World hunger and the global economy: strong linkages, weak action.

Author:Clapp, Jennifer
Position:Global Economy
 
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This paper probes some of the global economic forces that have contributed to the ongoing precarious global food security situation, especially in the years since the 2007 to 2008 food crisis. Since the crisis hit at a time when global food production per capita was rising, it is important that policies addressing hunger incorporate dimensions beyond food production. There has been some acknowledgement of the role of global economic forces in the food crisis by global policymakers, but global food security initiatives still largely emphasize increased food production over other measures. The paper concludes that more needs to be done to ensure that the rules that govern the global economy--especially those regarding international trade, finance, and investment--do not work against the goal of food security.

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Since the 2007 to 2008 food crisis, food security has become a prominent issue on the global policy agenda. Continued instability of global food prices since the initial price spikes has given rise to a concern that a new crisis could emerge at any time. A number of global governance initiatives for food security have been announced in recent years. These include efforts to channel funding into increasing agricultural productivity in the developing world. This approach to food security resonates with what has been labeled by many as a "productionist" approach to food security, which anticipates future food shortages and prescribes increased food production as the primary means to achieve enhanced global food security. (1)

Although the production of sufficient quantities of food is a prerequisite for food security, other equally important factors must also be addressed to achieve adequate access to food for all. The world currently produces in caloric terms more food than is needed to meet this objective, and food output per capita on a global scale has been rising, even through the recent crisis period. (2) However, because

food crises can erupt even when there is sufficient food available, it is important for food security policy to include measures beyond simply boosting production. In particular, policy measures that seek to improve distribution and access must also be integrated into food security policy. (3) Global economic relationships, such as trade, finance, and investment, as well as the rules that govern those relationships, set the international policy context and affect food security in complex and significant ways. (4)

In this paper I call attention to important features of the global economy that are widely associated with ongoing global food insecurity in the world's poorest countries, and which deserve more attention, and action, in policy circles. These include economic policies that largely originate in wealthier, more industrialized countries that contribute to higher and more volatile food prices and uneven distribution of food and agricultural investments. Global policy responses continue to prioritize productivity measures within the existing global economic governance framework, rather than transforming that very framework in ways that better support food security.

HUNGER AND THE IMPORTANCE OF POLICIES THAT AFFECT ACCESS TO FOOD

Hunger remains a serious global problem. Over 840 million people in the world are chronically undernourished, but due to the manner in which hunger is measured, this figure may underestimate the true scale of the problem. The main indicator of hunger used by the Food and Agriculture Organization (FAO), the Prevalence of Undernourishment (PoU), is very narrow in scope. (5) It measures the number of people consistently receiving fewer gross calories than necessary to live a sedentary lifestyle for over a year. (6) Given that many, if not most, of the poorest people in the world have activity levels that are far from sedentary, and often experience acute hunger on a seasonal basis, the PoU risks missing a large number of people who do not have adequate access to food. (7) Even short-term episodes of acute hunger can be devastating for small children and pregnant women. A focus on calories alone does not tell us much at all about the nutritional quality of food or implications of low nutritional quality, such as micronutrient deficiencies or stunting. In India, for example, nearly half of all children under the age of five are stunted, and more than 25 percent of children worldwide have an inadequate diet during their key growth years. (8)

The scale of global hunger is especially troubling, given that the world produces enough food to meet human needs. Data from the FAO indicate that on an average, there are 2800 calories available per person, after livestock are fed and after post-harvest losses are accounted for, which is an amount that far exceeds the 2100 calories an average person requires per day to maintain health. (9) FAO data also reveal that world food production per capita has actually been rising in recent years. (10) However, it is unclear whether this situation of sufficient global food availability will continue. This uncertainty, combined with production deficits in some countries, drives most of the production-oriented initiatives for food security. A productionist approach, however, only addresses one aspect of the problem, and fails to sufficiently delve into some of the deeper causes of hunger that exist today.

Uneven distribution of both food production and food trade, and poor access to food, are the key reasons that people continue to go hungry in this world of plenty. (11) Nobel prize-winning economist Amartya Sen's path-breaking work in the early 1980s demonstrated that access to food is key to understanding hunger, and that focusing on food availability alone to guide policy can have disastrous results, as was the case with devastating famines in Bengal in 1943 and in Bangladesh in 1974, among others. (12) This work fundamentally transformed the understanding of the determinants of hunger, which previously had centered almost exclusively on food availability. A person's income, position in society, and the productive resources and other assets available for production and trade are now widely seen to be other important determinants of access to food.

Today, the FAO features access as one of four key pillars of food security, alongside availability, utilization (nutrition), and stability. (13) Political systems and economic frameworks strongly influence the broader conditions that determine food security. As Dreze and Sen note, an access-centered approach to food security, "compels us to take a broad view of the ways in which access to food can be protected or promoted, including the legal framework within which economic relations take place." (14) The factors that determine access to food are often examined in a national or regional context, with a focus on democratic institutions and economic frameworks in hunger-prone countries and regions. This focus is important. But in an increasingly globalized world where food systems are closely intertwined with global economic relations in complex ways, we must also take the international economic and regulatory context into account when both analyzing the factors that affect food security and framing policy.

ECONOMIC POLICIES ASSOCIATED WITH HIGHER AND MORE VOLATILE FOOD PRICES

World food prices have increased, and have become markedly more volatile over the past decade. Volatility can have an enormous impact on people's access to food, especially in the world's poorest countries. (15) In Pakistan and Ghana, the poorest 20 percent of the population spends over 70 percent of their income on food. (16) Steep rises in food prices can easily overwhelm a poor family's entire budget, resulting in an immediate decline in food consumption, as well as an increase in poverty. (17)

A number of complex factors contribute to food price volatility. (18) Over the medium- and long-term, food supply and demand factors can influence food prices and their variability. Lower food stocks, for example, can lead to panic in markets, which can drive prices higher, while changing diets can increase demand for grains over the longer run, possibly affecting long-term price trends. (19) But while supply and demand factors were featured in many popular accounts of food price volatility, it is noteworthy that during the recent food price crisis, while prices climbed so rapidly and sharply, there was no decline in food production per capita. (20) Indeed, since the recent food crisis, it is widely recognized that other short-term factors played a significant role in triggering and exacerbating food price volatility. (21) These include a number of economic policies pursued in wealthier countries such as financial deregulation, biofuel policies, and trade policies, as explained below.

Financial Sector Policies and Commodity Speculation

Speculative investments in commodity futures and other agricultural derivatives have increased significantly since 2006, following the deregulation of the key financial markets--including in the United States and European Union--over the previous decade. (22) The relaxation of curbs on speculative investments, and the relative lack of regulation on new commodity derivatives, such as index funds, in these key financial markets helped to fuel these investments. Investors became interested in agriculture-linked financial investments as a "hedge against inflation" in a turbulent economic context. Indeed, speculative investment in agricultural commodities almost doubled from USD $65 billion in 2006 to USD $126 billion in 2011. (23) In the United States wheat-futures market, financial speculators' share of the trade increased from 12 percent in the mid-1990s to 61 percent in 2011. (24)

Some argue that the increase in commodity speculation pushed up food prices and made them more volatile. (25) From 2006 to 2008, average world prices for rice rose by 217 percent, wheat by 136...

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