Global Trends by Martin Khor

Monday 2 June 2008

World leaders to address food price crisis

This week, world leaders will meet in Rome in an emergency meeting to discuss what to do about the sharp rise in food prices.  Countries like Malaysia that were complacently relying on cheap imports have found the import prices surging.  It is time for them to grow more food.   


This week, world leaders are meeting in Rome in an “emergency meeting” to discuss what is now dubbed the world food crisis.

Some 40 Presidents and Prime Ministers, including French President Nicolas Sarkozy and Brazilian President Luis Lula, will assemble to show concern and perhaps come up with some concrete plans to address the high prices and shortages of many food products.

The conference on world food security was originally planned by the Food and Agriculture Organisation to discuss the effects of climate change and bioenergy on food production.

But in the past several weeks a new crisis has emerged, with riots taking place in many countries, as prices of food items such as wheat and rice have been shooting upwards, causing many poor families to drastically cut down on their family meals. 

Thus to the original themes has been added the response by world leaders to “the international emergency caused by soaring food prices,” according to the FAO.  Beyond immediate solutions, it will seek to map out a strategy for world food security in the years ahead.

A preview to next week’s food summit was the special session of the United Nations’ economic and social council (ECOSOC) two weeks ago.

The experts and ambassadors who spoke differentiated between the immediate and the long term solutions.

In the short term, urgent measures are needed to ship food to countries affected by food shortages.

But in the long run, everyone agreed, the developing countries have to produce their own food, instead of importing.

The paradigm of food security has suddenly changed. The world had in recent years seemed to have an abundance of food.  Many countries found it cheaper to import cheaper grains rather than produce them, and thus the “self-sufficiency” model gave way to “buy cheap imported food.”

Malaysia is a good example of this.  We are only about 60% self-sufficient in rice, which is cheaper to import than to produce.  Malaysia also imports a lot of vegetables, fruits, meat, wheat and so on.

With the rising prices of so many imported items, there is a new impetus for the country to become more self-sufficient in food.

The Philippines also suffered a shock some weeks ago when it placed an import order for rice, only to be told that there is no supply.

Countries like India and Cambodia had quickly stopped their export of rice to ensure that the local people had enough.

The lessons are being learnt for countries all over the world which are in a similar position as Malaysia or the Philippines.

Yes, it may be cheaper for some time to import food, but it is no longer certain that imported food prices will be low, or that the imports will always be forthcoming. 

Food is the most sensitive product, as it is needed more than other things, except perhaps air and water.  A shortage or a rise in price can lead to panic in the market and chaos on the streets.

The recent events have led to a new paradigm in countries that had been complacent with their food situation.  They are now putting higher priority to growing their own food.  And with import prices being so high, it is now more viable or profitable for farmers to grow food.    

Last week, the FAO issued a report showing that high food prices have particularly hit vulnerable populations in many countries.

The food import bill of low income food deficit countries will reach US$169 billion in 2008, 40 percent more than in 2007. By the end of 2008 their annual food import basket could cost four times as much as it did in 2000.

The FAO food price index has remained stable since February 2008, but the average of the first four months of 2008 is still 53 percent higher when compared to the same period a year ago.

“Food is no longer the cheap commodity that it once was. Rising food prices are bound to worsen the already unacceptable level of food deprivation suffered by 854 million people,” said FAO Assistant Director-General Hafez Ghanem. “We are facing the risk that the number of hungry will increase by many more millions of people.”