The Other Global Crisis: Combating the Food and Humanitarian Crisis
Sharma, Shalendra D., International Journal
Nations around the world are currently confronting an unprecedented financial crisis triggered by the collapse of the US subprime mortgage market. Despite extensive support from governments and monetary authorities, the financial meltdown has already taken a heavy toll on the world economy, with more economic hardship predicted for the immediate future. The crisis came at a time when the leading G7 economies were already slowing due to skyrocketing energy and commodity prices. Developing countries, and in particular the least developed, already reeling under sharp hikes in food and fuel prices, now face the daunting prospect of losing hard-won gains in economic development, poverty alleviation, and political stability.
In fact, before the financial crisis hit, many developing countries were in the midst of a wrenching food and fuel crisis. Overall, global food prices had increased by a whopping 83 percent over the 36 months leading up to February 2008. The current financial crisis has only exacerbated the problem. To sound the alarm, the World Bank issued an unprecedented "urgent warning" in April 2008 to the internal community that skyrocketing food prices were threatening recent gains against global hunger and poverty. More ominously, the bank warned of political instability and violence if the problems were not immediately addressed. Indeed, throughout the first six months of 2008, mass rioting over food shortages and spiralling costs occurred regularly in many countries, including Bangladesh, Mexico, Zimbabwe, Egypt, Haiti, Indonesia, Cameroon, Peru, Pakistan, Somalia, Brazil, Guinea, Mauritania, Morocco, Senegal, Uzbekistan, Yemen, and Argentina, among others. In the halls of national governments and organizations like the United Nations and the World Bank, there was palpable concern that the dramatic rise in inflation (driven by high food prices) not only has the potential to dramatically reverse the gains in global poverty reduction, but also to lead to political instability - a recruiting ground for terrorism and criminality. This is because food price inflation is the most regressive of all taxes as it hurts vast sections of the populace, especially the teeming urban poor. Crowded in slums, the urban poor are forced to spend a high proportion of their incomes (anywhere from 70 to 80 percent) on food. This means that sharp price hikes cut viciously into what little they have left for other necessary expenses like healthcare, education for their children, and shelter.
Like the financial crisis, the severity of the food crisis caught governments around the world by surprise. This confusion and unpreparedness was vividly reflected by the former leader of the world's richest and most powerful nation, US President George W. Bush, whose initial reaction was to blame developing countries implicitly for the crisis by noting that when poor countries like India and China prosper, they "start demanding better nutrition and better food.. .and when demand is high, that causes the price to go up." Of course Bush was hardly alone in holding this view, yet it is deeply flawed and carries serious negative policy implications. A more nuanced understanding of the roots of the global food crisis, its broader socioeconomic and political implications - including its linkages with the global financial crisis - and what individual countries and the international community can do to mitigate this serious threat to human security is urgent. The following pages attempt to do just that.
The reality is that the global food crisis has multiple roots. First, it is important to recognize that food shortages do not necessarily imply a sharp drop in available food supplies - at least not worldwide. Rather, the problem has much to do with access and affordability. As Nobel laureate Amartya Sen points out in his classic Poverty and Famines, there has never been an acute shortage of food in India - not even during the infamous famine in Bengal in 1943 in which some 1. …