The New Face Of Hunger

meatasthey growrich andthe sudden,voraciousappetitesof westernbiofuelsprogrammes,which convertcerealsinto fuel. Thisyeartheshareof themaize(corn)crop going into ethanol in America has risen and the EuropeanUnion is implementing its own biofuels targets.To make matters worse,morefebrilebehaviourseemsto be influencing markets: export quotas by Global food shortages have taken everyone by su4rrise. What is to be done? large grain producers,rumours of panicCAMAI(E BAKARY sells rice from sharpestrisesin food pricesever.But this buying by grain importers, money &om rJwooden basinsat Abobotemarket in year the speedof changehas accelerated. hedgefunds looking for new markets. the northern suburbsof Abidjan in C6te Since January, rice prices have soared Suchshifts have not been matchedbv d'Ivoire. He points to a bowl of broken r4r%;thepriceof onevarietyof wheatshot comparablechangeson the farm. This is Thai rice which, at 4oo cra francs up z5%in a day. Some4okm outsideAbi- partly becausethey cannotbe: farmersal(roughly$r) per kilogram,is the most pop- djan, Mariam Kone,who growssweetpo- ways takea while to respond.It is alsobeular variety. On a good day he usedto sell tatoes,okraandmaizebutfeedsherfamily causegovernmentshave softenedthe imr5o kilos.Now he is lucky to sell half that. on imported rice,laments:"Riceis very ex- pact of price rises on domestic markets, "Peopleaskthe priceand go awaywithout pensive,but we don't know why." muffling the signalsthat would otherwise buying anything," he complains.In early Thepricesmainly reflectchangesin de- have encouragedfarmers to grow more April they went awayand rioted:two days mand-not problems of supply, such as food. Of 58 countrieswhose reactionsare of violencepersuadedthe governmentto harvest failure, The changesinclude the trackedby the World Bank, 48 have impostponeplannedelections. gentle upward pressurefrom people in posedprice controls,consumersubsidies, "World agriculturehas entereda new, China and India eating more grain and exportrestrictionsor lower tariffs. unsustainableand politically risky perBut the food scareof zoo8, severeas it iod," saysJoachimvon Braun,the head of is, is only a symptom of a broader prothe InternationalFoodPolicyResearchIn- f; snooung up blem. The surgein food priceshas ended stitute(rrpnr) in Washington,nc.Ib prove Grainprices,$ terms.ianuaryand2007-100 3o yearsinwhich food was cheap,farming it, food riots have eruptedin countriesall was subsidisedin rich countriesand interalong the equator. In Haiti, protesters 300 national food markets were wildlv dischanting"rrlVe're hungry" forcedthe prime torted. Eventually,no doubt, farmeri will minister to resign;z4 peoplewere killed in respondto higher pricesby growing more riots in Cameroon;Egypt'spresident orand a new equilibrium will be established. deredthe army to start baking bread;the If all goes well, food will be affordable Philippinesmade hoarding rice punishaagainwithoutthe subsidies,dumping and ble bylife imprisonment.'Tt'san explosive distortionsof the earlierperiod. But at the situationand threatenspolitical stability," moment, agriculturehas been caught in worries Jean-LouisBillon, president of limbo. The era of cheapfood is over.The C6ted'Ivoire'schamberof commerce. J t M A ltl o t o t o trlolo transitionto a new equilibrium is proving ,toot, Lastyearwheat pricesrose77Yo arld.rice costlier,more prolonged and much more Sources:Chiego Boardol Trade;Jackons 16%(seechart).Thesewere some of the painful than anyonehad expected. F'

The new face of hunger

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"We are the canary in the mine," says Josette Sheeran,the head of the uN's World Food Programme,the largest distributor of food aid.Usually,a food crisisis clearand localised.Theharvestfails,often becauseof war or strife.and the burdenin the affected region falls heavily on the poorest.This crisisis different.It is occurring in many countries simultaneously, the first time that has happenedsincethe early r97os.And it is affectingpeople not usually hit by famines. "For the middle classes,"saysMs Sheeran,"it means cuttingoutmedicalcare.Forthose on$za day, it means cutting out meat and taking the children out of school.For those on $r a day,it meanscuttingout meat and vegetablesand eatingonly cereals.And for those on 50 centsa day,it meanstotal disaster." Thepoorestaresellingtheir animals,tools, the tin roof over their heads-making recovery,when it comes,much harder. Because theproblemis notyetreflected in national statistics.its scale is hard to judge. The effecton the poor will depend on whether they arenet buyersof food or net sellers(seebox); for some net buyers, the pricerisesmaybe enoughto tum therri into sellers.But by almost any measure, the human sufferingis likely to be vast.In EISalvadorthe poor areeatingonly half as much food as they were a year ago.Afghansarenow spendinghalf their income on food,up from a tenth in zoo6. On a conservativeestimate,food-price rises may reducethe spendingpower of the urban poor and country people who buy their own food by zoYo(in some regions, prices are rising by far more).Just over r billion people live on $r a day, the benchmarkof absolutepoverty;r.5billion live on $rtb $z a day.BobZoellick,the president of the World Bank,reckonsthat food inflation could push at leastroom people into poverty, wiping out all the gainsthe poorestbillion havemade during almosta decadeof economicgrowth. Smalt is fairly beautiful In the short run, humanitarian aid, socialprotectionprogrammesand tradepolicies will determinehow well the world copes with these problems.But in the medium term the questionis different where does the world getmore food from?If the extra suppliescome mainly from largefarmers in America,Europeand other big producers,then the new equilibrium may end up looking much like the old one,with world food dependingon a smallnumber of suppliersand-possibly-trade distortionsand food dumping.Sofar,farmersinrich countries have indeed responded.America's winter wheat plantingsareup 4%and the spring-sownareais likely to risemore.The Food and Agriculture Organisationforecaststhat the wheat harvest in the EuropeanUnion will riser3%. Ideally, a big part of the supply re-

of the world's water and vegetation,cove(, so raising their productivity on existing land would be environmentallvfriendlier than cutting down the rainforest.And it shouldbe efficient:in termsof returnson investment, it would be easier to boost grainyieldsin Africafrom two tonnesper hectareto four than it would be to raise yields in Europefrom eight tonnesto ten. The opportunitiesare greaterand the law of diminishingreturnshasnot setin. Unfortunately, no smallholder bonanzais yet happening.In partsof eastAfrica, farmers are cutting back on the area planted, mostly becausethey cannot afford fertilisers (driven by oil, fertiliser prices have soared,too). This reaction is sponse would come from the world's not universal.India is forecastinga record +som smallholders in developing coun- cerealharvest; South A&ican planting is tries, people who farm just a few acres. up 8%this year.Still, some anecdotaleviTherearethreereasonswhy this would be dence,plus the generalincreasein food desirable.First, it would reducepovertyl prices,suggeststhat smallholders,are not three-quartersof thosemaking do on $r a respondingenough."In a perfectworld," day live in the countrysideand dependon saysa recentrFpRIreport,"the responseto the health of smallholderfarming.Next,it higher pricesis higher output. In the real might help the environment:thosesmall- world,however,thisisn't alwaysthe case." holders managea disproportionateshare Farming in emerging markets is riddled rp

F with market failures and does not reactto have exacerbatedthe effects of under pricesignalsasotherbusinessesdo. investment.Farmingis just one part of a This is true to a certain extent of farm- food chain that stretchesfrom fertiliser ing in general.If you own a toy factory,or and seedcompaniesat one end to superan oilfield and the priceof toysor oil rises, marketsat the other.In thepast,the end of you run the factory night and day,or turn the chain nearest consumerswas less imthe tapsfull on. But it alwaystakesa season portant. Food policy meant improving to grow more food, which is why farm links betweenfarmersand suppliers.The prices everywhere tend to be "sticky": a GreenRevolutionof the 196os,for examro% increasein prices leads to a 1% in- ple, provided new seedsand subsidised creasein output.But the food crisisof zooS fertilisers.Malawi is doing something simsuggestsfarm prices in developingcoun- ilar now But over the past decade,the triesmay be stickierthanthat. other end of the chain hascometo matter The quickestway to increaseyour crop more. The main reason why Kenyan and is to plant more. But in the short run there Ethiopian farmers planted less this year is only a limited amount of fallow land was not just that fertilisers were expeneasily available.(The substantialunused sive,but that farmerscouldnot getcreditto acreagein Brazil and Russiawill take a de- financepurchases.Supermarketsare also cadeor so to get readyJ For some crops- more important to farmersthan they used notably rice in East Asia-the amount of to be, accountingfor half or more of food good, productive land is actually falling, sales,evenin many developingcountries. buried under the concreteof expanding cities.In other words, food increasesnow Successinpatches needto comemainly from higheryields. In theory,the growing importanceof tradYields cannot be switdred on and off ers and supermarketsought to make farmlike a tap; Spreadingextrafertiliser or buy- ers more responsiveto changesin prices ing new machinery helps. But higher and consumertastes.In some places,that yields also need betterirrigation and fan- is the case.But supermarketsneed unicier seeds.Thetime lagbetweendreaming form quality, minimum large quantities up a new seed and growing it commer- and high standardsof hygiene,which the ciallyin the fieldis ten to 15years,saysBob averagesmallholderin a poor countryis ill Zeiglerof the International RiceResearch equippedtoprovide.Sotradersand superInstitute(rRRr)in the Philippines.Evenif a markets may benefit commercial farmers farmer wanted to plant something more morethan smallholders. productivethis year, and could afford to, To make mattersworse,smallholdings he could not-unless researchwork had are fragmenting in many countries. Bibeengoingon for years. causeof population growth andthe lossof It has not, Most agriculturalresearchin farmland, the averagefarm size in China developingcountriesis financed by gov- and Bangladeshhas fallen from about r.5 ernments. In the 198os, governments hectaresin the 197osto barelyo.5hectares started to reduce green-revolutionary now; in Ethiopia and Malawi, it fel from spending,either out of complacency(believing the problem of food had been licked), or becausethey preferred to in. volve the private sector.But many of the private firms brought in to replacestateresearchersturned out to be rent-seeking monopolists.And in the r98os and r99os huge farm surpluses ftom the rich world were being dumped on markets,depressing prices and returns on investment. Spending on farming as a share of total public spendingin developing countries fell byhalf between1980and zoo4. This declinehas had a slow, inevitable impact.Creatinga new seedis a bit like designinga flu vaccine:you needto keepupdating it, or pestsand diseasewilt nigaie its effectiveness. When the rice variety rn8 wasintroducedin 1956,it producedalmost ten tonnesperhectare;now it yields barely seven.In developing countries between the r96osand r98os,yields of the main cereal cropsincreasedby 3-6"/.a year. Now annual growth is down to r-z%,below the increasein demand(seecharton previous page)."We'repaying the price for r5 years of neglect,"saysMr Zeigler. Alterationsin the structureof farming A burdento afford

t.z hectaresto o.8 in the r99os. By and large,the smaller the farm, the greaierthe burden of the costof doing businesswith big retailers.Smaller smallholders are also at a disadvantagein getting loans, new seeds and other innovations on which higheryields depend. Such bottlenecks and market failures makeit harderfor smallholdersto respond to higherprices,evenwithout the muitiple distortions that governments also introduceinto world food markets.Ihev mean the transitionto a new equilibrium"will be prolonged and painful. But they do not mean it will not happen.LennartBige,the headof the InternationalFundfor Alricultural Development,a uN agenryin Rome, arguesthat if farmerscan keepthe higher prices, they will overcome the problbms that beset them. As he points out, India feeds rz7. of the world's people on less than 5%of the world's water and 3%of its farmland-and, along with China, is seeingits cerealcroprisethis year.Similarsuccessstoriesarecroppingup, in patches. Despite EastAfrica's problems, Ethiopia_thisweek openedits own commodity exchange,a rare thing on the continent, in an attempt to improve the markets that connectfarmersand traders.Thespreadof mobile phones also relays market information more widely.In landlockedMalawi, it costsalmostasmuch to ship maize to and ftom world marketsas it does to grow it locally,so Malawian farmershave found it hard to export their surplus even with priceshigh. But partly becauseof the political disaster of Zimbabwe, regional marketsare now springingup out of nowhere in southern Aftica-and Malawi's farmersaresellingthere. Moreover, technological improvements are still pushing through the neglectedsoil. Mr Zeiglerreckonsrnnr has enough tinkerings in the pipeline to increaseyields by one or two tonnesa hectare.And if Europeancountriesrelax their hostility to genetically modified organisms,cropscientistscould do things*such as redesigningphotosynihesisin plants* which couldboostyields5o%ormore. Between November zoo7 and February 2oo8,rice exportsfrom Thailand (the world's biggestexporter) were running at 1m tonnes a month*an unprecedented bonanza.But for even for producersand traders, the blessing was mixed. Some farmers sold their crop before prices soared.Millers tried to keip suppliesback, waiting for higher prices.The government capped exports below last year's levels. The secretary-general of the Thai rice exporters' association told rnnr that .We don't know where the eooTharvestis.',Vichai Sriprasert,a big $(porter, describes the Thai rice market using languagethat, elsewhere,is literally true."Thisis a crucial time," he says."It will tell the story of who will survive and who will not survive.',s