Farmers need bigger returns to increase production

Reprinted with permission from DTN/The Progressive Farmer (A Televent Brand)

ROME (DTN) — Farmers around the world need to continue receiving higher commodity prices in order to increase food production in future years, former U.N. Secretary General Kofi Annan told the U.N. Food and Agriculture Organization in a lecture here Saturday.

“While this may be controversial in some quarters, there is a strong case to be made that food prices had to be rebalanced, provided volatility is tackled and the vulnerable protected,” said Annan, a native of Ghana who now chairs the Alliance for a Green Revolution in Africa.

“Food prices, aided by increased production, have been falling in real terms for much of the last three decades,” Annan said. “While this has been good news for consumers, particularly in the developed world, it has damaged many rural communities and the long-term global supply of food. If prices are artificially low, farmers are denied a fair return as well as the incentive and means to increase food production.”

Annan’s statement was remarkable, as rising food prices since 2008 have led many advocates and institutions such as the World Bank to switch their concern from farmers to consumers, particularly in developing countries.

The National Farmers Union and more leftist farm groups in the United States and Europe have made the point for decades that low commodity prices and the farmer’s declining share of the food dollar have hurt rural communities. But Annan said that the problem has been the worst for small farmers in developing countries who make up half the world’s population.

“More stable, higher prices can encourage investment and help communities, but only if farmers share in the benefits,” Annan said. “So in the long-run, a fair price now can stimulate production to help meet increased demand and hold down prices in the future. But we must do more to protect the vulnerable from dangerous price volatility.”

Annan did not propose specific help for the urban poor, such as the U.S. food stamp program, but said there is a need “for improved social protection schemes against price spikes to protect the poorest.”

Speaking to delegates from the 191 FAO member countries who have gathered for a conference and to elect a new director general, Annan said the FAO must be at the forefront “of developing a deeper understanding of the relationship between international, local and farm-gate prices to ensure both fairness and the right incentives are in place.”

Annan gave the Frank Lidgett McDougall Memorial Lecture, named for an Australian who helped found the League of Nations’ Food and Agriculture Organization in 1935.

In his speech, Annan said he believes the fall in food prices from their peaks is temporary, because population growth and increased wealth in developing countries will lead to increased consumption and the use of grain to feed animals rather than people. Rising oil prices will also make the conversion of grain to fuel more attractive, he said.

He also noted that while science seems to have reached a limit on the impact innovation and technology can have on increasing harvests in the developed countries, the impact of climate change may be badly underestimated. He warned that the current crisis of about a billion people in the world going hungry “will turn into a permanent disaster, putting in danger the lives of many millions of people.”

But Annan said he does not view delivering global food and nutrition security as an insurmountable task. “We have, after all, doubled food production before, so we must not despair,” he said.

He made the following recommendations to the FAO and its member countries.

–Fulfill their L’Aquila G-8 initiative pledges to spend more money on the development of Third World agriculture, irrigation, transport links and storage facilities.

–Increase government-sponsored agricultural research, saying “the research of major agro-businesses is still concentrated on the needs of large farming enterprises in the developed world.”

–Establish a new flexibility in patent rights so the benefits of innovation can be shared more widely.

–Pay particular attention to African agriculture, because cereal yields there are less than a quarter of the global average.

–Help female farmers “who make up, in many regions, the majority of farmers and who can find themselves cut off from capital by lack of title rights and prejudice.”

–Conduct rigorous research into the benefits and costs of crop-based biofuels.

Annan expressed mixed feelings on large-scale commercial farming in developing countries. Large farmers can play a crucial role in developing Africa’s agricultural potential, he said, “particularly in land-abundant countries like Zambia and Angola.” But, he added that cautions must be taken “to prevent any repetition of the environmental and social damage attributed to the Asian green revolution.”

He also said he is also worried about unilateral export bans and land grabs — purchases of farm land in Africa by richer countries and people on other continents.

“It is very disturbing that a recent report found that agricultural land that adds up to the size of France was bought in Africa in 2009 alone by hedge funds and other speculators,” Annan said. “It is neither just nor sustainable for farmland to be taken away from communities in this way nor for food to be exported when there is hunger on the doorstep.”

On the issue of land grabs, Annan may find it difficult to win an audience. French Agriculture Minister Bruno Le Maire told The Hagstrom Report recently that when he tried to get G20 members to take a position on the issue, they declined because developing countries wanted the investment to boost their agriculture.

Annan concluded by noting that many of his former colleagues were “bemused” when he took up the issue of agriculture after retiring from the U.N.

“I can see why the move from secretary-general to Farmer Kofi was met with smiles. It was perhaps not the obvious choice for me,” he said. But he said the survival of 1 billion people and the need to feed 9 billion people eventually made the challenge and urgency of finding solutions worthwhile.

(CZ)
© Copyright 2011 DTN/The Progressive Farmer (A Telvent Brand). Reprinted by Permission

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