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I used to make breakfast for my two children before setting off for work as a street vendor but
increases in food prices mean my children now go without their morning meal - Judith Alexandre,
Carrefour-Feilles district of Port-au-Prince, Haiti
Global food prices are up 83 per cent compared with three years ago.1 The resulting food
price crisis constitutes an unprecedented threat to the livelihoods and well-being of millions
of rural and urban households who are net food buyers. Around the world, Oxfam
International and many of its partners have seen soaring prices force people to eat less food
or less nutritious food and drive poor households to cut back on health care, education, and
other necessities. Women and childrens nutritional levels are particularly vulnerable, as
women often put mens consumption before their own.
Oxfam estimates that current food price levels constitute an immediate threat to the
livelihoods of around 290 million people living in countries most vulnerable to food price
increases.2 Such vast numbers dwarf those affected by even the largest natural disasters,
such as the 2004 Asian tsunami.
The current food price crisis occurs against a backdrop of continuing hunger and
vulnerability for millions. Persistent hunger affects 854 million people across the world, a
number that means we are off-track in meeting the target set by the world community in
2000 of reducing hunger by half before 2015.3 According to the UNs World Food
Programme (WFP), the number of food emergencies has increased from an average of 15 per
year during the 1980s to more than 30 per year since the turn of the millennium.4
Food prices are likely to remain high and volatile for years to come because of rising
production costs due to high oil prices, and rising demand for cereals, linked with the
growth in the biofuels sector and in consumer demand in emerging countries. In addition,
climate change is expected to lead to more unpredictable weather and climate-related
disasters, exacerbating volatility in yields and markets and undermining food availability
and the livelihoods of millions of people, especially in sub-Saharan Africa.5
Action is urgently needed to deal with the current crisis and to reduce the likelihood of
similar events in the future. But the crisis offers opportunities as well as threats. For decades,
low prices have punished the rural producers and agricultural workers who make up the
majority of the worlds poor people. Now high prices could reverse that trend, but only if
the right policies and institutions are in place to allow poor farmers and agricultural
labourers to benefit.
Unfortunately, at local, national, and global levels, the right policies and institutions are not
yet in place. In many poor countries, mechanisms for regulating food markets and
promoting agricultural investment were scrapped under so-called structural adjustment
programmes pushed by the World Bank and the International Monetary Fund. The results?
Less support for small farmers, and more instability in agricultural markets.
The food price crisis represents an enormous challenge to the leadership and legitimacy of
the worlds multilateral institutions, but is also a genuine opportunity to deliver long-
overdue reforms to the food and agriculture system. Those countries with the resources and
power to deliver such reforms should take the lead, as they have done in trying to avert a
global financial crisis. The scale of what is possible when the political will exists is
breathtaking: the US Federal Reserve and European Central Bank have injected well over $1
trillion into the financial system in the past six months.6 The amount Oxfam estimates is
needed in immediate assistance for the poorest populations in 53 developing countries
deemed most vulnerable to current price levels is miniscule in comparison: just $14.5
billion.7
This briefing note sets out a series of steps, both short- and medium-term, to deal with the
current food crisis, and to put in place the reforms required to prevent future repetitions.
The Government of Niger is implementing a national food security and nutrition action
plan, which includes subsidised sales of cereals and cash-for-work schemes. The plan
receives multi-year support from key donor governments.
Countries dependent on food imports must reconstitute some form of food reserve in the
months to come in order to reduce fluctuations on local markets and to improve food
availability for food deficit areas and populations. This would support local food production
and trade if planned and managed properly. National grain reserves could be replaced by
regional reserves when appropriate (e.g. in East Asia or West Africa) and complemented by
innovative mechanisms, such as hedging, insurance, and other risk-management strategies.
Peoples livelihoods need to be protected through humanitarian assistance and safety nets in
order to prevent hunger and malnutrition. The poorest developing countries need
international support to provide such protection. Last year, the world leaders meeting at the
G8 summit called for greater investment in social protection in developing countries. It is
now time for them to turn their words into action.
There is no global blueprint for agriculture. New interventions must be developed locally, in
close consultation with women and farmers groups and civil society organisations.
However, more proactive state support is often necessary to ensure delivery of agricultural
services and inputs (including extension services) where it is most needed, improve storage
and marketing systems, and protect and improve access to land, especially where these
functions have been dismantled in recent decades. Governments and donors must also
support womens access to and control of assets, goods, and services, as well as their voice
in agricultural policy-making.
Source: Rigged Rules and Double Standards (Oxfam International, 2002) and World
Development Indicators (www.worldbank.org/data/onlinedatabases/onlinedatabases.html).
However, the implications for multilateral trade rules and the Doha round are complex, and
claims by EU and US trade negotiators and the World Bank25 that concluding the Doha
Round of trade talks at the World Trade Organisation (WTO) is a solution to the current
food price crisis should be treated with great scepticism.
Trade rules are long term and largely irreversible, and must protect poor people in times of
both high prices and low. As prices and other factors shift, it is vital that developing
countries retain the policy space they need to protect poor people whether producers or
consumers. For example, governments may choose to lower tariffs during periods of high
prices, but need to retain the ability to raise them again, should prices subsequently collapse
(as they have after most previous commodity booms).
This is not to argue that developing countries should necessarily pursue self-sufficiency. The
optimum degree of market openness and food dependency depends on a number of factors,
including the structure of the economy, the level of foreign exchange reserves, the
opportunities to increase productivity, or a countrys long-term development strategies. In
successful countries such as South Korea, Malaysia, and Indonesia, for example, smallholder
development strategies were underpinned by government use of tariffs to stabilise domestic
prices (protecting floor prices for farmers as well as ceiling prices for consumers) and
thereby encourage investment.26
Unfortunately, there is a temptation for trade negotiators to ignore such nuances and use the
food price crisis in order to whip up momentum for a quick deal. But any agreement based
on what is currently on the table at the WTO is likely to undermine, rather than strengthen,
developing country agricultural systems, and is unlikely to solve the current crisis, for two
main reasons.
Firstly, current proposals do not adequately address the need for many developing
countries to retain the ability to protect rural livelihoods and ensure food security. Secondly,
even with the anticipated elimination of export subsidies, loopholes allow the USA and the
EU to maintain high levels of trade-distorting spending on agriculture, and therefore a
licence to continue dumping. Under current scenarios, the Doha Round is unlikely to oblige
either the US or EU to cut a single dollar from the subsidies it pays its farmers. While this
might not be seen as a priority in a period of high food prices, the resulting record farm
profits ought to provide an ideal opportunity for reform. The passage of the $289bn Farm
Bill in the USA in May and aggressive statements by European opponents of CAP reform27
suggest that opportunity is being squandered.
3. Rich countries must stop adding fuel to the fire through their biofuel policies.
Subsidies and tax exemptions which incentivise the diversion of agricultural
production to fuel production should be dismantled, and there must be an
immediate freeze on the implementation of any further mandates. Existing mandates
that are contributing to reduced access to food should be urgently rethought.
4. Developed and developing countries should avoid resorting to trade measures that
exacerbate the crisis or undermine long-term development goals. Rich countries
should stop advocating for tariff reductions to be locked in. Export bans should be
avoided: while they may be an understandable response to protect domestic
consumers in the short term in the absence of global action to deal with higher food
prices, they can negatively affect net food importing countries and producers. Rich
countries should not use higher food prices as a pretext to stall on much-needed
reforms in their trade and agriculture policies. The EU and the USA should publicly
commit themselves to a profound reform of their agricultural policies. Rich countries
should also restate their commitment to a pro-development outcome of current trade
negotiations, such as the Doha Round and the EUs Economic Partnership
Agreements (EPAs).
5. Additional financial support must be made available for net food importing
countries facing balance-of-payments or fiscal crises due to food price rises.
Debt relief for Heavily Indebted Poor Countries (HIPCs) suffering as a result of
the food crisis should be speeded up. Indebted non-HIPC countries that are
affected should also be granted debt relief.
The IMF should ensure that Poverty Reduction and Growth Facility (PRGF)
augmentation is offered automatically and immediately to all countries that want
it, without additional conditionality.
The IMFs Exogenous Shocks Facility (ESF) should be made available with only
fiduciary conditions attached, and with improved concessionality, to countries
suffering budgetary as well as balance-of-payments problems.
The World Bank and the IMF should also offer emergency shock financing to
middle-income countries suffering from the food crisis, with only fiduciary
conditions attached.
6. Governments and international bodies such as the FAO and World Bank should
commission a study immediately to clarify the contribution of futures markets to
the price spike. Oxfam is calling for careful consideration of these concerns and for
appropriate responses.
6. Developing countries must be supported to plan for, and protect against, future
shocks. All future Poverty Reduction Strategy Papers (PRSPs) should develop
comprehensive anti-shock plans. The projected shocks should be based on historical
probability and scale of all recent shocks. A strong emphasis should be put on the
fiscal effects of shocks and the implications for MDG-related expenditures.
Oxfam International Secretariat: Suite 20, 266 Banbury Road, Oxford, OX2 7DL, UK
Tel: +44 1865 339100 Email: information@oxfaminternational.org. Web site: www.oxfam.org
Linked Oxfam organizations. The following organizations are linked to Oxfam International:
Oxfam Japan Maruko bldg. 2F, 1-20-6, Higashi-Ueno, Taito-ku, Tokyo 110-0015, Japan
Oxfam observer member. The following organization is currently an observer member of Oxfam International, working
towards possible full affiliation:
Fundacin Rostros y Voces (Mxico) Alabama 105, Colonia Napoles, Delegacion Benito Juarez, C.P. 03810 Mexico, D.F.
Tel: + 52 5687 3002 / 5687 3203 Fax: +52 5687 3002 ext. 103
E-mail: comunicacin@rostrosyvoces.org
Web site: www.rostrosyvoces.org