The Financial Times reports that according to a UN Conference on Trade and Development (UNCTAD), foreign direct investment (FDI) flows in agriculture jumped to $3bn (€2bn, £1.8bn) annually in the 2005-2007 period, up from $600m during the 1990s. Though at first glance the numerical increase appears quite significant,  on the overall scale FDI flows in agriculture are very limited.

UNCTAD’s World Investment Report is the first detailed analysis of FDI flows behind the farmland grab trend, in which participating countries like Saudi Arabia and South Korea invest in overseas plots. The investors plan to export the bulk of the crops back to feed their domestic populations.  Investments in agriculture are being spurred by rising food prices and shortages, which has subsequently resulted in export bans.

Supachai Panitchpakdi, Secretary-General of UNCTAD, notes, “This year’s World Investment Report reveals a real and rising interest . . . for investment in developing countries’ agricultural industries,” and indicates that “‘south-south investment’ in agricultural production is on the rise.”  The Secretary-General believes this trend will continue in the longer-term future.

However,  the agricultural industry is historically amongst the most heavily regulated in many countries.  UNCTAD does note attempts to secure similar food supplies have been unsuccessful in the past,  citing previous experiences in South Korea in the 1960s and 1970s and the Gulf nations in the 70s. Along with respective agricultural policies set by individual governments; investors’ inappropriate policies, inexperience and lack of understanding of the local culture contributed to these failures.

Asia’s food demand is projected to double in the next forty years. Why? By 2050, Asia’s population is projected to increase by 1.5 billion people. With this larger population, scientists predict that Asia will have to import more than 25% of its food staples in order to keep its people from starving. With new fertile land being scarce and the likelihood that grains and other staples are likely to increase in price, what is the continent to do about its impending crisis?

Currently, many farmers are using a pump technology that enables them to extract as much water and they want from their land. This practice, however, is causing “groundwater over-exploitation”. In countries like India and China, for example, water tables have dramatically dropped. The governments’ failure at regulating current irrigation technologies could lead to a severe crisis, says the BBC. According to The Guardian News, present systems are 50 to 70 years old, and recent findings from the UN Food and Agricultural Organization (FAO) and the International Water Management Institute (IWMI) suggest that Asian governments need to revitalize their outdated irrigation systems and invest in more efficient methods of water usage in order to combat this crisis.

The Washington Post reported on the effects of the global food crisis in Nigeria, where 38% of children under 5 years old are starving and 65% of its population is unsure of the source of their next meal. Nigeria has been unable to exploit its agricultural resources despite its wealth from having the largest oil reserves in Africa, as well as some of the most fertile land. With 3.14 million hectares of arable land, only 7% is currently being used. Nigeria is suffering from an “unreliable agricultural output,” says David Hecht of the Washington Post.

But Nigeria is not the only major African country that is suffering. Kenya, for example, is facing a decrease in food output this year caused by major drought in some regions. Additionally, stem rust, caused by a fungus thought to have been eradicated 50 years ago, has resurfaced and is plaguing Kenya’s most luscious wheat fields. Now, subsidized school-feeding programs are lacking resources, forcing children to abandon their education and return to help out their impoverished families. Meanwhile, drought has caused food shortages in southern Ethiopia as well as a scarcity of water in some regions. As a result, the severe hunger season that annually afflicts Ethiopia is expected to be longer this year, already impacting child mortality rates.

What is being done about the food crisis? At last month’s G8 summit, President Barack Obama pledged $3.5 billion to aid agricultural development and food security in Africa. However, it is not clear where this money is coming from, as Congress is still dealing with the other pressing issues such as the financial crisis and health care. Still, a pillar of this G8 agreement is its commitment to ending tied food aid, that is, the exporting of U.S. food to developing countries for aid instead of buying the food in surrounding areas. For more information on this aid agreement, you can read the Council on Foreign Relations’ interview with Laurie Garrett.

A new report by the U.S. Government Accountability Office (GAO) has found that the U.S. is overpaying for the purchasing and delivery of food aid that it donates to those in need, particularly in Sub-Saharan Africa and Asia.  Despite being the largest overall donor of food aid, the practice of buying food products from U.S. farmers and shipping them overseas on American ships costs the U.S. more and delays aid deliveries.

The practice of the U.S. government subsidizing U.S. farms by buying surplus food products for aid has been criticized in the past for keeping global food prices artificially low and preventing farmers in developing countries from earning enough from their crops to avoid poverty.

Some of the findings in the GAO report included:

• Food aid purchased and shipped from the U.S. cost 29% to 34% more than if procured locally
• International in-kind food aid deliveries averaged between 106 and 112 days longer to deliver than locally produced food aid
• Local food procurement faces the dangers of being hampered by inefficient suppliers, poorer food standards, weak logistics and poor infrastructure

The report concludes with the call to make changes to current policy,

“the timely provision of food aid is critical in responding to humanitarian emergencies and food crises, and LRP [Local and Regional Procurement] has the potential to better meet the needs of hungry people by providing food aid in both a more timely and less costly manner. To fully realize this potential,however, challenges to its effective implementation must be addressed.”

Among some of the challenges that need to be addressed, the report recommended,

• A gradual shift by the U.S. from exclusively offering internationally grown food aid to supporting locally grown food
• Increasing food “market intelligence” to assist developing countries with gauging food prices and keeping locally grown crops competitive
• Clarify the U.S. laws pertaining to food aid so that U.S. agencies dealing with food aid would be able to support LRP

A Kansas City Star article points out that any change in the policies on food aid purchases and shipping would fall under the responsibility of the House of Representative’s committees on agriculture and transportation.

The soaring price of food was one of the drivers of the Global Food Crisis, making it difficult for people to purchase food for themselves or feed for their animals.  The Financial Times cites a biannual United Nations Food and Agricultural Organization (FAO) report that states that amount spent globally on  food supplies will decrease for 2009, following their all-time highs in 2008.  The damage done by the global financial crisis may be,

“Eroding purchasing power through a combination of falling incomes and real exchange rates… [afflicting] the affordability of food, however cheap it has become on the international market place.”

The report forecasts a building danger from natural disasters, which could hurt food availability and the recent spikes in the prices of staple foods like corn, wheat and soybeans.

This article by Lester Brown, founder of the Earth Policy Institute, appears in the May 2009 issue of Scientific American magazine.

In his analysis, Brown argues that causal factors such as the current world order, water shortages, eroding soil, and rising global temperatures are threatening not only the global food supply, but world civilization as a whole because of it.  He warns that a lack of widespread intervention on the latter three environmental factors, global water tables in particular, could push governments in poorer countries to collapse, with the resulting failed states threatening global security.

Brown also argues that the current food crisis is of concern for reasons beyond food shortage issues of the past.  He cites examples of event-driven shortages, such as droughts in the 1970s, and charges that today’s food crisis is trend-driven - following the intertwining of food production and the  energy economy as well as the growing world population and shifts in population affluence.  These trend-driven shortages, he says, pose a larger threat because they demand a shift in far-reaching global trends rather than isolated environmental conditions.

He also finds  acts by states to hoard food exports as a result of shortage concerns, worrisome.  These actions drive food prices up and deprive needy states of food imports.  Should that behavior continue, food access could become a forefront motivation in international conflict.

Lester Brown appeared as a guest on the Great Decisions Television Series 2009 episode entitled, “Running Out: The Global Food Crisis.”  The full episode can be viewed here.

Read Brown’s full article and please feel free to react in the “Comments” section below.

The World Trade Organization’s (WTO) chief countered the perception put forward by development experts that the international food trade was key to the recent global food crisis.

Speaking at the International Food and Agricultural Trade Policy Council conference in Austria, Pascal Lamy, the Director General of the World Trade Organization, rebuffed the idea put forward by UN Rapporteur on the Right to Food that unfair trade practices contributed to the recent global food crisis and persistent food insecurity in the developing world.  Lamy stated,

“International trade was not the source of last year’s food crisis…If anything, international trade has reduced the price of food over the years through greater competition, and enhanced consumer purchasing power.”

Some food security and development experts have previously stated that some trade policies for food are responsible for keeping food prices low, which has a negative effect on farmers in the developing world seeking to make a profit on food products.  Reuters reports that Lamy’s response to this position is that “…agriculture accounts for less than 10 percent of world trade, while only 25 percent of world farm output is traded globally…” meaning trade policies alone could not account for price fluctuations that end up hurting farmers.

Instead, Lamy called for changes in local policies on land use, taxes on agricultural goods, infrastructure, credit and new technology for agriculure, etc. will have a greater impact on food security than global trade policy.

The Influenza A H1N1 virus (also known as “swine flu”) outbreak continues to challenge the globe, despite a pronouncement by the CDC’s acting director of “encouraging signs” concerning the severity of the outbreak.  Still, various countries and international organizations are dealing with the possible spread of the virus and the effects on the world population.

Africa and the Middle East

Several African nations have taken measures ranging from bans on pork products, thermal monitoring of passengers at airports, and increasing stocks of medical supplies.  A government mandated cull of pigs in Egypt led to street protests by its Christian minority.  A Baghdad zoo put three wild boars to sleep, despite testing negative for “swine flu,” to overcome the “barrier of fear” that the virus was causing to zoo visitors.

World Health Organization (WHO)

The WHO is expected to move its warning meter up to phase 6, which indicates a full-blown pandemic of Influenza A H1N1.  The WHO has been tracking a human to pig transmission of the virus in Canada, which could increase the threat of mutation and redistribution to humans.  The WHO food safety experts are also looking to add “swine flu” to the infectious viruses that it normally monitors, rather than leaving it solely in the category of “farming issues.”

World Trade Organization (WTO)

The United States, Canada and Mexico have been engaging in careful public relations to separate the outbreak of “swine flu” with pork products.  As of Monday, pork producers continued to suffer losses and pork futures on the Chicago Mercantile Exchange have lost 10-20% of value based on fears that pork meat is a carrier of the “swine flu” virus. 

Canada is preparing to call on the World Trade Organization to reverse China’s ban on pork products from Canada’s Alberta province.  Mexico has asked the WTO to investigate similar bans placed by China and Russia.  Separately, Mexico is protesting the treatment of Mexican nationals in China since the outbreak began.

The Carnegie Endowment for International Peace (CEIP) held an event on April 8, 2009 with Professor Olivier De Schutter, UN Special Rapporteur on the Right to Food.  Professor De Shutter presented an analysis of the global food crisis titled “From Malthus to Sen.”  Following his remarks, he took questions from Steven Schonberger from the World Bank and Gawain Kripke from Oxfam America.

During his talk, Professor De Schutter made the point that the global food supply may be sufficient, but access to food has become one of the most dangerous barriers for the hungry.  Some of these barriers include uneven trade policies and imbalanced markets for food products.  Steven Schonberger focused his statements on the need to keep global food prices lower to prevent future food crises.  Gawain Kripke spoke on the idea of food as a human right, and the new U.S. administration’s opportunity to address global food issues.

In addition to the account of the event, a summary of De Schutter’s report and Schonberger’s presentation are also available.

Following UN Food and Agriculture Organization Director-General Jacques Diouf’s appeal to G-20 leaders to discuss agricultural initiatives for alleviating the global food crisis while meeting in London this week, the Fairtrade Foundation has repeated that call and said a fresh approach to trade was greatly needed to address the issue.

The group called on the hosting UK Government to stop pushing developing countries to liberalize their economies and not to rush through a completion of the WTO Doha trade round, claiming a global trade agreement is not in the interests of the world’s poorest countries.

The Fairtrade Foundation warned that the combination effects of the current food and financial crises are having a ‘devastating’ impact on farmers in the third world and called on the G-20 leaders to install measures to ensure food supplies and refrain from moving forward with trade negotiations.

Barbara Crowther, the Fairtrade Foundation’s director of communications and policy, said:

“The current crisis poses many new threats to the livelihoods of the poorest people on the planet.

“But they also offer an unprecedented opportunity for world leaders to develop a fresh approach to the global trading system, prioritizing justice and equity, including social and environmental standards, and build new trade relationships, fit to deal with the current financial, food and climate crises we now face.

“A new approach to global trade must put poor people and the planet first, strengthening local and regional supply chains, and ensuring cooperation in fairer global trade at an international level.”