Food Security – a motivating force for useful policy change?
These are personal reflections on how the post 2007/8 commodity price spikes raised food security up the political agenda and some of the consequential impacts. They have been gleaned from the authors’ recent research and participation in a number of meetings and other events on food security during this year. The three most important have been as a member of the Commission’s Scientific Advisory Committee for the Milan 2015 Expo whose theme is “Feeding the planet, energy for life”, a Rustat Conference on 11 September 2014, and a Workshop at the Centre for Science and Policy Cambridge.
“Food security is a bigger challenge than ever, with a global population expected to reach 9.6 billion people by 2050.” Agriculture and Rural Development Commissioner Phil Hogan to the 6th Knowledge and Innovation Summit at the European Parliament on 17 November 2014.
This quote is an absolutely standard phrase repeated at almost every event looking at future challenges facing agriculture in Europe. Global population growth is immediately linked to food security and there is an implicit suggestion that this demands a response by increasing EU agricultural productivity and perhaps EU agricultural output. Such statements are not accompanied by serious analysis of the real threats to European food security, nor of the most appropriate EU assistance to the 805 million worldwide who really are suffering food insecurity and undernourishment. All too frequently references to the growth in global population have become a convenient shorthand which is taken implicitly to justify the protection of EU agriculture.
The spikes in international prices of major food crops between 2007 and 2013 had short-run real impacts on food security in many parts of the world, and on food price inflation everywhere. The charts discussed below offer two perspectives.
The first chart, from the Commission’s price dashboard for the period January 2000 to September 2014, shows nominal wheat price indices peaking at over four times, and maize prices at three times, the 2000 level in spring 2008. They peaked again in spring 2011, 2013 and 2014, but are currently falling. The second chart, from World Bank data, shows these developments in a longer context since 1960 (2010=100) and in real as opposed to nominal prices and juxtaposing the prices of energy and fertilisers in the picture. This clearly shows that the deeply-established 20th Century downward trend in real agricultural commodity prices has halted. Prices have risen substantially above their lowest levels seen from 1985 to 2000. It is too early to say whether there is a new upward trend.
In the literature on the causes of these developments, most economists and statisticians conclude that most of the upward shift in agricultural commodity prices is due to the systematic rise in energy prices (followed swiftly by fertiliser prices) plus the impacts of supply shocks, and commodity stock and exchange rate changes. In contrast to popular belief, the effects of biofuel policies and commodity speculation were found to be much less important. None of the analyses suggest the price rises resulted from population- or economic growth- driven surges in demand. Indeed, on population, until the very recent report by Raftery et al (2014), the consensus based on the UN ‘medium fertility’ projections suggests that population growth, which has been slowing for many years now, will be stabilising towards the end of this century. In Europe, population is already falling in 10 Member States, and is expected to peak and decline in nine more by mid-century. This leaves nine other Member States whose population is expected (on medium assumptions) to continue to grow throughout this century (Belgium, Denmark, Finland, France, Ireland, Luxembourg, Netherlands, Sweden and the UK). It is an interesting observation on the state of public perception, that despite food, agriculture, environment and trade being zones of EU competence within the EU single market, national food security is still a preoccupation. The EU28 population is projected to peak at about 520 million around 2030 and then slowly decline. European economic growth has certainly declined, with few suggesting high rates of growth can return. Three other drivers of food consumption patterns in Europe also suggest less growth, if not actual falls, in future consumption. There are now strong and repeated messages being given on the need to reduce sugar consumption to combat health problems, and to reduce meat consumption mostly for environmental (GHG emission) reasons. Third, there are concerted efforts to reduce the high incidence of waste in the food chain. Combined, these can have noticeable effects in the decades to come.
On the production side, whilst it is certainly the case that crop yields have plateaued in Europe and many other parts of the world (Ray et al, 2012), detailed analysis by Fuglie and his colleagues show that, mostly due to labour outflow, total factor productivity growth has, in general, not slowed (Fuglie et al, 2012). It is also clear from this analysis that productivity growth in agriculture is closely related to expenditure on research and development. Therefore the claims in the Commissioner’s speech that R&D on food and agriculture is being doubled in the current financial period compared to the last should be accompanied by a future upturn in productivity. Of critical concern for global food security is whether the political capital and concern expressed in the many Food Security summits and discussions under the G8 and G20 result in a similar real increase in resources devoted to agricultural development and in agricultural R&D more widely.
The point of all this is that there are utterly different considerations affecting food security in the more developed compared to the less developed parts of the world. In the latter, population pressure, economic growth and its associated dietary changes are certainly up against the challenge of pressures on land and water, amidst climate change. Furthermore for those in the poorest countries, described vividly by Collier as the ‘Bottom Billion’, these food security challenges are enmeshed in the four traps of: conflict, the natural resource trap, landlocked with bad neighbours and with bad governance (Collier, 2007). It was in the context of the challenge especially facing the developing countries that the term sustainable intensification emerged to describe the necessary development path of agriculture (UK Foresight report on Global food security). The phrase, correctly suggests that it will be far less damaging to climate and biodiversity loss if the food output required for the expected growth in global consumption during the rest of this century is produced by intensifying production on existing agricultural land rather than bringing new land into cultivation.
What then should this phrase mean when applied to developed country agriculture such as in the EU? This was the question posed by the recent RISE study.
The facts that: most demand growth will occur outside Europe; European agriculture is already highly intense; the EU agricultural area is declining not expanding, and that EU agriculture has damaging environmental impacts, led to the conclusion that the main emphasis for Europe under the phrase sustainable intensification must be on the first word and not the second. It was suggested that this especially means exploring and communicating where the local environmental limits are for farming systems, and assisting farmers to measure and react to their local environmental performance. Learning how to do this, and equally important, finding the right mix of information, training, incentives and regulation to bring this about are the main challenges for Europe. Discovering, and then sharing, how to maintain, and grow, high productivity agriculture whilst significantly diminishing the negative environmental impacts is Europe’s biggest potential contribution to global security.
This is all the more the case because the most common definition of food security cited is the FAO definition which makes no explicit reference to the sustainability of production systems. The FAO emphasis on availability, fairness and access to food are completely understandable given the dominant immediate concerns of confronting undernourishment. However if the future follows the past, then the more successful we are at raising productivity of agricultural output to improve availability, the more pressure will bear on the environment, degrading natural capital. How to avoid these ‘mistakes’ of the developed countries must be a prime objective.
A particularly complex aspect of the food security debate and one often raised in European discussions is the role of trade. There are many layers to this, some ideological, and some just plain difficult. The benefits of freer trade both for market stability, by sharing the burden of adjustment to supply and demand shocks, and for efficient allocation of resources is one of the least contested propositions amongst economists. For basic foodstuffs like grain, the benefits of having well-established infrastructure enabling trade seem obvious when harvests fail in one region. Certainly the obverse, the dramatic price-raising effects of export restrictions when markets go short were well illustrated by the rice market in the 2007-13 period. Such price shocks are then usually most felt by the poorest importing countries.
However there are many who instinctively distrust trade, traders (especially commodity speculators), the WTO (despite its founding principles of non-discrimination and most favoured nation), and a presumed association with over-powerful multinational corporations. From this view point, food security often slides into food self-sufficiency encouraged by the predisposition against freer trade. There is little understanding, and certainly no belief, in the income loss to which such mercantilism leads.
There is no doubt that multilateral, and indeed regional and bilateral trade agreements are all struggling with non-trade concerns especially environmental externalities and non-competitive behaviour. The main examples concern the environment and animal welfare, but also others where there are strong and different national preferences concerning technologies, food production processes, and products. A relatively recent further twist in the story has been the fashion to make calculations of the ‘external footprint’ of EU food (and other) consumption. These footprints are usually calibrated as the number of hectares of land, volume of water, or Green House Gas emissions associated with EU imports. An example of this literature for water is Hoekstra et al (2011). Such calculations seem to carry an implicit indication that it is in some way wrong or undesirable to be using another nation’s resources. Economic benefit from such trade does not enter the calculations. What to do about these footprints is also unclear. The ultimate aim of course is sustainable production and consumption everywhere. The challenge is to find how to get there from where we are. This is far from simple.
To return to the question posed at the start of this essay, has the heightened political attention given to food security led to useful policy change? One can only hope so for the sake of the 805 million undernourished. The actions agreed at Aquila and subsequent G20 meetings is hopefully leading to stronger focus on agricultural development, more agricultural R&D, and for example, on better international coordination of market information (e.g. through the Agricultural Market Information System (AMIS) initiative). These issues are certainly by far the most important. Within the EU, the recent reform of the CAP has been conducted throughout the period when food security was high on the agenda. Did this motivate a strong rational reform to enable the EU to play its most constructive role in global food security? Unfortunately not. The food security slogan was used by farming interest groups to simply hang on to as much EU public financial support for agriculture as possible. The strategic direction of the proposals to strengthen the environmental sustainability of European farming was stoutly resisted. The precise reasons for this are still being analysed. The challenge of incentivising more sustainable EU agriculture remains and, one hopes, will be the subject of future reforms.
01 Dec 2014