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The Global Food Crisis


E. Wes F. Peterson

Professor of University of Nebraska-Lincoln

Department of Agricultural Economics


In 1967, E. Wes F. Peterson received a bachelor's degree in Anthropology(honors program completed with great distinction) from the University of California, Berkeley. In 1973, he received a master's degree in Public Affairs (Major: economic development) from Princeton University. In 1980, he received a master's degree in Economics from Michigan State University. In 1981, he received a doctor's degree in Agricultural Economics from Michigan State University.

From 1974 to 1976, he served as assistant director of the Regional Economic Research and Documentation Center in Lome, Togo, West Africa, and wrote and edited two monthly publications (in French and English) on labor economics in Africa. From 1975 to 1981, he served as research assistant, Department of Agricultural Economics, Michigan State University. From 1981 to 1983, he served as an assistant professor of the Institut de Gestion Internationale Agro- alimentaire, Cergy-Pontoise, France, mainly engaged in research, consultation and teaching of agricultural policy, economic development and international agribusiness. From 1983 to 1990, he served as an assistant professor, Department of Agricultural Economics, Texas A&M University. From 1999 to 2000, he was a visiting professor in the Food and Resource Economics Department, University of Delaware. Since 1990, he has successively served as an associate professor (1990-1996) and a professor (1996 to present) of the Department of Agricultural Economics, University of Nebraska.

His research interests focus on agricultural development, public policy and international agricultural trade.

His most recent publication is The Coming Global Food Crisis.


E. Wesley F. Peterson: The Global Food Crisis


The outbreak of Russian-Ukraine crisis on February 24, 2022 seriously disrupted global food supplies as both Russia and Ukraine are major exporters of grains and oilseeds, shipped mostly from ports on the Black Sea. From February to June 2022, grain prices rose about 14.5 percent increasing the hardships already being felt in many low-income countries in the Middle East, Africa, and Southeast Asia (FAO 2022). In late July, an agreement facilitated by the United Nations and the government of Turkey to allow safe passage for Ukrainian grain exports was reached and the first shipments began shortly thereafter (Picheta et al., 2022). While these shipments will help to alleviate the shortages that have led to higher prices, they will not solve the world food crisis that was already underway prior to the ongoing conflict. From 2020 to the onset of the Russian-Ukraine war, global food prices increased more than 40 percent (FAO 2022). As long as it lasts, the Russian-Ukraine war will continue to disrupt the world food system because it will impede the harvesting of this year’s crop as well as planting for next year (Kramer 2022). Picheta et al. (2022) report that this year’s harvest of grain and oilseeds in Ukraine is likely to be 36 million metric tons less than in 2021.


There is little that can be done in the short term to alleviate the global food crisis. Global commodity prices are set by the interaction of supply and demand and rising prices over time are an indication that demand is outstripping supplies. The Russian-Ukraine war is not the only factor leading to supply shortages. Global climate change giving rise to droughts in certain areas and flooding in others can have serious consequences for global food output. The ongoing COVID-19 pandemic has led to supply chain disruptions that also affect the exchange and transportation of agricultural commodities. Another important factor is the political response to rising prices. When global food price volatility increases, the governments of major exporting countries often implement export bans or other types of trade barriers to prevent rising world prices from being transmitted to their domestic markets where food price inflation can constitute a significant political problem. According to The Economist, 26 countries accounting for 15 percent of the total calories traded globally have implemented policies restricting exports this year. Such export restrictions, of course, add to global supply shortages and rising food prices. The war, climate change, supply-chain disruptions, and restrictive export policies are all difficult to change rendering mitigation of the global food crisis in the short run extremely problematic.


The World Food Program (WFP) of the United Nations is the primary world organization focusing on responding to global hunger and famine. In the past, the WFP has been highly effective at preventing famines as there generally is enough food produced in the world to feed everyone on the planet. Recent famines have all occurred in failed states in which the governments suppress publicity about food shortages for political reasons. Amartya Sen (1999), Nobel Laureate in economics, has suggested that famines never occur in democratic countries in which there is a free press that can alert the world to impending food shortfalls allowing the WFP and the world community to intervene. The WFP, however, is powerless to control rising food prices which increase food insecurity by making food unaffordable to low-income consumers. In addition, higher prices reduce the amount of food the WFP can procure given its budget which has not been increased for the present crisis and which may well be insufficient given the magnitude of the problem (World Food Program, 2022).


It would clearly be beneficial if the world community could convince exporting countries to allow their farmers to take advantage of the high world prices by increasing their exports. Because this can be politically challenging, governments in these countries may not respond favorably to calls for relaxing their export restrictions. It might be possible for individual countries to file complaints against these governments at the World Trade Organization (WTO), but such moves would be unusual. Most disputes at the WTO involve trade practices that harm suppliers’ access to foreign markets rather than the protection of domestic consumers. In any case, any action through the WTO would take a long time and may well be inconclusive as the WTO dispute resolution system is currently in disarray (Lester 2022).


Supply shortfalls are not the only forces causing global food price increases. Demand for food has been increasing for many years as the world population grows and average incomes rise. Based on data from the World Bank (World Development Indicators | DataBank (worldbank.org)), inflation-adjusted per capita income in low- and middle-income countries has increased almost threefold since 1995 while population in these countries increased 42 percent over the same time period. Rising population means more mouths to feed while rising incomes mean that individual consumers will want to consume more high-quality food including livestock products, fruits, vegetables, and vegetable oils in place of such staples as rice, wheat, or maize. Meat, dairy, and eggs require inputs such as feed grains and oilseed meals, commodities that might previously have been used for human consumption. The Food and Agriculture Organization (FAO 2009) has predicted that world food output will need to double by 2050 to meet this rising demand without dramatic price increases. To accomplish this feat, governments will need to significantly increase funding for research and the private sector will need to use the results of this public sector research along with those of their own research departments to develop technological innovations that will sustainably raise food output.


Three sets of actors are involved in agricultural research. The first set includes the national agricultural research agencies found in individual countries and funded from government budgets. The second set is made up of the international agricultural research centers belonging to the Consultative Group for International Agricultural Research (CGIAR 2022). Both the national research agencies and CGIAR research centers carry out public research which tends to focus primarily on generating basic scientific knowledge rather than more applied research that might lead to products that could be protected by intellectual property laws (patents). The third set includes private sector businesses that carry out applied research and development that can lead to patentable products. Public sector research has been of immense value in increasing agricultural productivity but funding for this work has declined in recent years (Alston et al. 2021). To address the long-term problem of rising food prices, increased public spending on agricultural research is critical. The private sector will respond to market incentives and can be counted on to take advantage of profitable opportunities for technological innovation but positive incentives (e.g., tax holidays, subsidies) from government agencies could possibly encourage greater research investments by these private firms.


It is important to emphasize that future technological innovations will need to involve practices that are sustainable contributing both to the reduction of the impact of agricultural practices on environmental problems and climate change as well as to the mitigation of the effects of climate change on agricultural production. For example, development of more drought-tolerant varieties of crops will be of great importance in meeting future food demand in a world in which severe droughts are becoming more common as a result of climate change. At the same time, many agricultural practices contribute to environmental problems such as soil erosion and contamination of water supplies as well as the carbon emissions driving climate change. Some farmers in the United States have adopted no-till field management as a way to sequester carbon in the soil with benefits for both soil quality and climate change. Sustainable agricultural innovations are critical for addressing the global food problem over the long run. Most arable land is already being cultivated so planting more land to food crops is not an option. That means that the only way to reliably increase agricultural output will be through increased productivity as a result of technological innovation.


It may be tempting for the governments in some countries to consider policies that would reduce their dependence on imported food. It is, of course, always worthwhile to encourage innovations in the domestic food system that may raise food output and such advances may lead to lower food imports. As a general rule, however, policies that aim at food self-sufficiency (e.g., import tariffs that raise the prices of imported goods) almost always fail leaving consumers worse off and introducing economic inefficiencies in the functioning of the economy. In normal circumstances, relying on world markets for food items that would be costly to produce within the country is a much better strategy than attempting to produce a country’s food supply entirely within its borders. Many countries do not have the land and other resources needed for efficient agricultural production and are better off relying on imports to supplement domestic food supplies. Even major food exporters such as the United States have to rely on imports for foods such as bananas or coffee as those commodities would be difficult to produce in the country itself. Singapore with the second highest per-capita income in the world is completely food secure despite relying on imports for virtually all of its food.


Many factors external to the agricultural sector will also need to be addressed to reduce the current levels of hunger (about 800 million people are currently food insecure) as well as to meet rising food demand while keeping food prices stable. The causes of the current crisis include Russian-Ukraine war and elsewhere (e.g., Ethiopia, Yemen, and South Sudan), climate change, supply-chain bottlenecks, and policies to restrict exports. The supply-chain problems are being corrected but the other causes require efforts from the world community that lie outside of agriculture per se. Reducing global conflicts and the displacement of large numbers of people require sensitive international diplomacy and peacekeeping efforts through the United Nations and other international bodies. Slowing climate change requires a widespread shift away from fossil fuels. Changing national agricultural policies that contribute to supply shortages depends on greater economic collaboration among countries and increased attention to the external effects of policies aimed at domestic problems. Increased financial assistance to poor countries faced with existential problems related to resource use, climate change, poverty, and economic development could help these countries to become more resilient. Greater international cooperation on all of these broad global issues would go a long way toward reducing food insecurity in the world today as well as in the future.


2022.08.05


Contacter:Mingyue Chang

Interviewer:Zihang Shi

Proofreader:Jixi Zhao

Editor:Di Wang




Sources:

Alston, Julian M., Philip G. Pardey, and Xudong Rao (2021). “Rekindling the Slow Magic of Agricultural R&D,” Issues in Science and Technology available at:Investing in Agricultural R&D Should Be a Global Priority | Issues in Science and Technology

CGIAR (2022). “Research Centers,” Consultative Group for International Agricultural Research, available at: https://www.cgiar.org/research/research-centers/

FAO (2022). “FAO Food Price Index,” Food and Agriculture Organization, available at: FAO Food Price Index | World Food Situation | Food and Agriculture Organization of the United Nations

FAO (2009). “How to Feed the World in 2050,” Food and Agriculture Organization, available at: 2050 High-Level Experts Forum: The Forum (fao.org)

Kramer, Andrew E. (2022). “Mines, Fires, Rocketts: The Ravages of War Bedevil Ukraine’s Farmers,” New York Times, August 5, 2022.

Lester, Simon (2022). “Ending the WTO Dispute Settlement Crisis: Whereto from Here?” International Institute for Sustainable Development, available at: https://www.iisd.org/articles/united-states-must-propose-solutions-end-wto-dispute-settlement-crisis

Picheta, Rob, Jomana Karadsheh, and Radina Gigova (2022). “Kyiv and Moscow Agree Deal to Resume Kraine Grain Exports from Black Sea Ports,” CNN, July 23, 2022, available at:

Sen, Amartya (1999). Development as Freedom, New York: Alfred A. Knopf.

World Food Program (2022). “A Global Food Crisis,” World Food Program, available at:https://www.wfp.org/global-hunger-crisis


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