While World Food Day 2011 may be over, the suffering of millions in Ghana and indeed the world is far from over.
The Food and Agricultural Organization (FAO) states that currently there are over 1 billion hungry and food insecure people around the world, out of which 98% live in the developing countries where food production needs to double by 2050 to feed the growing populations. In Ghana the number of food insecure people is estimated at 12.7 million as surveyed by Gallup.
The latest FAO report titled “State of Food Security 2011” contains some key statements about the global food security situation.
Small import-dependent countries, especially in Africa, were deeply affected by the food and economic crises. Some large countries were able to insulate themselves from the crisis through restrictive trade policies and functioning safety nets, but trade restrictions increased prices and volatility on international markets.
High and volatile food prices are likely to continue. Demand from consumers in rapidly growing economies will increase, population will continue to grow, and further growth in biofuels will place additional demands on the food system. On the supply side, there are challenges due to increasingly scarce natural resources in some regions, as well as declining rates of yield growth for some commodities. Food price volatility may increase due to stronger linkages between agricultural and energy markets, as well as an increased frequency of weather shocks.
Price volatility makes both smallholder farmers and poor consumers increasingly vulnerable to poverty. Because food represents a large share of farmer income and the budget of poor consumers, large price changes have large effects on real incomes. Thus, even short episodes of high prices for consumers or low prices for farmers can cause productive assets – land and livestock, for example – to be sold at low prices, leading to potential poverty traps. In addition, smallholder farmers are less likely to invest in measures to raise productivity when price changes are unpredictable.
Large short-term price changes can have long-term impacts on development. Changes in income due to price swings can reduce children’s consumption of key nutrients during the first 1 000 days of life from conception, leading to a permanent reduction of their future earning capacity, increasing the likelihood of future poverty and thus slowing the economic development process.
High food prices worsen food insecurity in the short term. The benefits go primarily to farmers with access to sufficient land and other resources, while the poorest of the poor buy more food than they produce. In addition to harming the urban poor, high food prices also hurt many of the rural poor, who are typically net food buyers. The diversity of impacts within countries also points to a need for improved data and policy analysis.
High food prices present incentives for increased long-term investment in the agriculture sector, which can contribute to improved food security in the longer term.Domestic food prices increased substantially in most countries during the 2006–08 world food crisis at both retail and farmgate levels. Despite higher fertilizer prices, this led to a strong supply response in many countries. It is essential to build upon this short-term supply response with increased investment in agriculture, including initiatives that target smallholder farmers and help them to access markets, such as Purchase for Progress (P4P).
Safety nets are crucial for alleviating food insecurity in the short term, as well as for providing a foundation for long-term development. In order to be effective at reducing the negative consequences of price volatility, targeted safety-net mechanisms must be designed in advance and in consultation with the most vulnerable people.
A food-security strategy that relies on a combination of increased productivity in agriculture, greater policy predictability and general openness to trade will be more effective than other strategies. Restrictive trade policies can protect domestic prices from world market volatility, but these policies can also result in increased domestic price volatility as a result of domestic supply shocks, especially if government policies are unpredictable and erratic. Government policies that are more predictable and that promote participation by the private sector in trade will generally decrease price volatility.
Investment in agriculture remains critical to sustainable long-term food security. For example, cost-effective irrigation and improved practices and seeds developed through agricultural research can reduce the production risks facing farmers, especially smallholders, and reduce price volatility. Private investment will form the bulk of the needed investment, but public investment has a catalytic role to play in supplying public goods that the private sector will not provide. These investments should consider the rights of existing users of land and related natural resources.
There is a lot of talking about food security, and the above guidelines to both governments and the private sector are surely important. However, a lot of actions will not have immediate impacts and the suffering of people will continue in the short term. The question therefore is what governments can do to help its consumers in the short term.
In the FAO report they also dedicate a section to the “World Rice Crisis”, a topic that has been debated again and again in Ghana because it is one area where short term help can be given to Ghanaians.
The situation with regards to rice in Ghana is basically that the country was self-sufficient at some stage. Due to trade liberalisation, the influx of higher quality and cheaper rice from net exporting countries and changing consumer demand many farmers in Ghana switched to other crops.
Over the past two years many confusing statistics were bandied around stating Ghana’s dependency levels on anything from 90 percent to 60 percent. It looks as if a dependency level of 70 percent is now taken for granted.
Beginning in October 2007 government policies in a number of countries caused prices to increase rapidly. Large producers of rice restricted supplies to the world market in order to avoid shortages for their own consumers, either completely banning exports or announcing increasingly high minimum export prices.
Governments of rice-importing countries scrambled for supplies to stabilize their own markets, often buying very large quantities and paying above market prices. Others announced plans to build up stocks during the crisis, further driving up demand. As a result of these policies, prices on world markets tripled between October 2007 and April 2008.
In 2008 the then NPP led government realised that it had to intervene to help consumers and scrapped a 20 percent import tariff on rice and other basic foodstuff such as cooking oil.
In a surprising move the new NDC led government re-introduced the 20 percent import tariff in 2009 stating that the food crisis was over, and that the move was necessary to help the local industry attain self-sufficiency.
Both the above arguments have been disputed time and again.
In the first place the FAO announced the beginning of a new crisis one month prior to the re-introduction of the import duties.
In the second place high import duties may protect local industries when local production is close to or over 100 percent. What the local industry requires to grow is massive investments to increase both quality and production.
The re-introduction of the import duties had three devastating effects:
- It created a massive duty differential between Ghana (37 percent) and the Ivory Coast (12.5 percent) that led to large scale smuggling of rice on Ghana’s Western borders;
- The smuggling caused massive losses to the state in that the required import duties were not collected;
- It created undue pressure on consumers who were still reeling from the 2007-2008 food crisis.
Despite many requests from consumer bodies that the government review its trade policy, the government doggedly pursued its self-sufficiency policy. At some stage promises were made that Ghana will be self-sufficient within two to three years – a promise that has already proved to be empty. In fact, self-sufficiency will take many years to achieve.
Ghanaians are increasingly questioning the government’s policy in the light of the food crisis and increasing pressure on consumers. Many analysts believe that government policy should be to help consumers by again scrapping the import duties while supporting the local industry. A gradual increase in import duties in line with the growth of the local industry is believed to the right policy to follow.
In 2012 consumers in Ghana will again vote for the government that they believe really care for the people. Given the food crisis that seems to be a certainty for many years to come, issues about food security will become important points when it comes to decision time.
World Food Day 2011 is indeed over. The suffering of Ghanaians, however, is far from over.