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Sunday, June 26, 2022

Rising prices: why the global drive to make food cheaper is not viable

As prices rise everywhere, on almost everything, the prospect of the human suffering this will cause is deeply troubling. There are predictions that the number of people in the world suffering from acute hunger – currently 276 million – could soon increase by as much as 47 million.

To solve this problem, many agree that trade barriers need to be low. This means not banning exports when individual countries hold their supplies, and making sure the sanctions don’t affect vital food supplies. There are fears that any barriers to global food flows will simply push prices higher.

This emphasis on keeping prices low is understandable and necessary. But it is also worrisome, as the economic mechanisms that have driven prices down in recent decades have seriously weakened the global food system.

I learned about this during a recent visit to Kenya. One evening, while eating fish on the shores of Lake Victoria, one of the world’s largest inland fisheries, I asked my Kenyan colleagues where my tilapia came from. The surprising answer was that it was quite possible that it was from China.

But in the cheap food paradigm, it makes sense. China has done a phenomenal job in developing its aquaculture industry (it now controls about 60% of the global market) and has also invested in Africa’s transport infrastructure.

Extremely efficient production and distribution have reduced costs, allowing local vendors in Kenya to make a living selling imported tilapia at prices their customers can afford.

This is exactly the kind of dynamic that the globalization of food has allowed. But when global trade is disrupted, the entire system is at risk.

Until recently, for example, Ukraine supplied 36% of the world’s sunflower oil. The Russian invasion has significantly reduced trade with Ukraine, making this key ingredient significantly more expensive for the millions of households and businesses around the world that use it.

Many African countries depend on Ukraine and Russia for more than half of their wheat. Supply shortages caused by the war, along with catastrophically high fertilizer prices, threaten to increase hunger in the region.

This is the other side of the global effort to keep food prices low. On the one hand, increased productivity and competitiveness have made it possible to produce food at a lower cost and distribute it to the people who need it. But the relentless pursuit of efficiency and competitive advantage has created risks to the sustainability of the food system.

This means that fewer countries and companies now dominate, reducing the diversity of food sources and supply chains needed to be strong and secure. As the UN report on food insecurity says, diversity matters because it “creates multiple pathways to mitigate shocks.” These upheavals can be catastrophic.

Therefore, it is not surprising that many countries are rethinking their dependence on food imports in order to feed their populations.

Protecting the planet

Focus on keeping food prices low also detracts from other issues such as the environment and supporting sustainable livelihoods.

As UN Secretary General António Guterres noted:

Food systems can realize our shared vision for a better world [by] Feed a growing population in ways that promote nutrition, human health and well-being, restore and protect nature, are climate-neutral, locally adapted, and provide decent jobs and an inclusive economy.

It is unlikely that the fish I ate in Kisumu was produced in such a way as to address many of these concerns. But the cheapness of food comes at a high cost elsewhere—for people’s health, their livelihoods, and the entire planet.

Made in China?
Shutterstock/TonKnthai

These “hidden costs” are estimated at almost $20 trillion (£16.3 trillion) a year. Simply put, the prices we pay for food today do not reflect the true cost of producing it, and such a system is not viable.

There is no doubt that food must cross borders in large enough quantities to prevent famine. But there is also no doubt that future generations will need to be able to rely on a more sustainable global food system that includes prices, diet, environment, livelihoods and sustainability.

Any fight against hunger must consider not only how to keep food cheap in the short term, but also how to rebuild food systems in the long term to be stronger and more resilient. This will entail significant changes, but there are already signs of shifts in the work of the world economy.

A well-known investor recently remarked that the Russian invasion of Ukraine “ended globalization as we know it,” predicting a process of “de-globalization” and companies reconfiguring their global supply chains.

This makes it possible to use the latest research to determine what economic models are needed to transform the world’s food systems. This should include “true cost” accounting, which properly reflects the various costs and benefits of producing, transporting, and selling what we eat.

In addition, significant steps need to be taken to create a food system that includes a circular economy (with more emphasis on sharing, reuse and recycling) and a “bioeconomy” model with a focus on the conservation of biological resources.

Politicians, businesses and consumers must recognize that low food prices are part of a larger problem. Focusing solely on keeping food as cheap as possible and relentlessly pursuing productivity and profits is not the way to keep the world fed.

Things must change. And the fact that now is the most difficult time to solve this problem, which is why we must do it.

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
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