The Causes of Poverty (64): Rising Food Prices

A spice vendor waits for customers at a market in Jakarta, photo by Dita Alangkara

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It seems that harvests are bad this year and that food prices have gone up. The effect of high food prices on poverty is not straightforward. Poor people do indeed spend a large proportion of their income on food, which means that increases in prices have a direct effect on their financial situation and can even cause hunger. On the other hand, many poor people make their living in agriculture. Higher prices can mean higher incomes for them. The poor are, however, increasingly urban poor, and for them higher food prices are entirely bad news. So it’s not crazy to blame poverty on rising food prices. According to the World Bank, food prices have pushed 44 million people into poverty in 2010-11.

The question is then: what’s causing these prices to rise? The weather is partly to blame – there has been an unprecedented drought in the United States and extremely dry weather conditions in Europe - but so are governments. Government promotion of biofuels, for instance, means that raw food materials are used for petrol alternatives and hence don’t go into food production. This lowers the supply of food and causes prices to rise. I’ve argued before that many make too much of this argument, but there is something to it. Land grabs can also become a problem when biofuels are subsidized or when rules mandate that x% of every litre of fuel sold should be biofuel. These land grabs for biofuel production result in displacement of local production for local consumption, impacting the income of both local producers and consumers: people have to buy the food that they would otherwise have grown, and they have to buy it from further away.

Some government policies designed to remedy the problem only make it worse. Governments that restrict exports of food in order to pump up supply and hence reduce prices – or in order to shield their national market against increasingly expensive imports – may end up pushing prices even higher. When farmers can’t export, their incentives to farm are affected. Result: supplies go down and prices rise even further.

What can be done? Well, inefficient or counterproductive policies should be halted. Biofuel mandates should be scrapped. And in countries with large proportions of poor people governments should offer insurance against drought or bad harvests as well as better safety nets.

More posts in this series are here.

The Causes of Poverty (37): Lack of Trade Liberalization

I’ve argued before that doing away with trade restrictions (especially in the agricultural sector) – such as subsidies (like the EU’s Common Agricultural Policy), import duties and other protectionist measures – would be a boost to the global struggle against poverty (read more here and here). Free and unsubsidized trade reduces poverty in at least three ways:

• It brings down prices because of increased specialization, competition and comparative advantage (read more about the reasons here). Although the removal of subsidies (only one element of trade liberalization) would initially raise prices and hence also poverty levels in importing countries, over time this would be compensated by the downward pressure created by specialization, increased competition and comparative advantage. However, these importing countries wouldn’t be the poorest ones: “three-quarters of the world’s poor live in rural areas, with the majority of them depending directly or indirectly on agriculture for their livelihoods” (source). The poorest countries would benefit from initial price rises caused by the removal of subsidies. (That doesn’t mean that everyone in the poorest countries would benefit: non-farm workers may suffer).
• It opens up foreign markets for poor producers.
• It eliminates distortions of competition between local producers and foreign, subsidized products, distortions which often force local producers out of business.

All this has a positive effect on the income of the poor. There’s a new paper here arguing that the net effect of trade liberalization is a reduction of the number of poor people worldwide by 3%:

the winners from trade reform would include poorer countries and the poorest individuals within countries. Nevertheless, it is also clear that even among the extreme poor, some would lose.

Of course, and again: beware of the silver-bullet fallacy. Domestic anti-poverty policies continue to be important as well.

The Causes of Poverty (36): Overpopulation (Because the Extent of Wrongness in Overpopulation Discourse is an Infinite Number)

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I never cease to be amazed by the persistence of overpopulation discourse in the face of irrefutable counter-evidence. The coming explosion of the population bomb is predicted time and again, with the same accuracy as the Christian Apocalypse. The spectacular failure of Paul Ehrlich‘s predictions in 1968, for example, seems to have had the same dissuasive effect on overpopulation discourse as Obama’s birth certificate on a large part of the Republican Party. Look at some of these statements:

Paul Ehrlich

The battle to feed all of humanity is over. In the 1970s and 1980s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate … India couldn’t possibly feed two hundred million more people by 1980 … One general prediction can be made with confidence: the cost of feeding yourself and your family will continue to increase. There may be minor fluctuations in food prices, but the overall trend will be up … The United States would see its life expectancy drop to 42 years by 1980 because of pesticide usage, and the nation’s population would drop to 22.6 million by 1999. (source)

Most of these statements are regularly repeated in some form or other, even today. Now, confront this with the following basic facts:

When Paul Ehrlich wrote his famous book ["The Population Bomb"], women were having an average around the world of five or six children; now they’re having an average of 2.6. Fertility rates around the world have halved. That’s not just true in Europe and North America; they’re way below replacement levels in most of East Asia now. Not just China but Japan, Korea, Vietnam and Burma have replacement rates of fertility or below. Around the world, fertility rates have been coming down really sharply. So the population bomb as we’ve conceived it before really isn’t there. There’s still population growth going on, but that’s going to stabilize. … birthrates are coming down fast, with Indian women, for instance, having fewer than three children on average today; and even African women have falling fertility. Fred Pearce (source)

What’s causing this population bust?

[T]hanks to advances in sanitation and medicine, women no longer need to have five or six children to make sure that two of them will live to adulthood. … Urbanization is a factor. When you’re in the countryside, your kids are an economic resource very early. They can help in the fields, they can look after the animals; there are piles of stuff they can do from the age of 4 or 5. Kids are an economic resource, which is why rural families tend to be larger. Fred Pearce (source)

More on fertility rates and overpopulation is here. Now, you could argue that even with falling fertility rates overpopulation can still be a problem. Heck, even with falling population rates you could say that there’s still overpopulation. Overpopulation is then a problem of relative population numbers rather than absolute numbers: if there are more people than the number that can be fed, then you have overpopulation. But this is also wrong: planet earth could feed a number of people that’s a lot higher than the current number.

Africa faces a food crisis, but it’s not because the continent’s population is growing faster than its potential to produce food, as vintage Malthusians such as environmental advocate Lester Brown and advocacy organizations such as Population Action International would have it. Food production in Africa is vastly less than the region’s known potential, and that is why so many millions are going hungry there. African farmers still use almost no fertilizer; only 4 percent of cropland has been improved with irrigation; and most of the continent’s cropped area is not planted with seeds improved through scientific plant breeding, so cereal yields are only a fraction of what they could be. Africa is failing to keep up with population growth not because it has exhausted its potential, but instead because too little has been invested in reaching that potential. (source, source)

Famines in general have causes that are completely unrelated to overpopulation. Read more here.

Overpopulation discourse isn’t just the proverbial barking up the wrong tree; it’s keeping company with some seriously rotten fruit. Look who else worried about overpopulation:

What was Hitler’s argument for attacking other countries? You might think he didn’t have one, but he did. His argument is frankly Malthusian: Our population is growing, and we will run out of food unless we get more land. …

The annual increase of population in Germany amounts to almost 900,000 souls. The difficulties of providing for this army of new citizens must grow from year to year and must finally lead to a catastrophe, unless ways and means are found which will forestall the danger of misery and hunger. Hitler in Mein Kampf

Hitler then reviews various policies to deal with the threat of over-population:

1. Artificial birth control. Hitler rejects this because it short-circuits natural selection. Furthermore, there is an international prisoners’ dilemma: The one country that lets its numbers rise will outnumber and militarily dominate the rest…

2. Increasing productivity via “internal colonization.” Hitler rejects this on a priori Malthusian grounds – there is no way for productivity to permanently outpace population growth:

Adolf Hitler

It is certainly true that the productivity of the soil can be increased within certain limits; but only within defined limits and not indefinitely. By increasing the productive powers of the soil it will be possible to balance the effect of a surplus birth-rate in Germany for a certain period of time, without running any danger of hunger. But we have to face the fact that the general standard of living is rising more quickly than even the birth rate. The requirements of food and clothing are becoming greater from year to year and are out of proportion to those of our ancestors of, let us say, a hundred years ago. It would, therefore, be a mistaken view that every increase in the productive powers of the soil will supply the requisite conditions for an increase in the population. Hitler in Mein Kampf

3. Acquire new territory outside of Europe. The problem with this plan, says Hitler, is that other European countries have already taken the good non-European land. So you would have to attack European countries to get the land:

In the nineteenth century it was no longer possible to acquire such colonies by peaceful means. Therefore any attempt at such a colonial expansion would have meant an enormous military struggle. Consequently it would have been more practical to undertake that military struggle for new territory in Europe rather than to wage war for the acquisition of possessions abroad. Hitler in Mein Kampf

4. Acquire new territory inside Europe. At last, a solution to the imbalance between people and land that Hitler likes! And of course, he doesn’t contemplate buying the land:

Of course people will not voluntarily make that accommodation. At this point the right of self-preservation comes into effect. And when attempts to settle the difficulty in an amicable way are rejected the clenched hand must take by force that which was refused to the open hand of friendship. If in the past our ancestors had based their political decisions on similar pacifist nonsense as our present generation does, we should not possess more than one-third of the national territory that we possess to-day and probably there would be no German nation to worry about its future in Europe. Hitler in Mein Kampf (source)

Of course, you can’t judge people by the company they keep, especially not if it’s involuntary company. One wouldn’t want to commit the error of reductio ad hitlerum or fall into the trap of Godwin’s Law. It’s not because a stupid or despicable person happens to believe something that it’s necessarily wrong and that other people should feel the need to reject their beliefs simply because they are shared by someone like Hitler (I am and will continue to be a vegetarian for instance).

However, I think it should at least worry those who talk about overpopulation that they share the same concerns with a genocidal fool who was genocidal precisely because of those concerns. Maybe there is some kind of link between those concerns and genocide. Also, it should worry them that genocidal war for Lebensraum is only the most unlikely perverse effect of concerns about overpopulation. Look for example at the effects of the one-child policy in China on gender balances (something which has been called a kind of genocide, not without reason).

Jonathan Swift

As a throwaway, a satirical quote from Jonathan Swift’s 1729 work “A Modest Proposal“, suggesting feeding the children of poor Roman Catholic families to wealthy Protestant landowners to deal with Ireland’s unsustainable population growth:

I have been assured by a very knowing American of my acquaintance in London, that a young healthy child well nursed is at a year old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled.

More on overpopulation is here.

The Environment and Human Rights (3): Water and Human Rights

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Following up from this post, some more information on the water crisis in the world and its implications for human rights. We obviously need water to survive, and no human rights without survival. Inadequate water supplies also cause diseases, violating our right to health. We need water – and clean water - to drink, but also to eat. Or rather, to produce our food. And we need a lot. People drink on average just a few liters a day, but they consume thousands of liters a day if we count the water required to produce their food. And evidently we should count it. Many areas of the world face already now face water shortages (there’s a map here). A fifth of the world’s population already lives in areas short of water. A global water crisis waits around the corner, and one likely consequence is famine, another human rights violation.

If we want to do something about the water crisis, we should be aware of the effect of food production on water shortages. Especially the production of meat requires huge amounts of water, compared to the production of grains or even rice. People in the West eat a lot a meat, and therefore contribute substantially to water shortages. As incomes in the developing world increase, people there will consume more meat. Hence, global water consumption will also increase. Combine this future increase with the fact that there are already shortages and that these shortages will get worse with global warming, desertification etc., and you get a real crisis.

What are the solutions? Or how can we prevent things from getting worse?

• Jokingly we could ask people to become vegetarians. That would also be better for greenhouse gas emissions, by the way.
• More seriously, and more realistically: food production, and especially agriculture and farming, represent 70% of global water consumption. That number could be cut down significantly with better irrigation; “more crop per drop”. There’s incredible waste going on there. 70% of irrigation water is lost in the process. One reason: farmers rarely pay their water bills at market prices, hence no incentives to cut waste. Unfortunately, pricing water at market prices would drive up food prices, pushing many consumers into poverty. And many poor farmers already can’t pay for expensive irrigation systems. More expensive water surely wouldn’t help them. Moreover, market prices may mean the privatization of water, and that’s dangerous. You might as well privatize oxygen.
• Other solutions: cut waste in households and industries. Here, everyone can help. Also more recycling efforts are needed. Desalination, although expensive, is an option. As are better water storage facilities, especially for poor families in developing countries. All these efforts will not only reduce the risk of a major global water crisis, but will also improve crop yields, thereby reducing the price of food and hence the risk of poverty and famine.

Human Rights Facts (40): The Recession and Global Poverty, Ctd.

A photograph taken during the famine of 1876-1878 in Tamil Nadu, south India during which an estimated 3.5 to 4 million people died, representing possibly as much as one eighth of the rural population. A starving farmer with his young child look at the dying animal in front of them which the original photographic caption describes as "the last of the herd". © Royal Geographical Society, photographer: W.W. Hooper

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Some more information on the impact of the current recession on global poverty (picking up where this previous post left off). By the way, if you want to know why I believe this is a human rights issue, look here.

From The Economist:

New research by the United Nations’ standing committee on nutrition gives a first estimate of how the crisis has hurt the group of people most affected by the crash: the very poorest.

In 1990-2007, the number of hungry people rose by about 80m, though this was, by and large, a period of rising incomes in developing countries (and a huge increase in population). In 2008 alone, the number rose a further 40m, to 963m – half as much in one year as during the previous 17. In other words, lots more children and pregnant women are not getting the food they need. The report reckons that the number of underweight children will rise from 121m to 125m by 2010, assuming no change in the size of the world economy (in fact, it is expected to shrink 2% this year). The World Bank has already estimated that until 2015 the crisis will lead to between 200,000 and 400,000 more children dying every year.

The poorest face two crises: the world recession and the resumption of food-price rises. Food prices had been falling but even then, the global price fall did not translate into a comparable decline on local markets in most poor countries, so the poor did not benefit much. World prices bottomed out in December 2008 and have since risen 26%. In the poorest countries, a rise of 50% in the price of staples pushes up the family food budget from 50% to 60% of household income.

The Causes of Poverty (18): Amartya Sen, Famines, and Democracy

Amartya Sen

(source, photo by Mary Lee/Harvard News Office)

Famines are easy to prevent if there is a serious effort to do so, and a democratic government, facing elections and criticisms from opposition parties and independent newspapers, cannot help but make such an effort. Not surprisingly, while India continued to have famines under British rule right up to independence … they disappeared suddenly with the establishment of a multiparty democracy and a free press. … a free press and an active political opposition constitute the best early-warning system a country threaten by famines can have. Amartya Sen

victims of a famine in India

Amartya Sen argues that democracy (which is a subset of human rights) is the best way to avoid famines. Of course, a well-functioning democracy is not a sufficient condition for the absence of famines. Other mechanisms also contribute to famine prevention, so it’s not impossible to see famines in democracies.

What is a famine?

G. B. Masefield states:

On balance it seems clear that any satisfactory definition of famine must provide that the food shortage is either widespread or extreme, if not both, and that the degree of extremity is best measured by human mortality from starvation. (source)

A famine occurs when there is a sudden collapse of the level of food availability and consumption (measured in terms of calorie intake). Sen’s argument is that a focus on lack of availability isn’t enough. Actual consumption is what counts. And consumption can drop when availability doesn’t (this was the case in the Bengal famine of 1943 for instance). Famines occur not only from a lack of food, caused by drought, crop failures or floods, but also from a lack of information. Rumors of a famine, even false rumors, are often enough for people to start hoarding and panic buying, which pushes up the price of goods, and which makes it impossible for poor people to get enough food. As a result, they may starve in the midst of abundance. A war may have the same effect or make it worse. And so can ineffective food distribution mechanisms.

Inequality

An important point about famines is therefore inequality:

While Famines involve fairly widespread acute starvation, there is no reason to think that it will affect all groups in the famine-affected nation. Indeed, it is by no means clear that there has ever occurred a famine in which all groups in a country have suffered from starvation, since different groups typically do have very different commanding powers over food, and an over-all shortage brings out the contrasting powers in stark clarity. Amartya Sen (source)

Information

Free information can counter these risks. It can debunk myths and rumors about food availability. It can inform accountable governments of certain risks and force them to act in order to remedy the food distribution, to impose price controls etc.

Price controls, however, are a risky business. Higher food prices may lead to a larger volume of food production because food producers will be encouraged to produce. Hence, higher prices may increase the overall availability of food and reduce the risk of famine. However, as we have seen, availability is not enough to stop famines. Distribution and equality of availability is just as important, and higher prices may result in very unequal availability and may put poor people at risk. But then, again, these poor people may find a better paying job in food production if food prices are higher… This is all very complicated indeed. For some light on the matter, look here.

More on famine here.

The Causes of Poverty (2): Bio-Fuels?

Three very similar cartoons about bio-fuels and food prices:

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Very funny, but it’s a bit simplistic to blame the food shortages around the world on the increase in food prices “fueled” by the use of raw food materials for petrol alternatives. First of all, the rising costs of food transportation due to rising energy costs also plays a part. Just as the increasing demand for food from emerging markets, and bad harvest in particular places at particular times.

But more importantly, many of the poorest countries in the world buy only a very small percentages of their food from the international markets and hence do not feel the immediate effects of the rising food prices. The bulk of their food comes from national markets, and often these markets are managed poorly, suffer from natural disasters and drought, and are obstructed by the policies of local dictatorships (e.g. Zimbabwe where many of the problems are the direct effect of the misguided policies of the government) or failed states.