The Guardian reports that climate change could lead to substantial increases in the prices of key staples such as maize and rice. This is based on new ground breaking evidence from a report titled ‘’Food Security, Farming and Climate Change to 2050’’ by the International Food Policy Research Institute (IFPRI). In the last decade the wide ranging effects of climate change have been discussed. However, IFPRI’s report is one of a growing breed linking climate change to food security.

Over the last two years, the world has witnessed turbulent events relating to food production: the food crisis in 2008, food riots, wildfires in Russia hampering grain stocks and devastating floods in Pakistan affecting rice output. These incidents signal what we are likely to expect in the future and IFPRI’s analysis focuses on the period between 2010 and 2050. World population is estimated to be 9 billion by 2050. Climate change is likely to add further pressure on food production as agriculture is dependent on local temperature and precipitation conditions. Slight changes to these variables means farmers will need to adapt production practices.

In economic terms, the suggestion of supply shocks means that demand is likely to exceed production, which can push prices upwards. The authors of the report have quite innovatively calculated the impact on food prices in three different scenarios (baseline, optimistic and pessimistic). Let us look at the pessimistic/worst case scenario; maize and rice prices are predicted to rise by 106.3% and 78.1% respectively. Whereas, in the optimistic scenario, maize is estimated to increase by 87.3%, whilst rice by 31.2%. Despite, the ‘’good’’ or ’’ bad’’ scenario, both situations imply the regressive impacts on food security, nutrition and human well being, particularly on the poorest who spend a higher proportion of their incomes on food. There are also political consequences to be felt through public unrest. Furthermore, countries may respond via greater protectionism and reduced trade flows.

With this in mind, policy makers need to take measures to reduce the implications of climate change. The report cites a number of measures to prevent the scenarios predicted: enhancing land productivity, improving irrigation efficiency (to conserve water) and more sustainable based policies (eg. aiming for carbon negative agriculture by 2050). What remains is an uncertain future and the affects of climate change, especially on prices and food security are indeed worrying. Concrete policy action needs to be made a priority, otherwise the challenges in the next period 2050-2100 will be even more daunting.

At the recent Hague Conference on Agriculture, Food Security and Climate change, on 2 November 2010, evergreen agriculture received unrivalled attention. Evergreen agriculture, defined as, “the combination of trees in farming systems (agroforestry) with the principles of conservation farming” , is gaining popularity as a way to combat land degradation as well as increasing small-holder production.

More specifically, a distinctive type of acacia (spiny tree or shrub) known as the ‘’fertilizer tree’’ has led to the doubling or tripling of maize yields on small-holder farms in countries such as Zambia, Malawi, Niger and Burkina Faso.  Scientists from the World Agroforestry Centre (WAC) believe that fertilizer trees can be utilized throughout Africa to combat climate change and ensure food security. At the Hague conference, Dr. Dennis Garrity, Director General of the WAC said, ““Doubling food production by mid-century, particularly in Africa, will require nonconventional approaches, particularly since so many of the continent’s soils are depleted, and farmers are faced with a changing climate. We need to reinvent agriculture in a sustainable and affordable way, so that it can reduce its emissions of greenhouse gases and be adapted to climate change.”

A particular type of fertilizer tree known as the Faidherbia albida has produced some spectacular results. For example, farmers in Malawi have seen their maize yields increase by up to 280% when grown under a canopy of the tree. Furthermore, 4.8 million hectares of millet and sorghum are being grown in agro- forests with up to 160 trees per hectare. Fertilizer trees are a great source of natural nutrients for land. They extract nitrogen from the air and transfer it to the ground through their roots and leaf litter. This replenishes land that has been exhausted of its organic nutrients. Additionally, they are an important source of timber and fuel. Moreover, the leaves and pods from the trees are used as fodder for livestock. The trees are beneficial to the environment and farmers because they provide positive externalities for 70 to 100 years.  

Most importantly, this method of farming is being taken seriously by governments, international donors and research institutions. For example, the WAC is working with 18 countries in Africa to establish national frameworks for evergreen agricultural production. It offers a viable strategy for sustainable development with a focus on increasing incomes of small-holder farmers. To read more about evergreen agriculture, see the following document:

http://www.worldagroforestry.org/downloads/publications/PDFs/B09008.PDF

The Institute of Economic Affairs (IEA) has today released a report launching a wholesale attack on the Fair trade movement. The study, titled ‘’Fair trade Without the Froth” has been written by Sushil Mohan, a trade expert from Dundee University in the UK.

Described as a ‘’specialty market operation’’, the report suggests that fair trade’s stringent requirements represent the views of  western consumers, rather than the needs of poor producers in developing countries.

Moreover, the notion that fair trade offers a better and more equitable relationship for producers is questioned: ‘’Fair trade’s proponents try to convey the impression that almost all the price premium they are paying for Fair Trade products is passed on to the producer, while the reality is very different.’’ For example, in some cases premium prices for goods translate into higher mark-ups for wholesalers, importers and retailers. Furthermore, fair trade has become an industry in itself with high bureaucratic costs, which are absorbed by price premiums.

Although fair trade production has grown rapidly in the past few years, it still only represents a small fraction of global food sales. Considering the fact that multi-nationals such as Kraft and Procter & Gamble are responsible for a majority of food processing activities, it may be worthwhile to target the private sector to improve rural livelihoods. Large businesses simply have the buying systems to make changes to rural communities on a grander scale.

Besides, Corporate Social Responsibility (CSR) and ethical trading are becoming more serious concerns for food corporations. More so, an ever-increasing number of companies are willing to engage in their supply chains to make them socially and environmental responsible. For example, Unilever has made a commitment to source all of its renewable ingredients from sustainable production within the next ten years. The New Business Models (NBMs) that we in DAPA are working on, also offers an ideal strategy for these companies to improve their supply chains and reduce rural poverty.

Overall, there is no doubt that the Fair Trade Movement has a valid cause, where it is working hard to improve the lives and working conditions of poor producers. However, rural poverty is major phenomena in the developing world and other options are available to reduce it on a wider-scale. Critical enquiry should be paramount and we must be careful of anti-corporative rhetoric that demonizes multi-national corporations. Instead the benefits they have on rural communities should be recognized with a greater emphasis on improving value chains and making them more transparent.

To read more about IEA’s report and its findings check out the following articles:

http://www.guardian.co.uk/uk/2010/nov/04/multinations-development-fairtrade-report?intcmp=122

http://www.telegraph.co.uk/foodanddrink/foodanddrinknews/8107746/Fair-Trade-does-not-help-the-poorest-report-says.html

Over the past few weeks, French workers and students have been protesting about pension reforms, creating scenes of havoc across the country. Not so long ago, the residents of Maputo and Chimoio in Mozambique were rioting over a 30% increase in food prices.  Such extremes in the reasons to protest highlight the vast differences that exist between the developing and developed world. Overconsumption of food has become such a major problem in richer countries that it is unimaginable to see people rioting over basic staples. However, Mozambique’s case illustrates the urgency of food security, especially in Africa.

The nations of Africa, NGOs and private enterprise have in fact been discussing this issue. Last month, between 2-4 September, the African Green Revolution Forum (AGRF) took place in Ghana. The AGRF’s main aim is to increase agricultural productivity and create higher incomes for African farmers in a sustainable manner. A recent article in NGO News Africa has summarized some of the main conclusions of the forum.

There are a range of factors inhibiting a green revolution in Africa but according to the chairman of the AGRF, Kofi Annan, a lack of political will takes precedence. A major production-related constraint relates to low fertilizer use. NGO News Africa argues that the average expenditure on fertilizers in Africa is 8kg per hectare, compared to the approximately 30kg per hectare that studies show would be necessary for a green revolution.

The example of Malawi is particularly illustrative. During the 2002-05 period, grain reserves were depleted and the country was on the verge of starvation.  However, between 2005-06, the new government headed by President Bingu wa Mutharika launched a program granting subsidies for fertilizers and hybrid maize to smallholder farmers. The results were spectacular. By 2007, Malawi had achieved self-sufficiency and even had enough grains to export. Agricultural input subsidies are good short term measures but currently Malawi needs to move beyond its focus on fertilizers and seeds to ensure long-term food security for the future. For example, continued subsidies could add fiscal pressure to the Malawian government.  Furthermore, smallholder credit, farmer training, infrastructure programmes and procurement services are other essential elements that need to be emphasized in order to prevent long-term hunger issues.

What seems to be a highly contentious issue is the debate between domestic production and export-orientated agriculture. Africa has much fertile land that agribusinesses and countries are vouching to buy. On the other hand, food security is vital, and exporting food crops may seem unethical in a continent where 300 million people go hungry. Furthermore, relying on food aid (cheap subsidized produce from the developed world) requires already scarce foreign exchange and can increase dependency. Conversely, despite populist ‘anti-markets’ rhetoric, export chains have been critical to the development of rural economies in Africa and have increased incomes substantially in some countries. In Kenya, where a large number of smallholders participate in horticultural export production, households are able to spend more on food, education and health. Export crops in most cases offer much higher financial rewards than products for domestic markets.

In conclusion, the nations of Africa must find the right balance between domestic and export production. In countries where hunger is a major issue, the necessary steps must be taken to ensure long term food security (increasing fertilizer use, farmer training, improving infrastructure). In other cases where domestic food production is more stable, encouraging smallholders to actively participate in export chains can help alleviate rural poverty and raise household food budgets.

More on food security in future posts!

The director general of the International Livestock Research Institute (ILRI), Dr. Carlos Seré, has recently published an insightful in the Guardian titled; Backing smallholder farmers today could avert food crises tomorrow.  Based on the rise of food crises and food riots in the developing world, Dr. Seré makes a strong case for using smallholder farming as a means to reduce poverty and hunger. The focus of his article is exactly what we in Markets at DAPA are working on. Especially in the area of New Business Models (NBMs).

Even though smallholders form the ‘backbone’ of world food production, they are a quite evidently an underutilized resource. They present new opportunities for agribusinesses to reduce supply risks as well as kick starting rural development. Due to his background, Dr. Seré discusses this issue within the prism of livestock farming. According to him, there needs to be an emphasis on collaboration and transparency between actors. With the right support, smallholders can be just as or even more efficient than large farmers. For example, there are a range of inputs and skills agribusinesses can provide to small farmers. However, he does not mention too much about the important role governments can play. Acting as a facilitator to increase smallholder access and providing incentives to agribusinesses to invest are some of them. The article also focuses on Africa and South Asia but its suggestions can easily be extended to Latin America and South East Asia.

Overall rural communities in the Global South face tough times. Directing our attention towards large scale farming has not arrested the process of rural to urban migration. As the rural poor continue to leave the countryside for cities in search of a better life, they are often subjugated to the harsh conditions of urban realities. Small holder farming can provide incentives for communities to stay on the land, whilst combating the twin objectives of economic security and increasing food production.

With just under five days before World Food Day, we’re seeing some significant attention being placed on food, agriculture, and rural development.  From the private sector’s push to standardize sustainability metrics and impact analysis for investment in agriculture to important papers and speeches on the status of food security, climate change, and hunger, we’ve collected a list of October highlights – and we’re only halfway through the month!

The launch of IRIS 2.0 and corresponding comment period has now begun.  This newest version of the Impact Reporting & Investment Standards, or IRIS, was announced last week highlighting a growing movement from the investment community to create a common language for describing the social and environmental performance of an organization. IRIS provides an independent and credible set of metrics for organizations to use when reporting their impact. IRIS performance indicators span an array of social and environmental objectives, and include specialized metrics for a range of sectors such as financial services, agriculture, and energy. Like financial accounting standards, IRIS provides a basis for performance reporting and enables critical industry analyses like performance benchmarking. IRIS is an initiative of the Global Impact Investing Network. Sign up for the webinar, or provide comments.

The State of Food Insecurity in the World:  World Food Program and the Food and Agriculture Organization of the United Nations, October 2010.  Twenty-two countries are facing enormous challenges like repeated food crises and an extremely high prevalence of hunger due to a combination of natural disasters, conflict, and weak institutions. More than 166 million undernourished people live in countries in protracted crises, roughly 20 percent of the world’s undernourished people or more than a third of the total if large countries like China and India are excluded from the calculation. Read more here.

Josette Sheeran, Executive Director of the UN World Food Program, suggests How We Can End Hunger: 10 Ways to Feed the World.  As Sheeron comments, “Many nations have defeated hunger. It doesn’t require some scientific breakthrough, people simply need access to an adequate amount of nutritious food. Food is good business. When nations solve that problem it fuels their economy. It creates jobs and opportunity. When people don’t have food, they only have three options. They migrate, revolt, or die. These options are unacceptable. We must be driven with a common purpose towards finding a solution.” Read the entire article in the Huffington Post, October 1.

In the aftermath of the earthquake in Haiti, on the ground development agencies like Oxfam have been contributing heavily to the discussion of how pro-poor agricultural development policies and programs can contribute to real economic growth and better livelihoods in post-conflict and post-disaster communities.  Planting Now, Agricultural Challenges and Opportunities for Haiti’s Reconstruction, an Oxfam UK Briefing Paper, suggests ways to move Haiti forward and provides interesting insights into the challenges and opportunities for reconstruction.

US Secretary of State, Hilary Clinton, receives 2010 George McGovern Leadership Award from the World Food Program.  With innovative new steps towards public private partnerships (have a look at a past post from CIAT on the Future of Food initiative here), Secretary Clinton has been lauded for promoting a bold new approach to issues like nutrition and farmers’ livelihoods was paving the way towards a future without hunger. Watch her acceptance speech here.

Finally, we just wrapped up a great conference at SOCAP where there were a lot of interesting and important discussions about metrics, reporting, and better ways to bridge the gap between investors and agro-enterprises.  Have a look at some post conference videos!

I should also mention that I (Katie) am delighted to be back at work writing for the CIAT Markets blog.   Coming to you live now from NY at Cornell University!