The rapid rise in grain prices is creating a world of victors and victims, but according to the United Nations’ Food and Agriculture Organization, the crisis also presents an opportunity.
“One of the huge advantages at the moment is that agriculture looks like you can make a lot of money on it. Where before, it looked like a declining sector,” said Dan Gustafson, director of the FAO Liaison Office for North America.
Problems associated with higher grain prices have elevated agricultural news to mainstream newscasts. While farmers and agricultural supply companies in western nations earn profits, they have come at a cost -the poorest citizens of the world cannot afford basic staples like rice.
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But according to Gustafson, the high prices also provide an incentive for governments, hopefully in sub-Saharan Africa, to re-invest in agricultural production. Farming is now seen as a business opportunity, not simply an issue of food security, he said.
To jumpstart that reinvestment, the FAO has committed $17 million to the Initiative on Soaring Food Prices. The program is already working with farmers and the governments of Mozambique, Senegal and Burkina Faso to boost production with better seeds, more fertilizer and improved knowledge.
The FAO is not alone in its enthusiasm for farming. For the first time in 25 years the World Bank is focusing on agriculture. Its 2008 World Development Report is subtitled Agriculture for Development. The report states that farming has been ignored for too long as a pathway to global development.
“A dynamic ‘agriculture for development’ agenda can benefit the estimated 900 million rural people in the developing world who live on less than $1 a day, most of whom are engaged in agriculture,” Robert Zoellick, World Bank president, said in a news release. “We need to give agriculture more prominence across the board.”
The report states that in 2007 only four percent of development assistance went to agriculture, even though 75 percent of the world’s poor live in rural areas. Back in 1990, the share of development aid going to agriculture was 12 percent. Farming has lost out, especially in Africa, as more assistance focused on AIDS, malaria and other health issues.
Governments in sub-Saharan Africa have also ignored the potential of agriculture, as only four percent of their budgets go toward farming.
“Quite frankly, for a long time it didn’t look like a good sector for (African) politicians to invest in,” said Gustafson from his office in Washington, D.C.
The goal was to get people out of agriculture and into the cities, where they could work at a factory.
Another factor preventing investment was that the 1980s and 1990s were years of overproduction. The priority was handling all the surplus grain, rather than food production advancements in Africa.
Gustafson cited one problem common throughout sub-Saharan Africa.
“The easiest thing to say is that it’s a combination of things,” said Gustafson, including a lack of fertilizer, lack of seed varieties and poor irrigation.
“But if I had to pick one, I would say knowledge. There are a lot of options out there that (African) farmers are unaware of.”
Consequently, one of the goals of the Initiative on Soaring Food Prices is to improve extension services in places like Senegal, so knowledge gets from universities to the field.
Another weakness in Africa is how to get the food to the market.
“What we have focused more on (in recent years) was the value chain, post harvest,” said John Thomas, director of the agriculture office for USAID, the U.S. government agency for international development.
When asked about the level of progress made in African agribusiness, Thomas gave the example of Rwanda.
He said the central African country has been able to expand its coffee industry, through improved technology and processing.
“In Rwanda, there’s been tremendous progress in developing coffee varieties, improving the process for washing the coffee beans, packaging them and making sure they have consistent quality,” he said. “That has expanded production, and incomes quite substantially.”
Another obstacle to overcome is to ensure that higher world prices actually make it to African farmgates.
According to Gustafson, in certain African countries the marketing practices and government policies keep prices well below values on the Chicago Board of Trade.
“That has always been an issue, and will be an issue now,” said Gustafson.
It could change, he said, if African governments realize that agriculture is a moneymaker.
If they want to reap the financial benefits, they will need to be part of the world market.
While aid agencies may believe the playing field is now tilted in Africa’s favour, one of the world’s leaders in international development is not convinced.
“Whilst it may be true that this will induce expansion of production in certain parts of the world… it’s not clear to me this rapid runup in price is likely to be net positive for developing countries,” said Ford Runge, a professor of applied economics at the University of Minnesota.
Runge is the co-author of Ending Hunger in Our Lifetime, an economic textbook that takes a detailed look at food security and globalization.
He said western nations’ obsession with subsidies has prevented that from happening. Subsidies inhibit agricultural growth and the effort to fight hunger in developing nations by making western product available more cheaply.
