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Food prices spiral again, supply shortages feared

Published:Sunday | November 7, 2010 | 12:00 AM

David Jessop, Gleaner Writer

Once again, global food prices are spiralling upwards.

On November 2, the United Nations Food and Agriculture Organisation (FAO) announced that its global food-price index had climbed for the fifth month in a row and had reached its highest level since its index peaked in July 2008.

This is not good news for countries from Haiti and Mexico to Bangladesh. When prices were last as high, they and other nations experienced food riots as the price of staples such as rice, corn, and wheat passed beyond what ordinary people could afford. Nor is it good news for a Caribbean still struggling to come out of recession and with a food-import bill stuck somewhere between US$3 billion and US$4 billion per annum.

Supply and demand

What is alarming is that the laws of supply and demand suggest that the situation may well get worse as demand from China, India, and Brazil, the world's fastest-growing economies, outstrips domestic production. As their populations increase, they become wealthier and their people seek a more varied diet.

According to the FAO, world cereals output needs to increase by one billion tonnes a year by 2050 to feed a global population that is expected by then to be some 40 per cent larger.

In reports published by the organisation over the last two years, the FAO suggests that the only way this situation can be addressed is by retaining existing levels of biodiversity and introducing new genetically modified higher-yielding crops.

The serious problem with food prices began in 2006 when they first began to escalate beyond the reach of many of the world's poorest.

While this initially reflected changing demand, by early 2008, food prices were being driven higher by speculation as food became a global 'asset class' to be traded. However, unlike in the past when such increases brought benefit to small farmers, the action of the markets broke the link between production and demand by turning food into a commodity for flight capital, with the consequence that in many parts of the world, poor families were forced to sell assets or make sacrifices in relation to health care, education, or to feed their families.

Although the historic highs abated in late 2008, the not wholly unrelated near collapse of the global financial system at around the same time dramatically reduced the ability of developing country finance ministers to subsidise or support in other ways the nutritional needs of the poorest in their societies as commercial credits dried up. The consequence being that most developing countries are now poorly placed to experience another food-price crisis.

As for the Caribbean, it would seem that little has happened on the ground in the last two years to make the region more self-sufficient. Rather, the emphasis has been on fine words, meetings, and more meetings, and documents detailing their outcome.

Throughout, the Caribbean has been moving at a pace that bears no relation to the nature of the problem or the need to find ways to rapidly address in practical terms how to encourage farmers and investors to open up idle land to grow more for domestic consumption by resident and visitor alike.

Recently, two meetings took place in the region that demonstrate the problem. The first was Grenada's Agriculture Week, attended by regional and international experts.

At the meeting, the Agriculture Minister of Antigua, Hilson Baptiste, urged Caribbean nationals to grow food required to feed themselves, suggesting that hormones in imported foodstuffs were having a negative effect on public health.

He also pointed to problems with the legal system in some Caribbean nations where never-repealed colonial laws ban farmers from putting up permanent structures on land and deny long leases that would enable banks to offer them credits based on a long-term financial horizon. He also suggested that the region lacked the administrative and institutional capacity and the political will to correct the situation.

Others pointed to a range of worrying developments affecting agriculture. They suggested that praedial larceny (the theft of crops) in some Caribbean nations may affect 18 to 25 per cent of agricultural land, and may have become an organised criminal activity; that a significant part of the region's food-import bill now results from imported ready-to-eat meals; and there is a continuing unwillingness among banks to offer credit to expand production, improve technology, or finance high-yield crop varieties.

Just as tellingly, Ena Harvey from CARDI is reported to have told the meeting that while the region's coconut industry was in decline, most of the coconut-based massage oils used in the tourism industry are now imported.

As for what is to be done at a regional level, the process grinds on. A special meeting of the Council for Trade and Economic Development endorsed the Regional Food and Nutrition Security Policy and Action Plan in late October.

This will be presented to the CARICOM heads of government at an inter-sessional meeting early in 2011.

The policy, according to a news release, "is geared to address the major food and nutrition security challenges in the community, and aims to achieve food availability, food access, proper utilisation for good health, nutrition and well-being, and stable and sustainable food supplies at all times".

What is alarming about all of this is that this is the second such high-level meeting over two years to endorse the policy. While it is clearly of value to have policy coherence with health and education and recognise that food security is about more than agricultural policy, the practical issues associated with food security require rapid national action.

The real test

No doubt next year, Caricom heads will endorse the outcome of two years of talking about food security, but the real test will be whether any government at a national level actually implements the practical reforms needed to bring about food security.

Worryingly, some ministers seem not to have got beyond the obvious suggesting that young people should be involved in agriculture, farmers need to operate as businesses, and investments and commercial credits are required to stimulate farming.

If food security is what is required and the social consequences of prices passing beyond what ordinary people can afford, it is action quite literally on the ground that is required.

David Jessop is director of the Caribbean Council. david.jessop@caribbean- council.org