Understanding and Containing Global Food Price Inflation

In recent months, dramatic increases in basic cereal prices have aroused intense concern about world agriculture and about the impact of food price inflation on poor consumers in developing countries.

While seeming to burst onto the world scene quite suddenly, the problem has been a long time in the making, as a result of burgeoning demand and slower growth in yields. Since 2000, the price of wheat in the international market has more than tripled, while maize prices have more than doubled over that period. The price of rice, after rising steadily through 2007, then jumped sharply in the first quarter of 2008, up 75% from the previous year. Ongoing trends and new factors have now converged to create this new global food equation, or "perfect storm" as Science magazine put it recently.

The cruel reality for poor households

Behind the graphs depicting those trends, a cruel reality is taking shape in millions of desperately poor households. For a family of five living on just US$1 per person per day, a doubling of food prices effectively cuts $1.50 out of their $5 daily budget. That leaves the family no choice but to consume less food and lower the quality of their diet. As nutrition deteriorates and access to services such as health care and education diminishes, the family's prospects for overcoming hunger and poverty become more remote than ever.

And that isn't the lot of just an unfortunate few. About 880 million people fall in the category described above, and 2.1 billion, nearly a third of humanity, fair little better, living on less than US$2 a day. According to World Bank President Robert Zoellick, food price inflation could push at least 100 million more people into poverty, wiping out all the gains the poorest billion have made during almost a decade of economic growth.

The CGIAR on high alert

Soaring food prices have put the CGIAR on high alert, and the international research Centers it supports are responding vigorously on several fronts.

In December 2007 at the CGIAR's 2007 Annual General Meeting in Beijing, the International Food Policy Research Institute (IFPRI) presented a report entitled The World Food Situation: New Driving Forces and Required Actions, which examines the factors behind rising prices. It describes how income and population growth, climate change, high energy prices, economic globalization and urbanization have all combined to transform food production, markets and consumption. The IFPRI also report offers a set of policy recommendations designed to stave off the worse consequences of food price inflation for poor consumers.

Particularly urgent is government action to expand "safety net" programs, involving food or income transfers. These must be targeted to the poorest people in both urban and rural areas, with emphasis on protecting the nutrition of young children.

A second recommendation is for developed countries to eliminate subsidies on domestic biofuel production, which have distorted world food markets and acted as a sort of tax on staple foods. According to IFPRI calculations, a moratorium on biofuel production in developed countries through 2008 would ease corn prices by 20 percent and wheat prices by 10 percent. The report also advocates that developed countries eliminate agricultural trade barriers, thus creating a more level playing field for developing-country farmers and giving them stronger incentives to boost production.

Finally, to promote growth in agricultural productivity over the longer term, developing countries should greatly increase their investment in agricultural research and extension, rural infrastructure and market access for poor farmers. In recent years, gains in agricultural productivity have fallen to 1-2 percent per year, well short of the 3-5 percent growth rate needed to keep pace with food demand, which is expected to double by 2030. A key requirement for boosting productivity growth is to invest in research aimed at preserving and making better use of diverse genetic resources for crop and animal improvement.

What agricultural research can do

The International Rice Research Institute (IRRI) has also spoken out strongly, specifically on the rice crisis emerging in Asia, as reflected in numerous high-profile media stories. Closely examining the causes and consequences of the crisis, IRRI has emphasized the need for renewed commitment to the development and dissemination of improved technologies. This, it insists, is the "only viable long-term solution for . . . ensuring that affordable rice is available to poor consumers."

Though there are no "silver bullets," many technologies already available could make a difference in boosting supplies of rice and other staples. In some regions, especially of sub-Saharan Africa, the yield potential of improved varieties already in use far exceeds actual performance. To exploit such obvious opportunities for achieving yield gains,, the world community must invest now and over the long term in problem-solving agricultural research. Among the options that should be exploited much more actively are a wide array of higher yielding, stress-resistant varieties of all of the major staples and improved practices for reducing crop losses after harvest. In addition, effective approaches have been developed (such as reduced tillage for South Asia's rice-wheat system) that permit far more efficient management of agricultural systems.

This is not to say, though, that the basket of options current available is entirely adequate to the tasks at hand. Food price inflation, together with climate change, clearly signal that even more productive and resilient crop varieties must be developed through accelerated study and use of the many thousands of samples of plant genetic resources (including wild plants related to crops) stored in CGIAR and other genebanks. Investment in such research will result in technologies that serve the dual purpose of both abating hunger and helping farmers cope with the impacts of global climate change. Many of the traits required to increase crop productivity in poor rural communities, such as drought and flood tolerance, are also those needed to confront climate change.

Technological innovation, in combination with policy reforms, is a formula that has worked well in the past. According to the World Development Report 2008, investment in agricultural research "has paid off handsomely," delivering an average rate of return of 43 percent in 700 projects evaluated in developing countries. Global public goods developed by the CGIAR Centers, in collaboration with many national partners, have contributed importantly to that success.

In the 1960s and 1970s, the Centers set in motion the Green Revolution, which led to spectacular advances in agricultural production, particularly in South Asia. Those in turn contributed to steadily declining food prices through the end of the 20 th century. Since the early 1990s, the Centers have devised whole new generations of technologies, with the aim of achieving sustainable intensification of crop production, based on prudent management of natural resources, especially soil, water and biodiversity.

Those approaches should have been implemented more vigorously years ago, but it is by no means too late. Perhaps, a major food crisis, combined with the ominous threat of global climate change, will be enough to finally concentrate our minds, efforts and resources on the vital task of achieving sustainable agricultural development.

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