The G20 was born out of the global financial crisis and, understandably, the bulk of its agenda has been focused on financial reform. It is important to remember, however, that in the midst of the financial crisis there was also a global food crisis. The early stages of the financial crisis in late 2007 and early 2008 coincided with sharp rises in food prices. Rapidly escalating food prices at that time directly reduced poor people’s ability to buy food and led to food riots in nations as diverse as Haiti, Egypt and the Philippines.
The Scope of the Global Food Crisis [h2]
Many experts attributed the food price spikes at least in part to the widespread movement of investors into agricultural futures markets, which promised higher returns at a time of financial instability. These speculative investments played a role in driving extreme volatility on international food markets, and poor countries that import food were hard hit.
Although international food prices have fallen from their peaks in mid-2008, hunger has only become more pronounced in the developing world. Today, more than one billion people go to bed hungry every night, over 200 million more than in 2008.
Hunger has deepened because developing countries that rely heavily on imported food have found that they have been unable to finance sufficient imports due to the tightening of credit on world financial markets. As a result, food prices have remained high in some developing countries, even as they have fallen in rich countries. On top of this, the overall decline in incomes triggered by the global economic crisis further affected the food security of the world’s poorest people, who spend 50–80 percent of their income on food.
At Pittsburgh in September 2000, the G20 summit leaders recognized the gravity of this situation. On the margins of its pledges to reform financial markets and promote freer international trade, the G20 promised to invest in the promotion of food security. It called on the World Bank to oversee a trust fund of US$20 billion that had been pledged for food security at the G8 meeting in L’Aquila in June 2009. But the G20 could do much more to combat hunger by linking its food security initiative more tightly with its broader economic agenda.
The G20 explicitly recommended that the US$20 billion trust fund be invested in agricultural productivity improvements in the world’s poorest countries through increased access to technology. This thrust meshes well with the World Bank’s most recent agricultural strategy, which focuses on increasing food production in the developing world. Because so many poor countries are now dependent on food imports, building their agricultural sectors to be more self-reliant is clearly an important goal.
Productivity is Not Enough
However, the narrow focus on a productivity approach to food security misses a big part of the picture. Food security is shaped very much by global economic relationships that directly affect people’s ability to access food. The G20 would like to see access to food improved, but it has not yet connected the dots between food security and its broader economic agenda that includes financial reform and trade.
For instance, the G20 leaders have expressly called for strengthened regulation over energy futures markets in order to address excessive oil price volatility. A similar case can be made with respect to agricultural commodity futures markets and food price volatility. Concerns about agricultural price volatility are already a driving force in financial reform proposals within the United States, but the G20 has yet to make that link on a broader international scale.
Why has Progress Been So Slow?
A second issue where the broader linkage could be made concerns the relationship between the international trading system and the vulnerability of developing countries to food price fluctuations. Dependence on imported food in the world’s poorest countries has grown over the past 30 years. Huge agricultural subsidies in rich countries have driven down world grain prices for most of that period and pushed many developing country producers out of business.
In Pittsburgh, the G20 endorsed an "ambitious and balanced" conclusion to the Doha Round of international trade talks that have dragged on since 2001. A key aspect of the Doha trade agenda is to reduce the subsidies that rich countries pay their farmers, but progress has been very slow. This issue is in fact one of the key sticking points holding up the entire negotiations. The global food crisis of 2008 should remind political leaders that this issue needs to be addressed in a way that reduces the negative impact on developing countries’ agricultural sectors.
The G20 leaders’ current view of food security is far too narrowly focused on investment to boost agricultural productivity. The prospect of more food production in developing countries is welcome, but it does not guarantee access to food for those who are hungry. The broader economic context is a key determinant of access.
Unless it explicitly incorporates measures to address food price volatility and the inequities in agricultural trade, the G20 food security strategy is likely to make only partial gains in the fight against world hunger.
Jennifer Clapp is CIGI Chair in Global Environmental Governance at the Balsillie School of International Affairs and professor in the Environment and Resource Studies Department at the University of Waterloo, Ontario.