Burgess COMMENTARY
This is really a 'non-story' because it will change nothing ... do nothing. Periodic big meetings like this FAO meeting about the food situation in 2012 are expensive and maybe do something for food PR, but rather little else. The Food and Agriculture Organization (FAO) is a big agency of the United Nations, and from time to time does something that is pretty impressive, but mostly it is a huge bureaucracy with all the problems of bureaucracy but magnified because of its multicultural staff and complex structure.

The food industry is both impressive and depressing. Some of the statistics about food production and productivity are amazing. In the United States only a very small number of people produce a huge amount of food, which should be good. What may not be so good is the cost to the environment that might be offsetting this high labor productivity. The heavy use of fertilizers, pesticides and herbicides, not to mention genetic engineering and other interventions may be doing damage that the food industry does not want to be talked about.

There is something very wrong when some people are eating too much and others are starving and undernourished. This is not a good outcome. As it is today, the structure of the world food industry is incapable of delivering food where it is needed, and the reasons for this is that the money profit incentive is not sufficient. The FAO is a big agency, but has little power to influence the big actors in the global food industry.

As long as the world works only with a money profit capitalist laissez-faire market economy as the model, product will only flow into markets where there is money profit to be made. This means that upwards of a billion people will ignored by the big food traders. This is not satisfactory. Something has to change.

From my perspective, the idea that humanitarian assistance or philanthropy will be an adequate solution to the problem, or government subsidy for that matter, is a non-starter. Something more fundamental is needed.

A starting point for massive structural reform can be the use of a better set of business and socio-economic metrics. Specifically it will be better to use not only the money profit metric but one that also includes social valuadd. This is what TrueValueMetrics is all about. A business should be accounting not only for the money profit it makes but also the social valuadd that it creates. There may be a money profit loss when food is distributed in areas where there is endemic shortage and poverty, but the sovial valuadd from doing this in places where otherwise there would be starvation and death is huge. Put this in the accounting and in the reporting, then there can be a very different profile for the allocation of investment resources.

The problem of periodic drought in agriculture should not come as a surprise ... it was a problem 5,000 years ago at the time of the Pharaohs of ancient Egypt. Food security and price stability can be assured when there are adequate available stocks of food in reserve, and in a market system it is a basic axium that the best way to achieve low prices is to have high prices. The logic of this is that high prices are an incentive to produce more, and in turn more production reduces prices in the supply demand relationship. The typical emergency response by organizations like the FAO is to seek some temporary help to keep prices low, and this serves more to constrain production than encourage production. Rather these organizations should be paying attention to the food security and food stock regime in place months and years before the problem arises.

This story makes me mad in some part because of work I did in Africa during the catstrophic drought in the 1980s. Food security plans were discussed in considerable detail and there was considerable agreement that food stocks was part of the solution as well as more production at affordable prices. The ideas were fatally because there was no interest or incentive for anyone to finance such an initiative. The money profit capitalist market economy does not work at all when there is no money profit and only social valuadd ... and governments in general have little money relative to what people want them to do. Bottom line ... food security has not been adequately funded, and 30 years later the food industry is still driven by the money profit incentive and not much else.
Peter Burgess

U.N. meets to discuss easing global food prices

The international community is gathering in Italy for World Food Day on Tuesday with a round of UN-hosted talks on how to keep global food prices in check and help prevent future commodity market crises.

“Food prices are too volatile and are dangerously high,” Olivier De Schutter, the UN’s rapporteur on the right to food, said ahead of the meeting.

De Schutter called for “immediate” action to help stabilise prices.

The Rome-based Food and Agriculture Organisation (FAO) of the United Nations is holding a week-long meeting of the Committee on World Food Security, which is made up of UN officials, farming experts and civil society representatives.

The latest UN data from earlier this month shows some 870 million people — around one in eight people in the world — are starving or under-nourished.

That figure is considerably down from the 1990s when there were a billion hungry but still “far too high”, according to FAO chief Jose Graziano da Silva.

There have also been market tensions this year after top producers like Europe, Russia and the Black Sea region revised down production forecasts, even though a crisis in the United States due to the drought never materialised.

Global food prices rose by 1.4 percent in September after holding steady for two months as cereals, meat and dairy prices climbed, according to FAO’s Food Price Index, which is still far off the record it reached in February 2011.

French Agriculture Minister Stephane Le Foll will host talks on the sidelines of World Food Day on Tuesday to focus on prices and at least 36 ministers are expected to attend, a French official source told AFP.

The talks will focus on three issues: “transparency of the market, limiting price volatility and the possibility of creating and managing stocks in the most vulnerable countries”, the source said on condition of anonymity.

Ministers from Brazil, Britain, Germany, Japan, Russia and South Korea are set to take part, along with a “high-level” US official, the source said.

The French government had pushed for “an agricultural G20″ in Rome to bring together farming ministers from 20 of the world’s leading economies.

It had also called for a meeting of the newly-established Rapid Reaction Forum to decide on emergency stocks in sensitive areas to counter price rises.

The drive came from the 2007-8 food crisis which sparked upheaval in many parts of the world and a new focus in anti-hunger projects on fostering domestic production and markets instead of flooding countries with aid.

But the United Nations has responded cautiously, with one FAO official saying: “We should not create a panic by sending the wrong signals.”

De Schutter also stressed the need for planning, saying: “These policies have to be drawn up beforehand and not dictated by short-term considerations.”

While there is no food crisis at the moment, global stocks are low because of the drought that struck the central breadbasket of the United States.

And with a spell of drought now affecting Australia, a French expert said that “strong uncertainty is likely to linger” in the southern hemisphere.

Harvests are down some 10 percent in Europe and the United States this year.

FAO has warned that the knock-on effect is that the poorest countries in the world face a food import bill of $36.5 billion (28.2 billion euros).

“The situation could get worse,” said Thierry Kesteloor, an expert on food security at the charity group Oxfam International.

He said the coming week was likely to see “a declaration of intentions rather than a real effort to the relaunch the political process”.

[Image via Agence France-Presse]