The Food Crisis: What is going on?

The battle against hunger suffered a serious setback this year, due to escalating food prices caused by increased demand and reduced production. The 850 million people who suffer chronic hunger have now been joined by 119 million more people, virtually all of them in poor countries.

On average, food prices have risen by 83%, compared with three years ago, while the cost of rice, corn and other staples has risen as much as 300% in some countries.

For poor families, many of which spend up to 70% of their income on food, even small increases in food prices squeeze the household budget and often lead to pulling girls out of school to save on fees, or refusing to seek medical attention because of the cost.

When households reduce food consumption, it is often women and children that suffer most.

In places where people are too poor to buy food at all, these developments have caused a humanitarian emergency. In Somalia, for example, nearly half of the population, or 3.25 million people, are now in need of emergency assistance. And in Ethiopia 4.6 to 6.4 million people have been driven into destitution in the past year, in addition to the 7.2 million who receive food aid every year.

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How did this happen?

A number of factors have come together to create a ‘perfect storm’ of a food crisis:

1. Human-induced climate change is a major cause. Extreme weather events, including droughts, floods and storms, have become the norm, leading to significantly reduced crop yields.
   
2. The boom in biofuels, especially ethanol made from corn, is another primary cause. The International Monetary Fund estimates that last year biofuels accounted for almost half the increase in demand for major food crops.
   
3. A third cause is the rising cost of fossil fuels, which  has driven up the cost of fertilizers and other inputs farmers need, as well as transport and storage costs.
   
4. Changing dietary patterns is a fourth cause. As incomes increase in the larger developing countries demand rises for meat and dairy products. These goods require vast amounts of grain to produce.
   
5. Finally, lack of government investment in small-scale food production over past decades has made it harder for farmers to take advantage of higher prices and produce more food. Aid to agriculture has fallen by half since 1990, parallel to a shift in government strategy away from rural development toward export industries.

The Food Crisis: An opportunity?

The food crisis presents an enormous challenge to the leadership and legitimacy of national governments and the world’s multilateral institutions. But it is also a genuine opportunity to deliver long overdue reforms to the food and agriculture system to increase food production, favour small-scale farmers, and help them adapt to climate change.

Most poor people in developing countries make a living from agriculture, so in the longer term higher prices should encourage investment in agriculture and offer the possibility of better rural livelihoods. But only for those that survive the short term. At the moment, soaring prices are increasing inequality and undermining progress in tackling poverty.

What needs to be done:

• Provide urgent assistance to countries facing immediate food shortages.
• Increase Canada’s development assistance and use more of it to help small-scale farmers produce more food with fewer inputs.
• Move quickly to reduce Canada’s greenhouse gas emissions, and take leadership at the United Nations in forging a post-Kyoto deal that avoids catastrophic climate change.
• Redirect Canada’s ethanol subsidies toward alternative fuels that do not drive up the price of food.
• Provide additional assistance to help poor countries adapt to climate change.
• Implement aid programs in ways that minimize the burden on women’s time, maximize women’s say, and strengthen the clout of producer organizations and women’s groups in the marketplace.

In Ethiopia, Oxfam has had success in developing cereal banks where small farmers “deposit” their harvest along with their neighbours and draw corresponding payments. The farmers in the cereal bank can sell into the market when prices are high and have a reliable store of grain all year round. Oxfam also work with partners to establish women-led enterprises that increase incomes and reduce environmental exploitation and pressure on the land.

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