8 Ways to Fix the Global Food Crisis
Ideas range from improving aid programs to taking a break on biofuels
By Marianne Lavelle , Kent Garber
Farming in the Sauri Millennium village in Kisumu, Kenya. Rural financing programs have allowed small farmers to support themselves.
Corn used for ethanol.
The world food crisis has two faces. Here in the United States, shoppers stare in disbelief at the rising price of milk, meat, and eggs. But elsewhere on the globe, anguish spills into the streets, as in Somalia last week when tens of thousands of rioters converged on the capital to protest for food.
The strain on U.S. consumers, grappling with the sharpest increase in grocery prices in years, is small compared with the starvation that toppled Haiti's government, ignited riots around the world, and is deepening the tragedy of Myanmar's cyclone survivors. And yet the connection between the developed and developing worlds will be crucial to solving what one United Nations official has called a "silent tsunami" of food prices that has plunged 100 million people deeper into poverty. To stem the misery, relief officials are calling both for emergency aid and for changes in policy worldwide.
Solutions will not be easy to sort out, since the dramatic food price escalation has numerous causes. Skyrocketing oil prices have strained every stage of food production, from fertilizer to tractors to transport. At the same time, demand for grain has never been higher, not only to feed the rising affluence of populous China and India but also to fuel cars and trucks as the world turns to ethanol and biodiesel. Supply, meanwhile, is being squeezed by a years-long drought in Australia, a major grain exporter, and experts worry that climate change may be a factor. In all, there could not be a worse time for investors to pour money into agricultural commodities, but they have, in reaction to the weakening U.S. dollar accelerated by Federal Reserve interest rate cuts. Around the world, panicked governments have responded to high commodity prices by slapping restrictions on exports—thus only worsening the food shortage.
Addressing this unparalleled confluence of events will require extraordinary leadership. U.S. farmers, who labored through years of anemic prices, now question how the use of their corn for ethanol could possibly be blamed for the shortage of a different grain—rice—in far-off Central Asia. Past approaches to foreign aid and trade have been politically expedient but have not helped poor countries become self-sufficient. And the U.N., already coping with a 55 percent rise in food aid costs, now confronts a new crisis, as it ships food to Myanmar.
That disaster makes only more urgent the need for world leaders to act. The ideas they weigh will not ease the global food strife quickly, but they can lay the groundwork for a planet with enough resources for its growing and increasingly connected inhabitants. Among them:
Take a Pause on Biofuels
Producing fuel from crops—corn in the united States and rapeseed, palm, and soy oil in Europe—accounts for between one quarter and one third of the spike in global commodity prices, says the International Food Policy Research Institute. Governments have heavily subsidized the industry as an energy alternative, but now one U.N. food official labels these policies "criminal" and has called for a five-year biofuels production moratorium.
Yet the United States won't be able to just shut off the corn ethanol spigot; billions of dollars have been invested in increasing U.S. ethanol capacity nearly fourfold since 2001. Reversing that policy would not only cause trouble in the Farm Belt; it would cut off an important source of fuel. The International Energy Agency estimates that global production of biofuels met about one third of the 900,000-barrel-per-day increase in worldwide demand for oil.
Some are looking at slowing down rather than halting the ethanol juggernaut. Texas Republican Sen. Kay Bailey Hutchison is leading the call for a freeze in the mandate to blend 9 billion gallons into fuel this year, a level to grow to 36 billion gallons by 2022. To ease any transition, agricultural economist Lester Brown, founder of the Earth Policy Institute and an outspoken ethanol policy critic, suggests a solution familiar to farmers: Use subsidies to steer production.
"Do with ethanol distillers what we've done with grain producers for decades," says Brown. "If we want them to produce less grain, we would say that in order to be eligible for support price, you should have to cut back your acreage 15 percent this year, and farmers did that. They understood the USDA was trying to balance world supply and demand. You could do the same thing with ethanol distilleries." Brown says the government could modify policy so that the blenders of ethanol collect the subsidy only if they reduce production. He says, "We're the only country who can now do something in the short term to restore some semblance of stability to the world food economy."
Corn growers vigorously dispute that ethanol has been more than a minor factor in the food price rise. Indeed, they have been producing plenty more corn—enough to devote 44 percent more bushels to ethanol while increasing corn exports 11 percent and keeping bushels devoted to feed and food about level in 2007. But many economists say that with so much of the corn crop now devoted to ethanol—23 percent, compared with 7 percent in 2001—the price of corn is following the price of oil upward. Since grains are substituted all over the world, they say corn's rise has indirectly contributed to the rise of other grains.
But the corn ethanol lobby makes a key point: "The crises the world is facing today—food, economic, or environmental—all have a common denominator: the ever tightening world oil market," says Bob Dinneen, president of the Renewable Fuels Association. That's why some are calling for greater investment in the next generation of biofuels—those made from nonedible sources such as grass, timber waste, and even algae. The U.S. Department of Energy, cofunding several plants that aim to produce this "cellulosic ethanol," predicts commercial production in 2012.
Improve Food Aid
wrenching photographs of emaciated children. Money to help them. Most Americans, if they think at all about food aid, know the basics but probably don't ever consider the logistics of how aid is collected, transported, and distributed. Nearly all foreignbound food aid given out by the United States—some $2 billion annually—comes from the surpluses of American crops; that's what Congress requires. Typically, the surplus commodities are purchased by the U.S. government, loaded onto U.S. carriers, and shipped to an intermediate destination, often thousands of miles away. There the food is handed over to a humanitarian agency, which transports it to its final location and sells it at a greatly reduced price or gives it away.
Many aid organizations, however, have begun to view this process as inefficient or counterproductive. Shipping Texas-grown sorghum to an African refugee camp can take five to six months and can incur substantial fuel costs. Says the charity Oxfam America: "While America provides half of the world's food aid, this generosity is undermined by legal restrictions and bureaucracy, as food aid must be purchased in the U.S. and transported on U.S.-flagged ships." And because of budget rules, even if Congress authorizes the $770 million of emergency food aid just requested by President Bush, the money won't be available until October, when the new fiscal year begins.
Worse, some agencies fear that developing economies are being hurt long term by the unintended consequences of U.S. aid policy. The prolonged presence of American commodities in struggling countries, they argue, overwhelms local markets and drives down prices, making local farmers less likely to expand production and improve yields. In part for that reason, care, one of the world's largest charities, announced it would begin phasing out U.S. government financing.
A better form of aid, some experts say, would be not food but money to buy it. Cash, says World Food Program spokesperson Jennifer Parmelee, "enables us to purchase closer to the area in which we want to deliver the food, which means it will be at a lower price, it will cost less to transport it, and it gets there faster."
Many agencies feel that such a change would best serve the hungry. Congress, however, has preferred aid policies that help constituents in the Farm Belt states sell off their surpluses. The Bush administration has proposed that American aid agencies buy up to a quarter of their food from regions located closer to areas of need, but lawmakers would most likely approve only a fraction of that amount.
Produce Higher Yields
The average African farmer uses one tenth as much fertilizer as her westernized counterpart. She—most are female—applies little or no pesticide or fungicide to her crops, and her soil has been so overtilled that her annual yields are woefully puny.
History repeatedly has shown that better farming techniques can help alleviate shortages. But development programs of the 1960s and 1970s flopped at boosting African production, and interest cooled in the 1980s during the Reagan years. Now a group of philanthropists led by the Rockefeller Foundation and the Bill and Melinda Gates Foundation has, along with the World Bank, begun investing hundreds of millions of dollars in developing countries, particularly Africa. Their focus: training and empowering poor farmers and native researchers. Vouchers help local farmers buy fertilizer, which has risen in price along with its petroleum feedstock. "In Kenya, a bag of fertilizer may cost 2,000 shillings, and the voucher provides 1,500," says Gary Toenniessen of the Rockefeller Foundation. In Malawi in 2006 and 2007, he says, vouchers for fertilizer helped increase production 50 percent.
The Gates Foundation recently announced $306 million in grants to boost agricultural yields in the developing world, with nearly $165 million to replenish depleted soils in Africa. Says Rajiv Shah, director for agricultural development at the Gates Foundation: "There is so much [untapped] potential, and that could go a long way toward helping address the price issue around the world."
These efforts are not without controversy: Critics charge that western philanthropists are violating African "food sovereignty" and promoting American agribusiness—Monsanto, DuPont, and the like—at the expense of peasant farmers knowledgeable about local practices. But local practices have yielded scarcity. A farmer in India grows three to four times as much food on the same amount of land as a farmer in Africa; a farmer in China, roughly seven times as much.
Grow Better Crops
Can genetically modified plants cure the food crisis? Proponents say that environmentalists and Europeans should quit their opposition to this technology if they want to accelerate global food production. Producing more hardy varieties than those found in nature, by inserting genes into crops in the laboratory, would be a benefit to all, they say. But it's not that simple. There's another factor that may trump enviros' worry about health risks and damage to native species that grow near the altered crops. Expensive gm crops simply haven't had much impact in boosting global food supply.
It makes sense to consider improved crops because conventional breeding has produced so much success. More productive strains of rice and wheat accounted for 21 percent of the growth in crop yields in developing countries from 1961 to 1980 and an astonishing 50 percent increase in yield from 1981 to 2000. "We need another breakthrough," says Norman Borlaug, who won a Nobel Prize for launching this so-called green revolution.
Genetically modified plants, which first hit the market in the mid-1990s, are widely used today for corn, soybeans, canola, and cotton. Just two engineered traits are sold: resistance to glyphosate, a herbicide used to kill weeds around crops, and the insect-killing powers of BT, a microorganism that produces chemicals toxic to bugs, not humans. gm crops have been embraced in the United States and in Brazil, Argentina, Australia, and Canada. But those crops have so far had little appeal in the developing world, where most farmers can't afford the herbicides or the high-priced gm seeds.
The only gm crops used in the developing world so far are BT cotton and canola, popular in India and China. Pesticide use has dropped 42 percent in India in 2005 as a result of BT cotton, but controversy has erupted as to whether the cotton is as productive as non-BT strains.
The benefits to date for farmers using gm seeds have not been larger crops—yields of gm soybeans run about 10 percent less than non-gm beans—but savings on chemicals and labor.
In April, a multinational review on the future of food production found that gm foods haven't been around long enough for researchers to know how they will affect human health and the environment. Genes from gm crops can drift into nonengineered crops, which threatens organic farmers and could destroy native plant strains. Mexico approved limited use of gm corn earlier this year but only after buffer zones were established to protect native corn.
Traditional plant breeding has been eclipsed by the hype surrounding gm crops. But even traditional breeders say there is much they can do to improve yields. This includes so-called transgenic methods, which tackle fungus and insects, and marker-assisted breeding, in which genes associated with desirable traits are tagged to speed up the breeding process.
In sub-Saharan Africa, the International Maize and Wheat Improvement Center has been working with local scientists to develop drought-resistant strains of corn, including open-pollinated varieties that can be replanted from saved seeds. More than 50 of these strains and hybrids have been created, with yields 20 to 50 percent higher than regular strains in a drought.
Curb the Speculators
Tom Buis, president of the national farmers union, calls it "the factor no one wants to talk about." The weak dollar has led to high commodity prices as pension, hedge, and index funds have bought oil, gold, and agricultural futures as a hedge against inflation. Although the U.S. farm industry relies on the commodity markets to manage its own risks, now it argues that change is needed—even curbing some of the same measures used to attract money to the market just a few years ago. "I think we have to make sure that policy is in place to prevent speculators from dominating the market," says Buis, who fears a bubble is building that could hurt farmers in the end.
Among the suggested solutions: freeze the number of contracts speculators can hold, or place higher price limits on markets. The Commodity Futures Trading Commission, which regulates grain markets, remains wary. CFTC Commissioner Bart Chilton says that while the increase in cash flowing into the sector has changed the way grain markets operate, there is no direct link between speculators and the jump in prices. "No single speculative group is responsible for affecting prices. There's no smoking gun out there," he says. "It does appear to be a reflection of real market fundamentals."
Darin Newsom, of commodities researcher DTN, says one possible solution for farmers who are concerned about a commodities bubble is to move their traditional risk-hedging activities into other types of swap contracts in which the impact of speculators is less apparent, essentially shifting to a different corner of the market until existing futures trading cools off.
Good weather, bumper harvests, a change in ethanol policy—any of these could take the heat off the market. Of course, another step that could do the trick would be unpopular on Wall Street: the Federal Reserve tightening U.S. monetary policy through higher interest rates.
Break Down Trade Barriers
Politics often kicks into high gear in times of crisis. That's what happened when India, Egypt, and dozens of other countries dropped their tariffs and taxes on imported foodstuffs to get cheap food as fast as possible. Doing so, they accomplished in just the past few months what over six years of trade negotiations, called the Doha Round, could not. "Imports have been liberalized in a way that not even the wildest trade enthusiasts would have imagined," says Arvind Subramanian, senior fellow at the Peterson Institute for International Economics.