CREDIT: <a href="">UNAMID Photo</a> (<a href="">CC</a>).

Policy Innovations Digital Magazine (2006-2016): Commentary: Market and Community Approaches to Food Crisis

May 23, 2008

The first quarter of this year saw food prices skyrocket, with the World Bank recording a 75 percent increase in its food price index since September 2006. The challenges for policymakers, however, extend beyond the current crisis. Since early 2002, food prices have risen by 140 percent, with the effect falling disproportionately on the poor. Meanwhile, a third of food bought in the United Kingdom is thrown away. There are fundamental problems of distribution and price stability that governments and NGOs must address if we are to repair food production and avoid further crises.

Policymakers are divided on the best way to approach such problems. Many argue that only greater market freedom will lead to lower prices and a fairer distribution of food, and that the current crisis is due to unnatural distortions caused by agricultural subsidies and tariffs. Artificially higher import prices heighten the impact of any national shortages. Further, the lack of competition, with the government in many cases acting as the main purchaser of crops at a guaranteed price, gives no impetus to domestic agriculture to improve efficiency.

Because a full 70 percent of the world's trade barriers are imposed by poor countries on other poor countries, such costs fall disproportionately on the world's neediest. The World Bank estimates that the removal of agricultural trade barriers would add $181 billion to world income, with the majority of this benefit going to poorer nations.

Such measures have long been opposed by those who feel that free-market policies damage crucial local agriculture. La Via Campesina, an international organization of rural and agricultural workers founded in 1993, argues that poorer nations should instead pursue a policy of food sovereignty. It proposes "a model of peasant or family-farm agriculture based on sustainable production with local resources and in harmony with local culture and traditions," with nations able "to define their agricultural and food policy without the 'dumping' of agricultural commodities into foreign countries."

Advocates of food sovereignty argue that the majority of the world's food is produced locally by small-scale farmers, many living in poverty. By focusing on improving the efficiency of these farmers through better technology, firmer institutional support, and protection from harmful dumping, food can be supplied effectively to those who need it most.

Free market measures sometimes hurt these small-scale farmers. A case in point is the experience of Peruvian farmers in the early 1990s following Peru's shock trade liberalization program. The market became flooded with cheap foreign imports, driving smallholders out of the market. Such policies, groups like la Via Campesina argue, have contributed directly to the current food crisis.

Despite the passion on both sides of this debate, policymakers' options are not black and white. Indeed, recent reports have proposed a synthesis of market- and community-based approaches. The 2008 International Assessment of Agricultural Knowledge, Science, and Technology for Development (IAASTD) argues that changes in food policy "should be directed primarily at those who have been served least" by traditional agricultural approaches, in particular poorer farmers, women, and minorities. Recognizing the role of small-scale farmers in supplying an enormous quantity of food locally, often to the very poor, the report insists that food policy needs to be reformed "to reduce poverty and provide improved livelihoods options for the rural poor, especially landless and peasant communities, urban informal and migrant workers."

The IAASTD argues therefore that policymakers must focus on increased investment in agricultural research programs and place more of an emphasis on "traditional and local knowledge." Furthermore, states and NGOs should aim to develop local institutions significantly, providing communities with "recourse to fair conflict resolution," and developing "legal frameworks that ensure access and tenure to resources and land."

Finally, the IAASTD urges a number of market-based policies, but operating again on a local level and with a view to improving the economic performance of small-scale farmers. Key among these are the development of intellectual property rights as a way to promote entrepreneurship, and the promotion of micro-credit. With a strong need among small-scale farmers for newer technology, more manpower, and more efficient production methods, such small-scale finance initiatives may provide the impetus for development among the poorest communities.

Moreover, the development of effective institutions for managing agriculture has been deeply asymmetrical, with producers in the developed world possessing massive economies of scale that continue to hinder institutional development in poor nations. Structural problems, such as the lack of effective land reform in Zimbabwe, are a barrier to all forms of innovative food policy. Policies aimed at combating such underlying issues, including the reduction of corruption and measures for a more equitable distribution of resources, are clear prerequisites for any significant change in the current food economy.

Jon Templeman is a student at the University of Oxford.

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