Importance of Food Security

• Muhammad Rasheed
• Asif Maqbool
• Naeem Qasim

The rapid raise in prices of rice, wheat and other food commodities has sent a shock wave through poor households around the world, as well as through governments and international policy makers. While food prices are always volatile, recent increases are of a magnitude last seen in the 1970s.

There are several causes: rising demand in large developing countries that have experienced growth in household incomes; neglect of agriculture in many developing countries over recent decades, leading to reduced supply; increased costs to farmers due to high fuel and fertilizer prices; competition from biofuels for land use; supply disruptions caused by drought in major agricultural exporting countries; speculation and an asset bubble in commodity markets; and the decline of the dollar, the currency in which many commodities are priced on global markets.

The Uruguay Round, which transformed the General Agreement on Trade and Tariffs (GATT) into the World Trade Organization (WTO), was launched in 1986. After twenty years, there was still no agreement. Everyone points to the Agreement on Agriculture as the stumbling block, but given delegates’ inability to solve the agriculture issues, it is hard to believe that other big topics like banking, insurance and telecoms – what the WTO calls “services” – would have been much easier.

To get past the obstacle of agriculture, and declare the Uruguay Round completed, the WTO artfully created the “Built-in Agenda” of issues not yet resolved, to be taken up at subsequent Ministerial Conferences. This artful practice of hand allows diplomats and negotiators to run back to their capitals saying we had a success and we gave away nothing! The Built-in Agenda is still pending.

The members of the WTO are developed, developing and least-developed countries. The WTO mainly focusing the interests of developed countries and sidelining the interests of developing and least-developed countries. They are compromising each other through a deal. This deal may have been hanging by a thread, but what snapped the thread was a major division between WTO members on how to achieve development.

The U.S. argued that opening markets was the best way to achieve food security and to promote livelihoods. India and China, supported by the majority of developing country members, argued for a strong safeguard mechanism to protect food security and livelihoods in the event of major disruptions to agricultural markets.

This deal did not collapse over small technicalities. It was doomed to fail from the start. There is no political support for what is on the table: not from India or France or Argentina or South Africa or most of the WTO members. Following the same WTO model is impossible now: governments are no longer willing to sacrifice other concerns strictly for the sake of trade. People are in the streets rioting over food and energy prices. The business world is in a state of shock over the financial crisis. These are the problems that governments have to focus on and the Doha Round cannot help them.

People want global agreements to solve food insecurity, to get them out of poverty and to avoid the devastating effects of climate change. If trade can help these goals, it should be used. But the deal on the table was likely to make things worse.

The WTO’s Doha Round and other bilateral and regional trade agreements currently under negotiation will not solve the issues of food security and other emerging issues due to the following reasons,

1. Existing WTO and bilateral and regional trade agreements push across the board liberalization, which worsens volatility of food prices. This leads to increased dependence on international markets and decreased investment in local food production.
2. Trade liberalization has eroded the ability of a number of developing countries to feed them, for example, Mexico, Bangladesh, Indonesia and Mali. The removal of tariff barriers has resulted in dumping of heavily subsidized commodities in developing countries, such as Ghana, Kenya, the Philippines, Jamaica and Honduras, while undermining local food production.
3. Developing countries have turned from net exporters of food to net importers of food. Two-thirds of developing countries are net food importers and are extremely vulnerable to volatile world food prices. The proposals under the current Doha Round were not very impressive and if those were approved then they will increase countries’ dependence on food imports while further eroding their ability to feed their own populations.
4. High food prices provide enormous benefits to transnational agribusinesses and commodity cartels that control the trade in food and agriculture. One of the largest global grain traders, Cargill, announced in April 2008 that its third quarter profits rose 86 percent to US$1.03 billion, in the midst of the global food crisis. Bunge saw its profits in the last quarter of 2007 increase by 77 percent compared with the same period in 2006. The Doha Round if concluded will strengthen the position of transnational companies in agricultural markets, who thrive on market deregulation.
5. The Doha negotiations do not tackle the major challenges facing the global food system, which include climate change, natural resource depletion, the quadrupling of oil prices, the lack of competition in world commodity markets, financial speculation and the rapid expansion of unsustainable agro fuels production.

Policy options

1. Governments and communities need to have a range of tools at their disposal to build durable and resilient food and agricultural systems that are ready for the challenges that lie ahead. This includes a greater emphasis on policies that increase food sovereignty, encourage local investment in local markets, support sustainable small-scale farming, safeguard local production from dumping, implement genuine agrarian reform, and allow trade instruments such as quotas and tariffs. Some of these instruments are being proposed by a group of 46 developing countries known as the G33 in the WTO’s negotiations on Special Products and Special Safeguard Mechanism.
2. The volatility of agricultural prices must be addressed through national policies and global actions to avert food crises and to ensure small producers a reliable and steady income. Well-managed public stocks need to be re-established. Such stocks provide an important buffer against price volatility and food insecurity. Speculation and extremely high prices forced upon consumers by traders and retailers must be controlled. At the WTO, the African group has a long-standing proposal on the need to allow commodity producing countries to make agreements among themselves in order to stabilize prices.
3. Governments should establish safety nets and public distribution systems to prevent widespread hunger. Governments have to provide financial support for the poorest consumers to allow them to eat. Governments must use the maximum of available resources within the State and from the international community.
4. A reform of the food aid system to respond more rapidly and to allow greater flexibility in the delivery of food aid. Instead of dumping surplus agricultural production as “in kind” food aid, donors should provide cash to governments and aid agencies to buy local food.