Global Trends by Martin Khor

Monday 28 April 2008

Act quickly on food crisis, UN told

The United Nations’ premier conference on development was held last week in Ghana.  The hottest issue was the need to identify the causes and to act to resolve the world crisis of food shortages and rising prices.


The food crisis, the problem of commodities, and how developing countries should preserve their space to choose between options in economic policies -- these were some of the key issues that emerged at the United Nations’ premier trade and development conference last week.

The UN Conference on Trade and Development (UNCTAD) has been the UN’s focal point on development and how this links to trade, finance and technology. Every four years it holds its major session, and the 12th session in Ghana on 20-25 April was known as UNCTAD XII.

The most topical issue was the rising prices and shortage of food, which has sparked recent unrest in many developing countries.

UN Secretary General Ban Ki Moon spoke of the “sky-rocketing” prices of food, as the prices of staple foods increased by more than half in the last six months, adding that the ban on rice or wheat exports by some countries threatens to exacerbate the problem. 

The food crisis can trigger multiple other crises, warned the Secretary General.  The causes are many, including the switch to biofuels, high costs due to oil price increases, and financial speculation.  The world has consumed more food than it produced and this is unsustainable.

Immediate humanitarian action is needed, but in the long run production must be increased. He announced he would set up a task force of experts to look at all elements of the food crisis.

He also called on wealthier nations to rethink their old policy on agricultural subsidies.  “If we can’t reduce subsidies when the prices are high, then when will we do so?”, he asked.

The UNCTAD Secretary General Supachai Panichpakdi said: “Developing countries can’t only import food but have to expand their local production.”

Ghana’s President John Kufuor quoted Ban’s statement that Africa is the epicenter of a development emergency and Tony Blair’s statement that Africa is a scar on the conscience of humanity.  He cited data on Africa’s declining shares of world trade and investment. 

While UN and government officials made general comments on the food crisis, it was left to the non-governmental groups to provide critical analysis and proposals.

In a statement read to UNCTAD XII, the citizen groups said one reason for the crisis is the shift from producing food to bio-fuels. But a larger reason is the decline in agriculture in developing countries, which had been wrongly pressured by the World Bank and IMF to cut government subsidies to small farmers, and to cut their food import duties. 

At the same time the high agricultural subsidies continue in rich countries. The surge of cheap and subsidized imports have overwhelmed local farmers and reduced food production in many developing countries

“The food crisis makes policy change necessary.  Developing countries must be allowed to defend their food security and small farmers, so as to quickly expand food production through sustainable agriculture, and to raise tariffs to prevent import surges. 

“The developed countries must quickly phase out their distorting subsidies, including those distorting subsidies. Land for biofuels should be turned back to farming for food.   There must be changes to policies at the World Bank, IMF, WTO and the free trade agreements. UNCTAD can play a central role in this reform.”

Another issue at UNCTAD XII was the loss of “policy space” for developing counties to implement the development strategies they want because of the international rules in trade and finance.

A battle was waged on this between developing countries, that wanted explicit recognition of this and more work by UNCTAD, and developed countries which were uneasy about the issue.

The conference’s declaration, known as the Accra Accord, agreed on mild language that recognized the constraints placed by international rules, and the trade off between these rules and the loss of national policy space. “It is particularly important for developing countries that all countries take into account the need for appropriate balance between national policy space and international disciplines and commitments,” said the Accord, echoing the sentiments of the previous Conference.

The NGOs, in their statement, were far stronger.  They said that since the last UNCTAD conference, policy space for government intervention and regulation has declined further.

This deterioration is mainly due to free trade agreements that “lock in developing countries including the poorest into inappropriate liberalization of imported good and services and inappropriate IPR policies. 

“The FTAs also introduce new rules on liberalizing investment and government procurement, eroding the governments’ ability to regulate for development and for the public welfare.”

Perhaps the most concrete item in the Accra Accord was that UNCTAD would expand its work on commodities.    This used to be the main area of UNCTAD’s work, as it hosted negotiations on several commodity agreements.  

The issue fell by the wayside after the agreements either were disbanded or became less active, and UNCTAD’s work on commodities became only a shadow.

The Accra Accord called for a special unit on commodities to help developing countries formulate strategies to respond to the challenges and opportunities of commodity markets.

UNCTAD was also asked to do work within its mandate on “emerging issues” such as climate change, migration and energy policy.