The G8 Leaders announced a US$20 billion pledge to boost world food security at their recent summit in L'Aquila. The pledge, greater by US$5 billion than originally anticipated, is a welcome one given that world hunger is on the rise. Indeed, the FAO recently announced that the number of undernourished people on this planet has now surpassed 1 billion. Never before have so many people gone hungry.
The G8 pledge is still short on details about how exactly funds will be spent, and indeed, about whether the funds represent new commitments or a repackaging of old ones. Broadly, the Statement on Food Security released at the Summit indicates that there will be a shift away from a focus primarily on short term responses and toward longer term solutions to boost production in developing countries, particularly amongst small farmers.
Having caught wind of the desire to move away from ‘food aid' a few days before the announcement, the World Food Programme executive director, Josette Sheeran, stressed that we can't forget the hungry in the short term while we promote longer term investment in the sector. The WFP points out that even if agricultural production were boosted by three-fold overnight, there would still be widespread hunger due to the global mal-distribution of food. This pressure appears to have persuaded the G8 to try to balance both long and short term objectives for the sector in its statement.
In determining the precise direction of investment to boost world food security, it is important that the G8 countries consider carefully the multiple and complex causes of global hunger today, and their own role within those causes. The situation has been exacerbated by the current economic crisis as it spreads from North to South.
- Food prices are still relatively high in developing countries, as reported recently by the FAO, despite the fact that international prices have dropped on global markets in the past year. Short term supply bottlenecks in poor countries, exacerbated by a lack of financing for imports due to the global credit crunch, have contributed to these higher local prices.
- Food price volatility on global markets remains a threat. There is growing recognition that financial speculation on agricultural commodity markets in industrialized countries - driven by global financial market volatility in recent years - played a key role in quickly bidding up prices in 2008, as noted in a recent US Senate report on the topic.
- The current economic crisis is pushing more people into poverty. This trend is confirmed by a recent UN progress report on the Millennium Development Goals, which indicates that 55-90 million more people will be living in extreme poverty in 2009 than was anticipated. Poor people in developing countries spend on average some 50-80 percent of their income spent on food. If their incomes fall, so does their access to food.
- The economic crisis has also meant a general contraction in the availability of credit within countries, which affects developing world farmers' ability to invest in the expansion of agricultural output.
- There has been a serious decline in both government and multilateral agricultural investment over the past 30 years in developing countries. The share of agriculture in Overseas Development Assistance (ODA) declined from 18 percent in the 1979 to just 3.5 percent in recent years. Even the World Bank admits that its support for agriculture dropped from over 30% of its lending in 1980 to just 12 percent in 2007. The ability to increase agricultural investment is threatened by cuts to both domestic budgets and foreign aid in the wake of the current economic crisis.
- Food import dependence has been on the rise in developing countries in recent decades, particularly in the least developed countries. This problem is outlined in a recent UNCTAD report on the impact of the food crisis on Africa. The report points out that agricultural trade protectionism by wealthy industrialized nations - namely high levels of farm subsidies for their own farmers which depressed world food prices for most of the past 30 years - contributed to food import dependence and vulnerability to food price volatility in the world's poorest countries.
- Food aid is woefully underfunded and lacks flexibility. Although donor countries pledged additional food aid funds at last year's G8 Summit, the level of food aid commitments in 2009 is down as the economic crisis takes its toll on aid budgets. The WFP recently announced that it has raised less than one quarter of its US $6.4 million budget for 2009. In addition to funding shortfalls, much of the food aid available is inflexible, making it highly inefficient as an aid resource. Although most other major donors have untied their food aid, the largest donor of international food aid, the US, continues to tie most of its food aid to US-produced grain. According to a recent US Government Accountability Office report, tied food aid results in long delays and high transportation costs, meaning that fewer hungry people can be fed than would be the case if the same amount were spent locally, within developing countries, to source the food.
Given the diversity of factors contributing to global food insecurity today, it is important that the G8 food security initiative tackle these issues in a meaningful way. While helping poor countries to feed themselves is an important goal, as US President Obama recently stressed, it is also important not to forget that the rich country policies have played a role in creating the current situation.
There is no silver bullet solution to global food insecurity. The problem is complex. As they formulate the details of their US$ 20 billion initiative, the G8 leaders must remember that the global economic crisis, which originated within their own territories, is a major exacerbating factor to food insecurity in developing countries. Further, they must recognize that not only their own food and agriculture policies, but also their broader economic policies, have long influenced global food security and will continue to do so in the future.
Jennifer Clapp is a CIGI Chair and Professor in the Balsillie School of International Affairs, at the University of Waterloo
The Global Food Crisis: Global Governance Challenges and Opportunities, a forthcoming edited volume by Jennifer Clapp and Marc J. Cohen, is co-published by CIGI and Wilfrid Laurier University Press.