Fixes for the Food Fight

By Jake Caldwell
From the Center for American Progress
Wednesday, April 30, 2008; 8:33 PM

The world is not food secure. An overextended global food system operating in an increasingly resource-constrained world with little or no cushion to cope with catastrophe is now at the brink of break down due to soaring global food prices. In the United States and internationally, our response must be immediate and enduring, requiring swift action this week by Congress, the World Bank, the Group of Eight industrialized nations and the United Nations.

Now is the time to break the thoroughly unproductive cycle of providing short-term emergency Band-Aid approaches to global food security. The United States must invest appropriately in farmers at home and in agricultural development in the developing world. It must also open world markets to more liberalized trade in food in order to deliver a stable and affordable food supply to the entire planet, and stable farm income for tens of millions of farmers around the world. These are not contradictory goals.

The current food crisis is the best case in point. As prices have risen and food supplies and stockpiles have tightened, civil strife and political instability have torn across the globe in unprecedented simultaneous fashion. This wave has run through such vitally strategic countries as Egypt, Indonesia, Haiti, Pakistan and India, striking primarily urban areas. In developing countries, where 60 percent to 80 percent of a family's income is spent on food, every 20 percent increase in food prices results in 100 million more people joining the ranks of the poorest of the poor.

In the United States, dramatic increases in food prices are eroding the purchasing power of the poor. With food inflation at its highest levels in seventeen years, food banks and soup kitchens report dwindling stocks alongside a 20 percent year-over year increase in visitors reliant on their programs. Since fiscal year 2007, enrollment in the nation's food stamp and nutrition programs has grown by 1.3 million, to its highest levels ever.

There are complex reasons for this sudden run-up in food prices. Demand is surging in the developing world as a result of income growth, changing diet (more meat, fruit and vegetables), and increased urbanization. Drought and volatile weather linked to climate change in key grain producing countries such as Australia and the Ukraine have limited supply. And high oil prices and energy costs have increased costs at every stage of agricultural production and transportation.

What's more, turmoil in the world financial markets is driving investors and speculators into the commodities markets, pushing up prices. This trend is further inflating food prices, which were already on the rise in commodities markets due to the recent growth in first-generation biofuels such as corn -- even though only 4 percent of world grain is currently consumed in biofuel production.

So how can the United States and other countries reverse escalating prices? In the short term, Congress must replenish the $200 million in wheat stocks it recently released for a special emergency fund, and approve a boost of $550 million in emergency food aid as part of a supplemental budget request. In the farm bill, Congress should support, at minimum, a $25 million pilot program to encourage the purchase of food from local producers. The U.S. must also contribute more to the United Nations World Food Program. But we must insist on accountability and a role for experienced, on the ground, nongovernmental organizations in the distribution of $2 billion in annual U.S. food aid.

But much more needs to be done. In many developing countries, agriculture employs over half the labor force, which means agriculture productivity is a fundamental building block of economic development and poverty reduction. Investment in agricultural development and small farmers in developing countries should be front-and-center at the G8 summit in July. President Bush and his counterparts from Canada, Western Europe, Japan and Russia must place a priority on agricultural aid that produces food which preserves the soil and water supply, encourages the use of locally available resources and traditional seeds, and is less dependent on fossil fuels. Access to capital and increased investment in scientific research to increase food production yields in a safe and transparent manner will be vital. Adaptation to climate change will require increased funding and local strategies driven by local needs.

The G8 must also work with developing countries to bring the World Trade Organization's Doha Development Round of negotiations to a successful close. At a time of record farm income, the developed world has a particular responsibility to dramatically reduce its unjustifiable subsidies and tariffs in agricultural products. Barriers to trade between developing countries must also be reduced. Liberalizing trade in agriculture and a completed Doha round will bring modest immediate economic gains, but must also be accompanied by investment in infrastructure and agricultural productivity as global markets opened up to wider trade.

Finally, we must move beyond corn as a biofuels feedstock and strive to produce only advanced biofuels that deliver measurable life cycle greenhouse gas reductions, utilize non-food based feedstocks, adhere to certifiable environmental safeguards and, are grown on semi-arable land that does not compete with food or feed. Congress should begin to phase down ethanol subsidies and reduce tariffs on biofuels produced overseas in a sustainable manner.

With political will and appropriate action, the United States, other developed countries and the developing world can succeed in attracting new investment to global agriculture, reducing prices, and achieving better incomes for farmers worldwide. Today's food crisis should mark the beginning of this effort in earnest.

Jake Caldwell is the Director of Policy for Agriculture, Trade and Energy at the Center for American Progress.

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