheme for bio-fuels that meets certain stringent criteria with regards to protecting food supply and ecosystems. Cooperation with the EU in this regard would be a step forward.

Finally, more Asian governments should explore the adoption of genetically modified foods that some view as a mechanism by which to continue the “green revolution” in our time. Japanese and South Korean makers of corn starch and corn sweeteners are already being forced to buy biotech corn and China has experimented with GM rice. As food prices soar and grain shortages continue, governments, food companies and consumers may need to overcome their longstanding resistance to genetically engineered crops and look to biotechnology for some of the solutions. Here again GMOs should not be seen as a panacea but as one strand of an overall food security strategy with strict policies to address some of the public concerns about them.

Feed or be Fed

Over a billion people in Asia are seriously affected by the food crisis, as food accounts for 60% of their average total expenditure. Because certain factors such as adverse climate conditions, trade subsidies in rich countries, diversions for biofuels and speculative purchases on commodity markets are difficult to control, it is therefore vital that Asian leaders take concrete steps now on the domestic front to review their manufacturing-led development models and provide targeted support to put into place policies that will address the many complex issues that have brought us to where we are today. In the 21st century there can be no excuse for Asian countries to be expecting food aid from the West. A long history of reliance on aid has created a dangerous dependency which must stop as the region is capable of feeding itself rather than being fed. A fine balance needs to be struck between poverty alleviation, managing the excesses of free markets, the use of technology (GMOs, fertilisers etc..), the role of industrial agriculture (corporate involvement) and investments (both public and private).

None of these is possible without carefully crafted policies.

Chandran Nair is the founder and CEO of the Global Institute For Tomorrow.