The food price crisis and the World Bank's blind spots

January 11, 2011 10 By admin

World Bank President Robert Zoellick, or at least his press team, responded promptly to last week’s concerns on a new Zoellickfood price spike with a comment piece in the FT. It’s fascinating as much for what is missing as for what is in there.

On the plus side, Zoellick gives due priority to food as ‘the essence of life’ and argues that the G20 needs to show leadership on this (alas, in traditional World Bank style, he completely ignores the UN’s Committee on Food Security (CFS), which leads the international response). He stresses the importance of price stability, and supporting small farmers as both a way to produce local food, and to raise the incomes of poor people.

There are several nice nudges and tweaks – access to information on grain stocks to calm market fears; small regional reserves for fast-disbursing food aid; source food aid from local small farmers to boost agriculture. But the whole piece seems to suffer from a straitjacket of free market ideology (he probably didn’t pick the title ‘Free markets can still feed the world’, but it’s a pretty accurate reflection of the tone of the piece). Whatever the problem, the answer can’t go beyond liberalizing trade and investment, voluntary codes of conduct, access to information, and improved aid and safety nets for those that fall through the cracks.

What do we want? More than tweaks and nudges......

What do we want? More than tweaks and nudges......

This was captured in one of his proposals: ‘give countries access to fast-disbursing support as an alternative to export bans or price fixing’. Export bans, which he presents as the major problem to be confronted, can indeed damage poor people in food importing countries, and need to be discussed. But ‘price fixing’, if by that he means deliberate government intervention to stabilise prices for consumers and producers, has been an effective tool in countries such as Vietnam to reduce food insecurity and provide incentives for farmers to increase food production. So why lump the two together? As far as I can see, the only thing they have in common is that they both interfere with the purported magic of untrammelled markets.

The suggestions for supporting small farmers by sourcing food aid from them are pretty pitiful too – what about government investment in extension services and infrastructure for small farmers rather than big farm lobbies? Or land reform to ensure secure access to land, credit etc, especially for women, the most excluded farmers of all?

Zoellick concludes that ‘the answer to food price volatility is not to prosecute or block markets, but to use them better’. What’s missing is the bit in between his two extremes – regulating markets so they work to the benefit of all, not just the powerful.

Finally, I assume this piece was looking purely to short term action, because it focuses on short-term measures rather than longer-term reform. He fails to mention the long-term drivers of high food prices, such as climate change, the redirection of land to producing biofuels rather than food, the spate of large scale land grabs by foreign investors in many of the world’s poorest countries, the possible role of commodity investment funds and other financial speculation in exacerbating price volatility, or the distorted way that technologies are developed and implemented, that all too often gives priority to large, rich agriculture and fails to really benefit small farmers. If the food price crisis really erupts this year, as seems increasingly likely, we need to have a much deeper discussion than this of its causes and how to respond.

To be fair, Zoellick was one of the earliest international leaders to sound the alarm on the 2008 food price crisis and made some pretty significant shifts in the Bank’s priorities in response.  This time around, the measure of success should be whether poor people are insulated from shocks, how markets can be re-engineered to deliver a combination of stability and sustainability, and whether poor producers can benefit from the market opportunities of higher agriculture prices.   Instead, if this piece is anything to go by, the Bank seems to have a myopic focus on maintaining the integrity of trade and markets.