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| Credit: AA |
Opinion by
Lawrence Haddad, the
Executive Director at the Global Alliance for Improved Nutrition.
Peter Kamalingin, the Pan Africa Director at Oxfam International
The alarming rise in global food prices is exacerbating inflation and making
it difficult for families around the world to understand what this means for
vulnerable communities and how long this trend will continue.
Food and energy prices are at historic highs around the world and
inflation is expected to rise in the coming months, with the UN Food Agency
warning people of rising costs, especially those in developing countries. While
there is a wave of outrage in rich countries as politicians see inflation in
the United States reach its highest level in 40 years, hundreds of people this
week rallied around rising inflation taxes and energy bills. People in Latin
America, Eastern Europe, and the Pacific have also been overestimating food
prices. Let's take a look at the biggest increase in prices in recent months.
Basic food items in South Africa are 6.3% more expensive than a year ago. The
same trend is in New Zealand, where food prices rose 4.5% percent in December. Food and Energy prices are rising 5.7% for grocery items
compared to last year, and eggs and meat are the most expensive in the United
States compared to 7.4% more than a year ago.
Triple CCC factor:
The UN food price index rose to record levels last
month. The levels are really high since 1975 and the three big drivers are
climate, covid19, and conflict. On the climatic side, we have experienced some
very severe droughts in some of the most important food-producing regions such as Argentina, Malaysia, Indonesia, Ukraine, and Russia. It is really pushing up
prices because supply has been disrupted. On the Covid front, we know that
moving food from farm to fork is much more complicated under Covid restrictions
and lockdowns. When it can't be moved, it can't really match supply and demand.
On the conflict front, we are seeing tensions around Ukraine and Russia.
Tensions are high in Ethiopia, northern Nigeria, northern Mozambique, and
northern Kenya. This kind of tension makes it difficult for food producers and
farmers to plan. Therefore, there is uncertainty in the system and this leads
to an increase in prices.
Russia is the third-largest oil producer in the world and at that point, there will be a shortage of oil and an increase in demand. This is more than a recent thing. But
demand is growing and this has led to an increase in prices throughout the
supply chain, which in turn increases the price and pushes it back to
consumers.
Read more: Russia-Ukraine tensions: inching towards war
Increasing supply chain input:
Certainly, the supply chain is being affected by Covid, climate, and conflict. Therefore, one of the reasons for this increase in food prices is the rising input cost in the supply chain which includes, labor, energy, and fuel prices. As it increases, definitely, everything is on the rise.
One of the main reasons for this is the increase
in wholesale gas prices which has increased by 250% because countries are not
producing as much energy as they used to. Climate change has caused heavy rainfall
in India and China and which has affected the supply of agricultural products
and agriculture has been damaged. Therefore, it has also led to an increase in
prices, for example, due to the increase in wholesale natural gas in the UK,
which is a green component in fertilizer production, fertilizer prices have
risen leading to an increase in food prices. This has also led to an increase
in the price of carbon dioxide, which is a by-product of fertilizer production.
These are a combination of factors that are driving up the rising cost of input
in supply chains. One more thing, the demand is growing as we try to revive the
economy amidst the Covid-19 pandemic. People are ordering more and businesses are
ordering more which increased demand and narrows down the supply side. Resultantly,
we are seeing the classic effect in the process. (Haddad)
Corporate factor:
Admittedly, this has been exacerbated by the effects of the Triple C, but
what we need to focus on is that in the substantial part of the
world, especially in Africa and the low-income
countries, the problem was already there. The main reason for this is
the failure of the food system with high productivity. Much of this is due to
decades of continuous non-investment in small food producers, family producers,
and small-scale farmers. There is disinvestment in production capacity. For
many years in Africa, there has been a commitment to spend at least 10% of the
budget on agriculture and food production, which has not been possible. In fact, it's actually much worse now because many of the economies
are increasingly suffocating under an increasing public debt crisis. The
capture of the global food system by the big corporate sector is a huge problem
and this is where the problem lies. There is a tendency for big corporates to
take over, which is also suffocating the policy space for average governments
to invest in agriculture. (Kamalingin)
Countries are falling victim to big
multinational corporations?
There is a huge concentration of power between the big corporates in
Africa and South Asia and that is a problem, but a big part of the problem is
the non-investment of governments. For the first time, we have a science-based
roadmap on how to end hunger by 2030. It will cost an additional $33 billion a
year, which seems too much, but it is actually double what we are already
spending. This is equivalent to an increase in the net worth of the world's 10
richest billionaires over the past year.
Where does the responsibility lie?
The responsibilities of governments causing food inflation can not be denied. There are African countries that have set the target for themselves to control inflation. However, the latest report of the African Union on the progress
towards these targets shows that some countries are indeed performing very
well. But most countries are really far behind. The former head of the UN Food
Agency has always said that there is no union for hungry people. There is no
way they can have their voice heard properly. They cannot put pressure on
governments unless they come up with a last resort. That's why governments need
to feel the heat a little more. (Haddad)
Admittedly, these are the leaders of many states, they have some capacity,
and They have not maximized the scope, but the United States should realize
that the reality of these countries is far beyond what we would imagine, for
example, these are the countries where, for some of them, even 60% of the
national budget is being paid servicing debt and financial space is very small.
So there are some things they can do, but there is a lot that is beyond the
control of African governments, yet they have not come together. That is why we
are really asking them to do what they can, at least, execute what
they have included in this Malabar commitment. But it is important to
understand that some large corporates have a turnover that is significantly
higher than the turnover of some of these governments. Therefore, they have
undue influence on other national parliaments, including the national
legislative process on policy-making. They are far more powerful than we can
imagine. Hence, it is important to show solidarity and understand that if we do not
take collective action, for example, to illicit financial flows where these
countries are losing money due to the weaknesses of the global tax regulatory
system. If we do not do all these things to increase the financial capacity, it
will be difficult for these governments to make proper investments in food
production. We never talk about silent revolutionaries in the food system in
Africa who are small to medium enterprises. We need to support small and
medium enterprises and smallholder farmers. (Kamalingin)
Support to small-scale corporations:
The logic is that for small and medium-sized
enterprises, family farming, and investing in all of them, governments must play a role. But the governments, as mentioned, are finding it difficult to do so
because of the growing problem of public debt. The other thing is that the
climate is actually making it difficult for them to create. Climate patterns
are changing and changing in ways that farmers cannot afford. Further, there is
an alliance of big corporates with the state which is making it difficult for
the weak small farmers to produce enough food for themselves. (Haddad)
Read
more: Climate change and the question of War
The truth is, it doesn't matter what we put in it. At the moment the market system has failed. At least weak, small producers are still the most important. The problem is that they do not have enough investment in technology, input, and access to affordable credit. At least in Africa, this is where the future lies and where agricultural policies and investments should be guided. It should also include investments in technology, training, agricultural extension, services, and market systems. Probably 70% food in Africa is still a matter for small farmers and this is where we need to direct our investment. As far as I can see, they are the ones who are most affected at the moment. These countries are not poor, they have been made poor by global policies. For example, Africa illicits $60-70 billion in financial flows every year. So if there could be a multifaceted mechanism, it would be able to limit it and lead it towards food production. It is also important to understand that these effects of food hunger problems are not gender blind. They are influencing women and children alike. We need to make policies that are clearly guided and focused on. (Kamalingin)
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