Sunday, April 17, 2011

Exploring the contours of Food Crisis

The purpose of this blog is to turn spotlights on impending food crisis. World has its hands full dealing with Energy and Water crisis, yet this is the right time to also turn attention to looming food crisis and take necessary steps. It would be reasonable to say that today we are at a inflection point in food crisis. From this point forward, the cost of any preventive and corrective measures is only going to increase. 

Food Crisis - How its affecting the World
Lets start with exploring the evidence which indicate as why the food crisis is real.

The above map depicts two things:
- First, the affect of food crisis comes in various forms. The most serious form being the political unrest itself as observed in recent years. It was food crisis at heart of the movement which toppled the Tunisian dictator.
- Secondly, The affects of food crisis are not confined to any single country, region or continent. Its a global phenomenon now.

Various international organisations have acknowledged the problem:
World bank has said that rising food prices has pushed 44 million people into extreme poverty in developing countries since June 2010.

FAO has declared that global food price index is at a record high compared to the last food crisis three years ago.

Roubini, NYU economist, said that rising food and energy prices are fueling inflation across the emerging markets and hence pose one of the biggest threat to global economy recovery.

Private food companies are now forced to pass on the burden to consumers. ConAgra is mulling 25% increase in price on some of its products. Kraft has opted for stealth moves like reducing the packaging size or using the cheaper ingredients. 

What is Fueling Food Crisis
Again we map it out the reasons behind food crisis.

As evident from above, unpredictable climatic conditions and increased consumption has been primarily responsible for food crisis. Other reasons being land diverted for bio-fuels etc. World has been addressing unpredictable climatic conditions by pollution control, afforestation and other means. However, it is a long drawn struggle with no quick cure. 
China, India which have become engines of world growth have to feed their population. Increased consumption is going to be a norm as world population increases and living standards improve in developing countries. 

Hence effective solution lies in improving the food supply and food security.

Need for Broad & Inclusive Measures
World Bank has suggested following steps: 
  • Achieve better food chain security
  • Improving weather forecasting
  • Establish humanitarian food reserves in disaster prone and isolated areas
  • Empowering smallholder farmers through transactions with global groups like the World Food Program 

G-20 backed a billion-dollar Global Agriculture and Food Security Fund to get food aid to needy countries.

Much of the efforts are seen at country levels where governments are responding by increasing the budgetary spending, price controls and trade controls. However, caution needs to be exercised while using price controls and trade controls.
- Price controls and public distribution should not take away the incentive to produce from farmers.
- Trade controls and any other protectionist measures can bring more harm than good at global level by restricting food trade.
True opportunity lies in increasing agriculture yield as many of developing nations have low yields, as much as one seventh of the developed countries.

Food crisis and recent food contamination incidents have renewed the focus on food safety.
  • European Union has issued a directive towards legal compliance to food safety measures throughout the supply chain.
  • US enacted the bio-terrorism act and recently have come with Food Safety Modernization Act. 
  • Several industrial standards like GS1, ISO 22000 have evolved over time to address the issue of food safety.
The compliance pose a big challenge to food industry as whole supply chain (starting from farmer) needs to be revamped and aligned.

Food crisis has not reached severe proportions yet. And it should not be allowed to. As H. G. Wells put it 'Hunger makes a fool of a man'. France President Nicolas Sarkozy too acknowledged the seriousness when he declared that 'The world faces the risk of food riots if leaders around the world do not deal with food inflation'.

So to conclude, Food crisis warrants our attention just as other major crisis.
We have our hands full with triple crisis - Energy, Food & Water. 

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