What crisis? Worst is yet to come

from the Globe and Mail

ERIC REGULY

ROME — Is there a food crisis? In the strictest definition, no. There is hunger, but no starvation. There are sporadic food riots in the poorest countries, but no widespread, out-of-control urban panic.

If you don't believe there is a crisis, you might think this week's Food Summit in Rome, sponsored by the United Nations Food and Agriculture Agency (FAO), is another bureaucratic boondoggle in the making, a grand photo opportunity for everyone from the Pope (Benedict XVI is indeed coming) to Nicolas Sarkozy and his fashionably low-cal wife.

Viewed in a different way, the crisis is genuine and potentially horrific. Galloping food prices tell the story. Thanks to two decades of scant investment in agriculture, soaring populations and the new protein-craving diets in the developing world, almost every food commodity is up by triple-digit rates in the past two years. In the first three months of this year alone, the FAO food-price index rose 53 per cent over the same period in 2007.

The brutal truth is that the world has consumed more food than it has produced for the past eight years. Global stocks for rice and soya, the staple foods for billions of people, have fallen to 10 to 15 per cent of annual consumption from about 20 per cent (the stock-to-use ratio). In other words, the world is no more than two months - a month short of the next harvest - from running out of food.

Here's another scary bit of information: The growth in farm yields, or productivity, is falling. The FAO's database says cereal yields rose by almost 3 per cent a year between 1961 and 1984, in good part thanks to Asia's Green Revolution. Since then, the yield improvement has fallen by more than half. This explains why the Malthusians are coming out of the closet.

If rate of yield improvement falls below the rate of population increase, "starvation" would replace "crisis" in the headlines.

With perhaps two billion poor people, many making $1 a day or less, suddenly worried about feeding themselves, the Food Summit delegates will have some planning to do. The short-term fixes don't require a lot of imagination. The World Food Programme (WFP), the UN's emergency food agency, will get topped up with funds so it won't lose its buying muscle. Saudi Arabia just pledged $500-million (U.S.) to the WFP. Similarly, the World Bank has unveiled a $1.2-billion facility to finance safety-net programs and grants to the poorest countries.

Medium- and long-term solutions are where the challenges lie. Where should the money and energy go?

There is no doubt the best bang for the buck would come from helping the armies of small, poor farmers. They make up 85 per cent of all farms in the world. They don't necessarily need genetically modified (GM) seeds and air-conditioned tractors (though they would help). Far simpler and cheaper things could boost their farm yields dramatically.

Take irrigation. Only about 5 per cent of Africa's arable land is irrigated; the crops on the rest of the land depend on rainwater, which may or may not come. Irrigation systems can boost yields dramatically. But better yields are not the only way to keep the planet fat and happy. Another way is to reduce losses after the harvest. In some parts of Africa, 50 per cent of the harvested crops are destroyed by insects and rodents. The loss is compounded by fear. Knowing their stockpiles are a rapidly wasting asset, farmers try to sell as much as they can as fast as they can. As the grains flood the market immediately after the harvest, the price falls.

The solution is dead simple: Proper warehouses. Some aid groups, including the Syngenta Foundation for Sustainable Agriculture (which is funded by Syngenta, the Swiss agribusiness giant) are building cement and brick warehouses in rural Africa.

Roads can also help enormously. If farmers can't get the food to market, they can't earn the income required to grow more food.

Help to small farmers is a proven winner. Vietnam went from a "food deficit" country, to use the UN term to describe a country that needs imports to feed itself, to a substantial food exporter because of small-farm development. There was a nice side benefit too. Vietnam's poverty rate fell below 15 per cent last year, from 58 per cent in 1979. The World Bank's World Development Report, released earlier this year, showed that GDP growth generated by agriculture is up to four times more effective in reducing poverty than growth in other industries.

Boosting the productivity of small farmers is not optional. Here's another scary food statistic. In spite of food's near vertical price curve since 2006, prices, adjusted for inflation, are still well below their mid-1970s level. The food "crisis" may just be getting started.