We are becoming more selfish, not less. As food, fuel and fibre become increasingly expensive it's every country for itself. That's why the prescription for global food security by the G-20 , a group of 20 nations including India, is so odd. It completely ignores reality. G-20 has offered five solutions to cool food prices. First, increase production and yields on the millions of small farms in developing nations.
To accomplish this, G-20 is keen to strengthen collaboration in R&D , set up a task force to improve wheat productivity, invite private investment in the farm-to-fork chain, and help small farmers cope with climate change. Does this mean that for starters France, as G-20 chair, will adopt GM food crops with proven ability to increase yields and fight climate change? The world already has ample skills and technology to double food production. They aren't being used.
While EU is uncomfortable with biotech, Chinese, African, Indian farmers don't invest more inputs in land that doesn't belong to them. Or worse, they don't get their money back. Solution lies in clear and transparent property rights that give small farmers ownership and allow them to unlock its value, coupled with sufficiently high food prices to make efforts worthwhile. Developed nations need urgent consumer education. G-20 's second solution is faster and more accurate collection of market information to smooth price shocks. But who will tell the Chinese ?
The world's largest food importer has notoriously unreliable local inventory data. China won't change because transparency reduces its bargaining power. Actually no smart importing nation would reveal its cards, no matter how much it helps rest of the market. Remember how former food minister Sharad Pawar was criticized for talking openly about India's desperate need to import edible oil, sugar, fertilizers and pulses because it queered the pitch for price negotiations.
Moving even further from reality, G-20 recommends international policy coordination for "stable, predictable, distortion-free and transparent system for trade" . That's a dig at countries like India that have ring-fenced grains, cotton and sugar for local consumers. But how about coordinating biofuel policies that are a bigger menace? The USA and EU have mandated use of corn-based ethanol and palm oil and rapeseed oil-based biodiesel. Shouldn't they check with the rest of the world before burning our food in fuel tanks?
As poorest families are worst hit when prices rise suddenly, G-20 recommends better risk management systems in developing countries. But if prices are high because of smaller crops, a country needs buffer stocks to cool them. Buffer stocks, as we know too well, are expensive and a drag on the exchequer. Food importing countries would be doubly hard-pressed to create them. If risk management means protecting private traders and processors from volatility, it's a different thing altogether. Commodity exchanges are now present in all continents .
But few farmers even in the USA, and certainly no poor families anywhere, hedge directly . So as a tool, it has no relevance to the poor at the heart of this plan. The final recommendation, and most dear to French President Nicolas Sarkozy, is greater regulation of commodity exchanges. That means making it tougher for speculators such as hedge funds and index traders to make so many bets on food prices rising that it distorts the physical market as well.
Speculators are the easiest to penalize because people see them as Death Eaters of the commodity world. But study after study in country after country, including India and the USA, from 2008 onwards has absolved them of blame for price rise. More importantly, unlike crude oil and metals, the bulk of the world's food is not traded internationally . So prices in London, Paris, New York and Chicago, even if cleansed of speculation, are of small consequence to countries not trading food. In short, G 20 says 'garibi hatao' without ruffling any feathers. It's an opportunity lost.
You need far greater courage to acknowledge that modern agriculture needs stronger property rights, which means disrupting the social order , and higher returns on investment, which means costlier food, to deliver. Politicians love doles such as the World Food Programme or MNREGA. But you can't eradicate hunger by giving one fish daily. You need to teach a man to fish. If governm-ents of top 20 nations are so bere-ft of ideas, where will we find political will for the real solutions?
Source: http://articles.economictimes.indiatimes.com
To accomplish this, G-20 is keen to strengthen collaboration in R&D , set up a task force to improve wheat productivity, invite private investment in the farm-to-fork chain, and help small farmers cope with climate change. Does this mean that for starters France, as G-20 chair, will adopt GM food crops with proven ability to increase yields and fight climate change? The world already has ample skills and technology to double food production. They aren't being used.
While EU is uncomfortable with biotech, Chinese, African, Indian farmers don't invest more inputs in land that doesn't belong to them. Or worse, they don't get their money back. Solution lies in clear and transparent property rights that give small farmers ownership and allow them to unlock its value, coupled with sufficiently high food prices to make efforts worthwhile. Developed nations need urgent consumer education. G-20 's second solution is faster and more accurate collection of market information to smooth price shocks. But who will tell the Chinese ?
The world's largest food importer has notoriously unreliable local inventory data. China won't change because transparency reduces its bargaining power. Actually no smart importing nation would reveal its cards, no matter how much it helps rest of the market. Remember how former food minister Sharad Pawar was criticized for talking openly about India's desperate need to import edible oil, sugar, fertilizers and pulses because it queered the pitch for price negotiations.
Moving even further from reality, G-20 recommends international policy coordination for "stable, predictable, distortion-free and transparent system for trade" . That's a dig at countries like India that have ring-fenced grains, cotton and sugar for local consumers. But how about coordinating biofuel policies that are a bigger menace? The USA and EU have mandated use of corn-based ethanol and palm oil and rapeseed oil-based biodiesel. Shouldn't they check with the rest of the world before burning our food in fuel tanks?
As poorest families are worst hit when prices rise suddenly, G-20 recommends better risk management systems in developing countries. But if prices are high because of smaller crops, a country needs buffer stocks to cool them. Buffer stocks, as we know too well, are expensive and a drag on the exchequer. Food importing countries would be doubly hard-pressed to create them. If risk management means protecting private traders and processors from volatility, it's a different thing altogether. Commodity exchanges are now present in all continents .
But few farmers even in the USA, and certainly no poor families anywhere, hedge directly . So as a tool, it has no relevance to the poor at the heart of this plan. The final recommendation, and most dear to French President Nicolas Sarkozy, is greater regulation of commodity exchanges. That means making it tougher for speculators such as hedge funds and index traders to make so many bets on food prices rising that it distorts the physical market as well.
Speculators are the easiest to penalize because people see them as Death Eaters of the commodity world. But study after study in country after country, including India and the USA, from 2008 onwards has absolved them of blame for price rise. More importantly, unlike crude oil and metals, the bulk of the world's food is not traded internationally . So prices in London, Paris, New York and Chicago, even if cleansed of speculation, are of small consequence to countries not trading food. In short, G 20 says 'garibi hatao' without ruffling any feathers. It's an opportunity lost.
You need far greater courage to acknowledge that modern agriculture needs stronger property rights, which means disrupting the social order , and higher returns on investment, which means costlier food, to deliver. Politicians love doles such as the World Food Programme or MNREGA. But you can't eradicate hunger by giving one fish daily. You need to teach a man to fish. If governm-ents of top 20 nations are so bere-ft of ideas, where will we find political will for the real solutions?
Source: http://articles.economictimes.indiatimes.com
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