World Bank President, Robert Zoellick, identified soaring food prices as ‘the biggest threat to the poor around the world. We are in a danger zone because prices have already gone up; stocks for many commodities are relatively low’, Zoellick said in a news conference opening the annual World Bank-International Monetary Fund spring meetings in Washington two weeks back.

Food prices may not have been the cause of the crises in the Middle East and North Africa, but they were certainly an aggravating factor. The World Bank’s Food Price Watch shows that there is double-digit food price inflation in Egypt and Syria. Commodity price spikes hurt poor countries most because food is such a large share of household budgets.

Global food prices have soared 36 per cent from a year ago, according to the Bank’s food price index, pushing some 44 million people below the $1.25 a day poverty line. Another 10 million people would be pushed into poverty if prices rise another 10 per cent, according to the Bank. ‘One of the points that we are trying to emphasise through these meetings is the need for the G20 and for the World Bank and others to put food first’, Zoellick said. ‘Because I think we are in a particular moment of vulnerability in that if you have some other events, which you can never predict, we really don’t have a cushion.’

France has put food prices and commodity price volatility on centre stage in the agenda of the G20 and the world has now been galvanised to worry about global food security.

‘Immediate action must be taken to address underlying factors driving food prices and volatility, which are excessive speculation and demand for bio-fuels’, says Luc Lampriere, spokesman for Oxfam.

The instinct, as Shenggen Fan suggests in this week’s lead essay, is to go for simple solutions to deal with what is a complex and inter-connected problem. In India, exposure to international price volatility is used as a reason for agricultural protectionism. In Indonesia, banning imports of rice is seen as a policy instrument for ensuring food security. In Australia, the xenophobes have amazingly argued that concerns about global food security are a reason for restricting foreign investment in agriculture! The problem of recurring food crises, Fan points out, is much more complex and requires a comprehensive approach from developed and developing countries as well as international organisations.

Counter-intuitive though it may appear to some, keeping food markets globally open is a key to global food security. Restrictions on trade exacerbate the problem; they are not a solution to it. Open food trade allows amelioration of the impact of supply shortfalls because of seasonal or other failures in one place, there and elsewhere in the world. Although export bans may help to secure domestic food supply at one point in time or another, they lead to tighter markets for other exporting countries and induce panic purchases by food importing countries, both of which fuel further price increases and volatility, as Fan says.  As Warr argues it is ‘not that Indonesia’s self-sufficiency policy is a bad idea, but that protection policy (the import ban) as an instrument of achieving it results in unnecessary social costs and places food self-sufficiency in conflict with the goals of food security and poverty reduction.’ Countries like Australia, the United States, Canada and New Zealand have a crucial role to play, through commitment to open trade and investment in food, to global food security.

A long-term structural problem is the new competition of fuel for food resources. The benefits and threats of crop-based bio-fuel production for food security and environmental sustainability need to be carefully evaluated in terms of their real contribution towards lowering greenhouse gas emissions and the carbon-intensity of transport fuels.

Social safety nets, international emergency grain reserves, and above all, investment in productivity-enhancing agricultural technologies and know-how are all part of the solution to the problem of global food security.

Fan also suggests a new high-level group to monitor the world food situation and to trigger action when food markets are likely to become unstable. The group would also provide guidance on grain reserves for food security emergencies, when and how to release them, and at what prices. Hopefully, the G20 will take these and other suggestions on board in the lead up to its next summit.

Peter Drysdale