Food price crisis offers lessons for new trade and agriculture policies

By Oxfam

NEW YORK?Poor farmers in developing countries have not benefited from higher food prices, due in part to flawed trade and agricultural policies that have made them vulnerable to recent food price shocks, said international agency Oxfam in a new report released today, World Food Day.

The report, Double Edged Prices, calls on all governments, donors, and agencies to learn lessons from the crisis, including the importance of investing in agriculture, reforming trade policy to help ensure greater food security, and designing social protection systems that protect the poorest.

?Declining investments in agriculture combined with a rush to liberalize agricultural markets in developing countries and continuation of trade-distorting agricultural policies in developed countries, have all contributed to today?s crisis,? said Raymond C. Offenheiser, president of Oxfam America. ?Alleviating the impact of current high prices involves addressing the chronic vulnerabilities that arise from decades of poorly designed trade, agriculture and social safety net policies. These are what lie at the root of the problem.?

Although prices may continue to fluctuate and fall somewhat, they will nevertheless remain high compared to recent trends, according to the report. The sharp rise in global food prices has pushed an estimated 119 million more people into hunger, bringing the global total of malnourished people close to a billion. Higher food prices mean people are eating less food or food of lower nutritional value. Children are being taken out of school and farmers, no longer able to afford to farm are being forced to migrate to cities to live in slums. Women are especially vulnerable because they rarely own land and have limited access to credit and other services, but bear much of the responsibility for feeding and caring for families.

?While many of us are directing our attention to the financial crisis, far less attention is being paid to the food price crisis, yet the two are inextricably linked,? said Offenheiser. ?More than $12 billion was pledged for the food crisis at an emergency meeting in Rome earlier this year, but little more than one billion dollars has been disbursed so far. As billions are being committed by governments around the world to deal with the financial crisis, commitments to address the food crisis must not be forgotten. We must not leave the poorest on the sidelines.?

Government policies, especially on agricultural investment, trade, the development of domestic markets and social safety nets for the poorest have affected the degree of vulnerability and associated impacts experienced in different countries. In Brazil, for example, well-targeted government agricultural policies have shielded small farmers and consumers from the harshest impacts. In Malawi, government subsidies have successfully boosted production levels in many areas, resulting in surpluses and a reversal of previous shortages.

?Countries that have invested in smallholder agriculture and social protection policies have proved to be more resilient to the crisis,? said Offenheiser. ?Conversely, countries that opened their markets too widely or too rapidly to food imports and failed to invest in their agricultural sectors have fared far worse.?

Trade agreements, such as the Central American- Dominican Republic Free Trade Agreement (CAFTA) have forced developing countries to liberalize rapidly and extensively without providing adequate safeguard mechanisms to defend vulnerable sectors, leaving these countries extremely vulnerable to food price spikes. While US agricultural exports to these countries reached record levels, growth in the Central American agricultural sectors decelerated spelling increased poverty where agriculture accounts for as much as a quarter of GDP.

?The international community has failed to organize to respond effectively to this food crisis,? said Offenheiser. ?Developing countries are being bombarded with different initiatives and asked to produce multiple plans for different donors. We need to see one coordinated international response, led by the UN, which channels funds urgently to those in need and also sets the stage for longer-term reforms.?

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