The Wall Street Journal
Food Crisis Forces New Look at Farming
Poor Nations, and Their Donors, Now Rethink Emphasis on Free Trade
By JOEL MILLMAN and ROGER THUROW
June 10, 2008; Page A1
(snip)
For decades, poor nations were discouraged from investing too much in agriculture, which was seen as a problem rather than a solution to fighting poverty. Many free-market economists came to believe that the reason billions of people are poor is because they are shackled to subsistence farming. The economists' solution: find something else for them in manufacturing, tourism or services so that they can make money to buy food instead of growing it. Poor countries were discouraged from growing much of their own staples, such as rice and wheat, that are usually grown more cheaply in rich countries. Instead, they were told to focus on export crops that might fetch a higher price.
Now, with grain stocks depleted, China and India gobbling food as never before and food prices soaring, many poor countries are turning their back on the old ideas and installing government programs designed to support local farmers. These include cash subsidies to poor consumers, increased efforts to improve local seed varieties, and government-sponsored handouts of fertilizer and seeds. The food crisis has also contributed to a major rethink among the advice givers. Institutions such as the World Bank and International Monetary Fund are once again treating investment in poor farmers as a promising development strategy. Last week in Rome, World Bank President Robert Zoellick told an emergency United Nations summit on the food crisis that boosting developing country agriculture productivity and reducing hunger were top priorities for the bank.
(snip)
For many nations, food security has become a matter of national security. Last month, Costa Rica published an ambitious National Food Plan designed to aid subsistence farmers. It calls for ramping up rice, corn and bean harvests to make Costa Rica nearly self-sufficient in staples by 2010. In May, Mexican President Felipe Calderón announced sweeping reforms to aid small farmers, starting with a decision to abolish import taxes on nitrogen fertilizer and chemicals needed to manufacture fertilizers. He also pledged emergency funds to bring modern irrigation to 53,000 additional acres of farmland, about three times the area Mexico previously had budgeted for this year.
(snip)
Since the early 1980s, the World Bank and IMF preached that higher yields from rich countries' farmers would keep food cheap, eliminating the need for poor countries to spend their meager dollars on boosting agricultural productivity. This held true for years. Most poor countries could usually import staples more cheaply than grow their own, and could focus resources elsewhere. That advice failed to take into account the possibility that food grown by wealthy farmers might not stay cheap forever. Even though agricultural productivity is still climbing, rising demand for food in Asia, greater use of grains for cattle, and the diversion of crops for biofuels have all helped increase prices quickly. Now that countries want to revive their agriculture sectors, it's not going to be easy, given the neglect of the past few decades.
Consider what has happened in Africa. In the 1980s, governments were prodded by the World Bank to get spending under control. Many set about whacking agriculture programs. Irrigation projects dried up. Schools that trained scientists and agronomists fell into disrepair. At an agriculture school in Mozambique, students who are supposed to study mechanized farming rely on broken-down tractors and combines that sit like museum pieces on the school's lawn. In Ghana, some agents for the government's agricultural extension service, who are supposed to spread the latest scientific advice to farmers, often must hitch rides or walk to make their rounds. As governments in Africa got out of the business of seed, fertilizer and grain marketing, an unprepared private sector failed to fill the gap. In Ethiopia, for instance, the government liberalized grain markets in 1990, lifting restrictions on private trade after 15 years of virtual state monopoly. But private entrepreneurs, with too little access to financing, couldn't provide enough fertilizer and seed to farmers. Nor did they have the means to store and move vast volumes of grain.
(snip)
Only recently has the World Bank acknowledged the damage caused by its advice. In a report released in October, the Bank's Independent Evaluation Group cited the decline in agriculture spending and a scattershot approach to funding, concluding that the Washington institution had neglected African farmers. It noted the Bank devoted just 9% of its total lending in sub-Saharan Africa from 1991 to 2006 to agriculture, even though the vast majority of the poor depended on agriculture for their livelihoods.
(snip)
URL for this article:
http://online.wsj.com/article/SB121305872754859449.html (subscription)
(