How to fix a "broken" supply system

The current droughts in Europe and floods in the USA threaten yet another rise in cereal prices in the next few weeks, and serve as a reminder of the changing dynamics of the global food supply system.



Aid agency Oxfam in its new report, Growing a Better Future, says the global food system is “ broken” and warns that we have entered “a new age of crisis where depletion of the earth’s natural resources and increasingly severe climate change impacts will create millions more hungry people.”



It builds on projections by US-based think-tank International Food Policy Research Institute (IFPRI) to predict that food prices of staple grains will more than double in the next two decades.



Using economic modelling based on alternative future scenarios for agricultural supply and demand that take into account the potential impact of climate change, IFPRI has been projecting crop yields, food prices, and child malnutrition up to 2050 and beyond.



“Climate change, high and volatile food and energy prices, population and income growth, changing diets, and increased urbanization will put intense pressure on land and water and challenge global food security as never before,” said Mark Rosegrant, director of environment and production technology division at IFPRI.



“If agricultural production and policymaking continues down its present course, there could be severe consequences for many poor people in developing countries.”



In another 40 years traditional suppliers of certain cereals will change and so will food preferences in Asia as economic prosperity will wean people off a grain-rich to a more diversified diet.



“For Asian countries, we expect rice consumption to continue to decline - as it has been in Vietnam - from 168kg per capita in 2000 to 119kg per capita in 2050,” said Rosegrant.



Asian countries could end up exporting bigger quantities of rice mostly to African countries. The demand for staples will grow in least developed countries, but demand for maize and other coarse grains to produce biofuels will grow substantially in developed countries as well, the projections show.



But growing demand and limited potential to increase supply will force Asian economies, including India and China, to become net importers of grains and meat if there are no changes in the pressures on the food supply and policies, according to Rosegrant.



The USA, Canada and Russia will be able to sustain their production and remain big exporters. Australia’s performance depends on weather conditions which have affected yields dramatically in recent years. Brazil and Argentina will become increasingly important exporters. But food prices could go up 70 percent by 2050, he says.



Global prices are already high with a lot of uncertainties even over the next few months. "During the last food price crisis in 2007-2008, many of the major suppliers of staple grains were affected by environmental factors - as we have now," cautioned Abdolreza Abbassian, secretary of the Intergovernmental Group on Grains at the UN Food and Agriculture Organization (FAO). The last crisis pushed up the number of hungry by almost a billion.



So how do you repair the “broken” food system? Three experts give us their five top policy fixes:



Christopher Barrett, a food aid expert, who teaches development economics at Cornell University in the USA:

  • More money for research: Substantial expansion of investment in agricultural research capacity, especially in low- and middle-income countries. “The food price crises of recent years are the bitter harvest of a generation’s underinvestment in agricultural research to ensure that productivity growth keeps pace with demand growth.”
  • Investment in renewable energy: Spend more to power irrigation in Africa and parts of Asia and Latin America. Provide low-cost liquid fuels to reduce transport costs and food marketing margins in more remote rural areas: and reduce diversion of prime agricultural lands into fuel crop production. “The energy crisis is linked to the food crisis and will become more closely coupled in the years ahead.”
  • Reduce bureaucratic red tape and investment restrictions: This will improve the flow of money in agricultural marketing systems that could reduce large post-harvest food losses. “The world produces ample food; it just cannot distribute and store it well so as to meet needs equitably and efficiently.”
  • Diffusion of genetically modified crop varieties: Help low and middle-income countries enact appropriate bio-safety standards to expand the use of genetically modified (GM) varieties that have proved effective in reducing losses to pests, increasing yields, and/or reducing agro-chemicals use.
  • Reform US food aid and improve coordination among donors: This will eliminate restrictions that add costs and impose delays which undermine the efficacy of the world’s emergency food assistance system.

Mark Rosegrant, IFPRI:

  • Increase investments in agricultural research to improve crop and livestock productivity; promoting GM crop varieties which have proven effective and are considered safe.
  • Greater spending on agricultural infrastructure, especially rural roads and irrigation.
  • Improve access to diversified, nutritious food and safe drinking water with good service delivery and safety nets.
  • Spending on girls’ education, which has a direct bearing on food security.
  • Promote the manufacture of ethanol - biofuel from sugarcane rather than from staple grains. “This will not only reduce pressure on grain to be used as feed for biofuel but provide a cheaper and greener alternative to fossil fuel.”

Gonzalo Fanjul, Oxfam’s senior strategic adviser:

  • Manage the food system better by regulating volatile commodity markets and making them more transparent; bolster regional and national food reserves; and put an end to biofuel policies which reward companies which divert food into fuel.
  • Invest in small-scale producers and protect their rights to land and other natural resources. Five hundred million small-scale farms in developing countries already support one third of humanity and offer the greatest potential to sustainably boost global yields.
  • Recognize the crucial role women play in feeding the world by ensuring women are in positions of leadership in institutions where agricultural, food security and climate change decisions are made.
  • Deliver a global deal that will ensure the world avoids the worst impacts of climate change, and helps poor producers adapt to changes already in the system.
  • Introduce national and international rules that will stop investors and corporations undertaking irresponsible large-scale land investments which undermine vulnerable people’s access to resources and food security.



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