Most of the world’s poor live in the rural backwaters of Africa, Asia and Latin America. Most of them are small farmers or landless farm workers. The overwhelming majority of them are starting to benefit from the present rise in global food prices.
Yet the cacophony of apparently “informed opinion” now giving vent is loudly moaning about food price rises. “There is a sense of panic,” says Abdolreza Abbassian, secretary of the grains trading group at the UN’s Food and Agricultural Organization. “The first global food shortage since the 1970s”, headlines the Financial Times. In Russia, price controls on basic foodstuffs have been imposed. The European Union has suspended its “set-aside” rules that ban farmers from planting cereals on 10 percent of their land.
This is economics as paranoia. The truth is this is a long overdue correction in the terms of trade whereby the urban minority of the world have long been subsidized by the poorest of the poor — those left behind in the remote reaches of the countryside.
We should feel a bit less pity for these urban consumers. The majority of slum residents of Lagos, Shanghai, Rio de Janeiro or Bombay live longer and in better health than their rural compatriots. Their governments spend far more per head on them than they do on the small farmers and landless. Only 4 percent of foreign aid, according to the World Bank’s latest report, goes to the rural poor.
Belatedly last month the World Bank has decided that improving economic growth in rural areas is by far the best way of reducing poverty among the world’s poorest people. What fortuitous timing — the market, in pushing up agricultural prices, is doing much of the job for it!
At least one UN agency, the International Fund for Agricultural Development, sees the picture clearly. Its remit has always been the small farmer. Shantanu Mathur, a senior official, tells me that his organization now “feels much happier than when food prices were going down”, as they have for the last three decades. “I believe the international community should take advantage of this rise to invest in good projects in the rural backwaters.”
Mathur singles out two opportunities in particular. The first is the niche market of organic produce. More and more Third World farmers are being trained to take advantage of this. “It is very responsive to prices”, he says. The second is bio fuels. Mathur punctures another myth. “Bio fuels don’t have to be a trade off between food and fuel. It is the stalks that make the fuel. The grain on the plant can be used for food”.
History repeats itself — the first time as tragedy, the second time as farce — and too quickly too, as memories seems to shorten. The last time there was a sudden, and massive, jump in food prices was 1974 when US Secretary of State Henry Kissinger called for a World Food Conference.
The conference was duly held in Rome and declared that “within a decade no child will go to bed hungry, no family will fear for its next day’s bread, and no human being’s future and capacities will be stunted by malnutrition”.
Robert McNamara, then head of the World Bank and decided that the bank’s main focus would be on rural development. For a while much was done and McNamara’s enthusiasm infected many other Western aid agencies. But now 30 years later the bank confesses that its financing for rural areas has fallen from 30 percent of its total in the early 1980s to 10 percent today. The proportion of Western development aid targeted at the agricultural sector fell from 17 percent to 3.4 percent.
What happened? Food prices fell. The market had responded — farmers all over the world planted more.
But something else happened too over the next 30 years. Rural incomes did improve. The number of hungry fell — in some countries, such as China, India and many parts of Africa, quite dramatically.
The 1974 shock got governments and aid agencies off their butts, but once things started to move they lost interest. Too many— perhaps some 800 million — are still left behind, out of the loop. This time high food prices and renewed interest by Western agencies may give them a helping hand. But for how long?
