It is in the cities that the 2011 food crisis hits hardest. The revolution in Tunis began as a food riot. In recent weeks, markets in Algiers and Cairo have erupted, and malnutrition has reached 17 per cent in Agadez,
Last year’s La Niña blighted harvests in Canada, Russia and Ukraine, and the U.S. Department of Agriculture warns that an overcrowded earth is “putting unsustainable pressure on resources.” But in 2009, when the weather was good, things were not that much better. Prices get high-level attention in the odd years when they are high, not in the typical years when they are typically abysmal.
The year 2002 – the index year against which the current disaster is measured – was the bottom of a steep 50-year decline in prices. Food was cheaper by half than it is now, and there was no world crisis, only local misery. Bankrupted peasants abandoned Chinese villages for urban slums. Twenty thousand Punjabi farmers committed suicide. Sugar workers clashed with police in Mexico, and Nebraska farmers took jobs at Wal-Mart to stave off foreclosure.
Pinpointing high grain prices as a threat to recovery, French President Nicolas Sarkozy and World Bank President Robert Zoellick have urged stockpiles and “weather insurance or a rainfall index” as practical steps for dealing with nature’s limitations.
There may be another problem too, but it is hardly surprising that world leaders should overlook it. Since the 1950s, chronic underinvestment in agriculture has been considered a normal feature of a healthy, growing economy. A successful farm policy is one that delivers cheap food to urban consumers, whatever the cost at the producing end.
In the 1930s, German and Soviet planners first began to speak of an “agricultural sector,” a subordinate economy-within-the-economy whose profits could be diverted, by force if necessary, into industrial expansion. Émigré economists brought the concept to Washington, but Franklin Roosevelt initially went a different way.
New Dealers lifted food prices by creating artificial scarcities. In three years farm earnings rose to “parity” with 1916, the best year on record, and there they stayed. When the U.S. Supreme Court threw out the Agricultural Adjustment Act, policy shifted toward subsidies that held farm income steady while filling grocery shelves with low-cost staples. By the end of the 1930s, according to Rebecca West, all countries – communist, fascist, and capitalist – had accepted “the insane dispensation which pays the food-producer worst of all workers.”
Dual-economy theory soon entered the canon of development policy. Nobel economist W. Arthur Lewis
Newly independent regimes saw the potential. India’s five-year plans defined agriculture as “a bargain sector, which can produce the requisite surplus with relatively low investment and in a comparatively short time.” Taxes, price controls, duties and currency policies were subtly or overtly designed to siphon “waste” profits from rural producers. Enterprise was punished by anti-profiteering laws applied solely to the farm sector. Cheap food meant cheap labour, which gave emerging Asia its competitive edge. The Kennedy administration helped, depressing prices still further by flooding Asian markets with surplus wheat.
