After a half century of decline, agricultural commodity prices rose with oil prices in the 1970s, and again for a decade until 2014. Food prices rose sharply from the middle of the last decade, but have been declining since 2012, and especially since last year, triggering concerns of declining investments by farmers.
Earlier predictions of permanently high food prices have thus become less credible. Higher prices were said to reflect slowing supply growth as demand continues to grow with rising food needs for humans and livestock, and bio-fuel mandates introduced a decade ago on both sides of the North Atlantic.
Prices had become increasingly volatile, with successively higher peaks in 2007-08, 2010-11 and mid-2012. Some food price volatility had its origins in climate change-related extreme weather events in key exporting countries.
‘Financialization’, including linking commodity derivatives with other financial asset markets, also worsened price volatility in the second half of the last decade.
With three food price spikes over five years, food insecurity was widely seen as a major challenge. Higher and more volatile food prices seemed to threaten the lives of billions. But the FAO food price index peaked in 2012, years after the 2007-2008 food price spike triggered many mass protests.
Official development assistance for agriculture has fallen for decades despite the expressed desire by many developing countries to raise such investments. Meanwhile, rich countries have continued to subsidize and protect their farmers, undermining food production in developing countries, and transforming Africa from a net food exporter in the 1980s into a net food importer in the new century.
Food investments for economic recovery
Meanwhile, economic recovery efforts are needed more than ever in the face of protracted economic stagnation. A global counter-cyclical recovery strategy in response to the crisis should contain three main elements.
First, stimulus packages in both developed and developing countries to catalyze and ‘green’ national economies. Second, international policy coordination to ensure that developed countries’ stimulus packages not only ensure recovery in the Northbut also have strong developmental impacts on developing countries, through collaborative initiatives between governments of rich and poor countries. Third, greater financial support to developing countries for their sustainable development efforts, not only aid but also to more effectively mobilize domestic economic resources.
We need more investments that will help put the world on a more sustainable path such as in renewable energy and ecologically sensitive agriculture. After well over half a decade of economic stagnation, with developing countries slowing down dramatically since late 2014, it is still urgent to prioritize economic recovery measures, but also other needed initiatives. Preferably, recovery strategies should help lay the foundations for sustainable development.
Given the large unmet needs for infrastructure, more appropriate investments can contribute to sustainable growth. Such investments should improve the lot of poor and vulnerable groups and regions. In other words, investments should lead to the revival of growth that is both ecologically sustainable and socially inclusive.
Enhancing food security and agricultural productivity should be an important feature of stimulus packages in developing countries dependent on agriculture. Re-invigorating agricultural research, development and extension is typically key to this effort.
The Green Revolution of the 1960s and 1970s – with considerable government and international philanthropic support – increased crop yields and food production. However, the efforts for wheat, maize, and rice were not extended to other crops, such as other major indigenous food crops and those associated with arid land agriculture.
We need a renewed effort to promote sustainable food agricultural productivity. Public investments, including social protection, can and must provide the support needed to accelerate needed farmer investments. There are many socially useful public works, but priorities must be appropriate, considering national and local conditions.
For Sustainable Development
Projects could improve water storage and drainage, and contribute to agricultural productivity or climate adaptation. For example, in many developing countries, simple storage dams, wells, and basic flood barriers/levees could be constructed, and existing drainage and canal networks rehabilitated. Public works programs could prioritize basic sanitation or regeneration of wetland ecosystems that serve as “filters” for watercourses – as appropriate.
To be sure, many complementary interventions will be needed. Food security cannot be achieved without better social protection. This will be critical for the protection of billions of people in developing countries directly affected by high underemployment and unemployment, to reduce their vulnerability to poverty and undernutrition.
But sustainable social protection requires major improvements in public finances. While more revenue generation requires greater national incomes, tax collection can also be greatly enhanced through improved international cooperation on tax and other related financial matters.
Clearly, such an agenda requires not only bold new national developmental initiatives but also far better and more equitable international cooperation offered by a strong revival of the inclusive multilateral United Nations system.