Food prices volatility: watch this space

A recent article by the Institute for Agriculture and Trade Policy (IATP) outlines the food price situation and the actions that need to be taken to reduce price volatility. In 2012, as prices began to creep higher and a third food price spike since 2007 looked likely, governments should have been poised to act to curb food price volatility once and for all. As the IATP authors believe, governments did not take this opportunity and failed to address the root causes of food price volatility.

This recent article is an update to the authors’ 2012 report, Resolving the Food Crisis, and calls for action to be taken around a series of themes:

• Donor funding for agricultural development
• Reducing biofuels expansion
• Curbing financial speculation on agricultural commodities
• Building food reserves
• Halting land grabs
• Addressing climate change

These issues are neither original nor specific to solving the problem of food price spikes. Instead they are frequently raised by NGOs and other stakeholders across the world and, as the authors point out, these problems are not going away. Not enough is being done to address them. There are huge opportunities for progress in 2013 but whether governments will seize them is another matter, as history attests. Action to address food price volatility from the G20 has revolved to date primarily around the Agricultural Market Information System (AMIS) and, while G20 leaders plan to meet in Russia this year, no meeting of agricultural ministers is planned. Decisions over the future vision of the World Trade Organisation Doha Development Round could be an opportunity to ensure trade rules ‘protect and promote food security,’ but given the previous disarray of the Doha Round this may be too much to hope for. New farm legislation in the US and reform of the Common Agricultural Policy in the EU show little sign of being transformative.

The State of Food and Agriculture 2012: Investing in agriculture for a better future

The UN Food and Agriculture Organisation (FAO) this week released its annual report, the State of Food and Agriculture, for 2012. This year’s focus is on “the accumulation of capital by farmers in agriculture and the investments made by governments to facilitate this accumulation.” Farmers are part of the private sector and their investments in developing their businesses can have large impacts on the wider rural economy. This, as the report asserts, is why farmers are crucial stakeholders in national plans to improve agricultural investment.

And developing agriculture is important. Improvements in the sector can have wide reaching benefits for reducing hunger and poverty. Given that 80% of the world’s chronically hungry are farmers, greater investment in agriculture, which has been stalling or declining for several decades, can significantly contribute to meeting the first Millennium Development Goal of halving hunger and poverty by 2015. Indeed the report finds that over the last 20 years, countries with the highest rates of on-farm investment have made the most progress in halving hunger.

But farmers are only part of the story; governments have an important role to play. In low- and middle-income countries, farmers’ own investments to farming outstrip investments made by governments or the private sector. This report shows that farmer investments can have greater social and economic benefits when undertaken in an inductive investment climate, an area controlled by markets and government. As the report states, “Governments are responsible for creating the legal, policy and institutional environment that enables private investors to respond to market opportunities in socially responsible ways”. Developing this enabling environment is a crucial function of the public sector, particularly in terms of levelling the playing field between smallholders and larger investors. Improving incentives for farmers to invest and reducing the barriers will aid agricultural development significantly.

Challenges, Opportunities and Successes: Resilience in Ethiopia

We, as a planet, need to be resilient in the face of the known and unknown impacts of climate change. Agriculture is likely to be one of the sectors most impacted by changes to the climate, representing a major barrier to attaining global food security. In developing countries the road to resilience is unfathomable given that development itself is a considerable challenge.

This challenge is evident in Ethiopia where 83% of the population depend directly on agriculture. A paper published in August 2012, authored by Alex Evans, lays out the obstacles Ethiopia must contend with such as:

• A high dependence on aid: 7.5 million people depend on food safety nets.
• Low natural resource security: 5% of land is irrigated and water storage capacity is extremely low.
• Population growth: Currently 85 million but this is expected to grow to 119 million by 2030 and 145 million by 2050.