Past Crisis, Present Issues and Future Prospects – Food Tanks

Some personal background may be useful as I write this blog for the Food Tank website, in addition to my membership. I grew up on a farm in Miami County, Ohio (just north of Dayton), worked at a family-run tomato canning factory for more than a decade, and then left to become an economist. I received my PhD from Harvard, specializing in economic history, but did my thesis on a more esoteric topic (Assessing a Probable Marginal Production Function for American Agriculture). Through good fortune and perhaps a sensitivity to food issues, I ended up as a development economist specializing in agriculture, food and nutrition issues, mostly in Southeast and East Asia. In addition to the academic portion of my career I spent at three faculties at Stanford, Cornell, Harvard and the University of California, San Diego, I was deeply involved with national policy makers in Indonesia, China and Vietnam.

I have two main characteristics: (1) Avoiding food crises stabilizing rice pricesboth in individual countries and in global markets, and (2) management structural change, reflects my early experience in Asia with the changing role of rice in domestic economies at different stages of development. During the historical process of structural change, agriculture as an economic sector plays an increasingly smaller role in the macro economy, with it becoming more productive at the agricultural level. Both subjects present controversial policy issues for the economics profession.

To do this it is necessary to understand the “food system” in which each society operates. In his February 20, 2022, New York Times book review of Food to Extinction: The world’s rarest foods and why we need to save them by Dan Saladino, Pete Wells, New York Times The restaurant critic provided a very unpleasant definition of “food system”.

“What we really mean is that profit-minded corporate logic has been unleashed on a global scale at an incomparable cost to health, economic stability, cultural cohesion and enjoyment.”

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This definition undoubtedly resonates with many readers of this blog, but it also resonates with someone who has spent the past several decades trying to make various food systems better for the poor. However, the definition misses the trade-offs required in those efforts, trade-offs that reflect the extreme complexity of food systems globally and locally. In the midst of a world food crisis, it is impossible to know how to successfully intervene to prevent it without a clear understanding of these complexities and trade-offs.

Even against this background, it seems foolish to write about the prospects of world food security in these highly uncertain times. In more than half a century of closely watching the world food economy, the future has never been less clear. I saw the effects of successive monsoon failures in India in 1965 and 1966, when I was a graduate student at Harvard. I helped the Indonesian government deal with the world food crisis from 1972 to 1974, when Thailand literally shut down the world rice market by banning rice exports. I helped prevent a rice crisis in 1996 by showing the need for an outbound supply of rice to Indonesia after its Food Logistics Agency (BULOG) had previously failed to keep track of rice stocks to get rid of the rice surplus . In 2008, my colleague Tom Slayton and I helped persuade the reluctant Japanese government to sell unwanted, imported “WTO rice stocks” of high-quality US and Thai long-grain rice to the Philippines, in desperate demand. was doing. Import of rice (“At any cost.”) Amidst apparently speculative panic in national and global markets, the announcement by the Japanese prime minister in June 2008 that his government would begin negotiations with the Philippines for export of this rice . Caused the bubble to burst. Within a month, rice prices returned to normal levels as farmers, traders, shopkeepers and international rice brokers realized that they were sitting on billboards of very expensive rice that had suddenly lost half its value. Not a ton of Japanese-owned rice was ever exported, and world rice prices have remained relatively stable since then. Lesson learned among leaders of Association of Southeast Asian Nations (ASEAN)- don’t panic, and build up rice stocks.

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In 2020, the COVID-19 pandemic disrupted the global food supply chain, along with most other economic activities. Food prices rose sharply, but food shortages were localized and tended to occur in areas experiencing civil strife. The Russian invasion of Ukraine on February 24, 2022, turned these localized, but mostly manageable food shortages, into the potential for global food shortages. Energy and fertilizer markets were also caught in the war, and since February the world food community has been trying to stay at war on the ground and commodity markets around the world amid rapidly changing conditions.

As noted in early August 2022, what are the prospects for world food security? There are many reasons for hope.

Indonesia is the chair of the G20 summit meeting in Bali in November 2022. After initially stating that the impact of the war in Ukraine on food security was not part of the agreed agenda for the summit, the Indonesian government quickly realized that global leadership was needed to prevent countries and markets from panicking (2008 a lesson from), and is now very actively leading efforts to make food security a key item for G20 discussions and commitments;

Turkey and the United Nations agreement between Ukraine and Russia to reopen Black Sea ports for the export of wheat and other agricultural commodities raises much hope that some supplies will make their way into world markets by the end of the year . Russia’s missile strikes on Odessa port facilities after trade openings have been agreed have substantially increased the risk of conducting these export operations, and there remains great uncertainty over the ultimate scope of agricultural exports from Black Sea ports;

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Crop production prospects are now better than they were two months ago, as weather has cooperated in critical wheat-producing regions and farmers have responded to higher prices. Wheat crops in Canada and the US are expected to recover from last year’s severe drought. The Chinese wheat crop is not as bad as had been feared in the spring, and India’s record heat wave earlier this year did not damage the wheat crop as much as originally expected. Globally, the US Department of Agriculture’s July 2022 Commodity Report (WASDE) forecast wheat exports to be 205.5 million metric tons for the crop year 2022/23, significantly higher than 2020/21 and 2021/22 .

why worry? Prices of wheat, vegetable oil, fertilizers and energy remain sharply higher than before the COVID-19 pandemic. These high prices place a heavy burden on poor countries and poor households who must buy their food from global and local markets. In a sense, the world is lucky to have dodged an important meal supply lacking, but now the problem is to a large extent financial, The global factors needed to solve these financial problems are different from those needed to solve physical food shortages, but proactive global cooperation will still be needed to prevent widespread hunger and starvation.

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Photo courtesy of Raul Gonzalez, Unsplash