A fundamental change is taking place in the global role of agriculture. Since prehistory food has only been cultivated for human consumption or as feed for livestock; but lately, agriculture in developed and developing nations has been transformed as cereals are being grown for conversion into fuel.
How this has come about and the potentially alarming implications it has for the Caribbean and its food security, make the continuing debate about the future of sugar on the European market pale into insignificance.
The background made simple is that rapidly increasing energy prices resulting largely from uncertainties about the security of supply; increased demand for oil from rapidly industrialising nations such as China; and global pressure to reduce carbon emissions from fossil fuels, have all combined to create recognition of the importance of bio-fuels.
The consequence has been that the United States, Europe and others have begun programmes to substitute an ever-increasing part of their demand for imported oil and natural gas by bio-ethanol and to a lesser extent bio-diesel. For example, earlier this year President Bush called for fifteen per cent or 35 billion gallons of US gasoline requirements to come from renewable fuels by 2017.
The effect of this has been to cause the demand to soar for the feed stock – principally corn but increasingly other cereals – and for already highly subsidised corn farmers in the US and elsewhere to divert production away from human or livestock consumption to meet the demands of the ethanol industry.
This has had a threefold consequence. Firstly as farmers across the world have seen the price they can obtain for cereals for fuel, they have reduced their supply to the food and feed market. This has had the effect of forcing up the price of food globally at a time when demand, particularly from newly industrialising nations, is increasing. Secondly, in an attempt to profit from this new demand, developing nations from Brazil to Singapore have been deforesting land to increase their arable acreage with potentially disastrous environmental consequences. And thirdly huge cash-rich hedge funds and private equity, two relatively new and powerful investment vehicles, have entered the market and begun to speculate in food as its price rises.
Confirmation that structural change in agriculture is underway came earlier this year when the UN Food and Agriculture Organisation (FAO) and the OECD’s 2007- 2016 outlook report confirmed that high prices for agricultural products will prevail for at least a decade.
The report also pointed out that higher commodity prices were becoming a particular concern for net food importing countries as well as the urban poor. It also meant, the report noted, extra costs and lower incomes for farmers who need the feedstock to provide animal feed. It concluded that trade patterns are changing.
Put another way, the global implications are as great as those of the agrarian revolutions that took place in Europe in the eighteenth century or in the US a century later. However, this time the result is not lower food prices for a growing population but the real possibility that many nations and in particular the poorest in every society will find, particularly where food is imported, that its price may rise to unacceptable levels.
Already the effect is being felt as the price of flour to chicken and soft drinks increase. While the world is some way away from civil unrest, recent demonstrations in Mexico City over the quadrupling in a year of the price of corn based tortillas, point to the implications.
All of which poses a problem for the Caribbean. Food security has not received sufficient attention despite the fact that the region’s largely agriculture and tourism based economies have become increasingly dependent on imported food.
While the region has the available agricultural land in nations such as Guyana, Suriname, Cuba and the Dominican Republic to produce more food and the capacity to better organise agricultural production in nations such as Jamaica, Belize and the OECS, this is far more difficult than it seems.
Last month the media in St Vincent reported on a seminar on health and nutrition. Strikingly what emerged from the reported comments of senior civil servants was a growing concern about the cost of imports and the effect this will have on nutrition. Officials reported a decline in the nation’s strategic grain stocks and significant increases in prices for flour and the seed required for growing feed for livestock. They noted that between 2002 and 2006 cereal imports costs rose from EC$17m to EC$27m and that the island’s experience was similar in meat and meat products.
They argued that although St Vincent had much available agricultural land, farming was not organised well for food production. Lack of investment, absence of capital, an inappropriate marketing system, the absence of insurance, poor cool storage facilities and the individuality and smallness of farming operations made the creation of a local market for food difficult.
Much the same could be said about agriculture in virtually every other country in the Anglophone and Hispanic Caribbean.
The ‘food versus fuel’ debate touched popular imagination after Cuba’s President published in March and April two personal reflections on this topic. His message was that the use of food for bio-fuel production would result in rapidly escalating prices, food shortages and even starvation. Changing the use of agriculture to produce fuel, he suggested, drew a line between the rich and the poor. Subsequently support for this view came from unusual quarters including right-of-centre publications such as The Economist and the Chairmen of a number of leading companies.
Their collective words should have resonance in the region.
A modified, regionally-integrated Caribbean agricultural sector has the capacity to give the region food security through self-sufficiency. There are high level political initiatives underway on agriculture of the kind launched by Guyana’s President, Bharrat Jagdeo, and the identification of need by Cariforum and the FAO.
Unfortunately these are not moving at the pace at which the markets are changing the price of food.
David Jessop is the Director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org
Previous columns can be found at www.caribbean-council.org
