FAO INVESTMENT CENTRE DISCUSSION PAPER, JANUARY 2000
The author of this discussion paper is Andrew MacMillan who, at the time of writing, was Principal Adviser in the FAO Investment Centre. The paper builds on a number of ideas developed in Information Paper No. 7 prepared for the 25th Session of the Committee on World Food Security (31 May-3 June 1999): Investment in Agriculture for Food Security: Situation and Resource Requirements to Reach the World Food Summit Objectives. The paper benefited from comments on earlier drafts by Jacques Vercueil, David Wilcock, Margret Vidar, Ben Watkins, Leslie Lipper, Kostas Stamoulis, Jelle Bruinsma, Barbara Huddleston, Michael Wales, Bo Bengtsson and other FAO staff. The views expressed in the paper are those of the author and imply no commitment on the part of FAO.
Some three years after the World Food Summit (WFS), at which most countries committed themselves to halving the number of undernourished persons by the year 2015, there is little sign that the rhetoric has yet been followed by determined political action, whether at national or international levels, on the rhythm and scale required to achieve this goal. Only 35 countries have set explicit goals for poverty eradication and no countries have yet enacted national legislation to reflect their reaffirmed adherence to the concept of adequate food as a human right.
This paper questions whether, in the search for rapid means of reducing the number of food insecure, governments and the international community are following the right tactics (or can even be sure what is the right route, given the gaps in our understanding about the links between nutrition, poverty reduction and economic development). It also suggests that, to the extent that international funds will be needed to support rapid improvements in poverty reduction and food security especially in Low Income Food Deficit Countries (LIFDCs), there is a need to explore options for developing new transfer mechanisms which are not debt and dependence inducing. Possible ways of constructing such mechanisms are briefly examined.
Food insecurity is the result of poor people being unable to gain access to food by producing it, buying it or being given it. Lasting solutions are, therefore, intimately tied to the reduction of poverty. In many situations, these may involve measures to increase production by small farmers, given the high concentration of poverty in rural areas, but more generally they depend on the improved functioning of the entire economy with growth being combined with policies which favour equity.
When, as now seems to be the case, resources being set aside – whether nationally or internationally - to improve food security are scarce, the chances of achieving the WFS goals by 2015 will almost certainly be raised if greater priority is given in their allocation to funding measures to improve short-term food access vis-ŕ-vis long-term development. Policies which favour more equitable income distribution are an important part of the solution. In line with such policies carefully targeted safety nets involving either food or cash transfers, ideally combined with health and education improvements, can have an immediate impact on reducing numbers of food insecure people. Although not without problems, they have the advantage of being relatively cheap, institutionally less demanding than development programmes and quick to show results in terms of the number of people better fed. In contrast, most types of investment intended to create sustainable improvements in food security through the creation of new productive assets often require substantial financial commitments per beneficiary, are still more prone to institutional failure and misuse, and take a long time to plan and still longer to generate significant food security benefits. If safety nets take the form of asset generating activities (such as paying poor people for labour-intensive infrastructure construction with cash or food-for-work) or direct feeding (especially of young people and when accompanied by nutrition education), they not only have an immediate impact on food security but also create other important streams of benefits for poor people. Moreover, it would seem to be self-evident that in countries in which a large proportion of the population is unhealthy and under-fed, assuring that as many people as possible are well fed in the short-term is not only a humanitarian imperative but also makes good economic sense. To the extent that the major share of responsibility for ensuring equitable food access can be assumed by communities, especially through reinforcing traditional coping mechanisms, fiscal costs to be borne by central government can be kept low and dependencies minimized.
The adoption of a human rights approach to food security, apart from its inherent moral worth, could provide an assurance that, when resources are limited, governments and civil society in general, faced with a self-imposed obligation, continue to set aside the minimum allocations needed to ensure that people remain adequately fed.
For the attainment of significant lasting gains, however, developmental and safety net approaches to addressing poverty and food insecurity must go hand-in-hand within a pro-poor policy environment. As income-earning opportunities rise as a result of economic growth accompanied by measures which lead to a more equitable sharing of benefits, the need for safety nets will diminish. The problem is that for most countries, especially the LIFDCs, this twin-track approach is likely to be unaffordable. This implies a need for greater access to external resources.
Expanded lending by the international financing institutions is one option for filling the resource gap but not an attractive one, given the risk of increasing dependencies and indebtedness just when the world is coming to grips with the goal of reducing it. Indeed, if the poorest countries were again to embark on the use of loans to meet a large proportion of the costs of a major assault on poverty, the requirements would probably quickly exceed their borrowing capacity. It is, therefore, hardly surprising that few developing country finance ministers are keen to borrow funds for poverty alleviation programmes. Yet, at the moment, the multilateral financing institutions, while they give increasingly high priority to poverty reduction, only have lending instruments at their disposal for funding such programmes, and the amounts available for commitment are small in relation to needs.
The recent development of several new international mechanisms for funding environmental actions through grants, however, has set encouraging precedents that might possibly be emulated for food security and poverty reduction. Of particular relevance are Debt-for-Nature Swaps, the Clean Development Mechanism (CDM) for carbon trading and the Global Environment Facility (GEF). As is the case of the environmental concerns addressed by these mechanisms, large-scale poverty and food insecurity are problems of global significance even if the transboundary effects may be less evident. Indeed it was explicitly acknowledged in the Rome Declaration of the WFS, that the "right of everyone to have access to safe and nutritious food" needed to be addressed in a global context through collaborative action between countries, poor and rich. The chances, however, of developed countries being persuaded to set aside increased resources to tackle problems of food insecurity and poverty will be greatest if potential recipient countries demonstrate that they are doing all within their own power to address the situation. Donors can be expected to attach conditionalities, relating to the extent of visible commitment to pro-poor policies, governance standards and possibly subscription to human rights legislation, in agreeing to consider new mechanisms for grant funding.
In the short-term there would appear to be good opportunities for bilateral donors and NGOs to engage in Debt-for-Food Security Swaps, and debt forgiveness beyond the terms of the current Heavily Indebted Poor Countries (HIPC) Initiative. These could cover a greater share of debt and reach out to more countries in which there are high concentrations of poverty and evidence of a determination to address the problem. Saved debt service charges, converted into national currency, would be used to increase the scale of national programmes in support of poverty reduction and food security. Such swaps and forgiveness initiatives, however, can only be a stop-gap measure.
For the longer term, options could be explored for creating a global mechanism, possibly modelled on the CDM, which would oblige countries, both developed and developing, to meet self-imposed but legally binding obligations related to responsible global behaviour or sustainable consumption patterns. Those countries which exceed their entitlements would incur penalties (or buy entitlements), the proceeds of which would be used to support investments in livelihood improvements in economies which are committed to the same code of behaviour but which fail to use their entitlements.
Various ways of financing such a mechanism need to be explored. One approach would be to establish population-related quotas for the use of non-renewable global resources (e.g. fossil fuels or other international traded minerals), which could be traded between profligate users and those using less than their quota. An alternative, more closely related to food security, would be to develop the concept of tradable national food entitlements (based on population and per capita calories consumed) which would have the attraction of establishing a direct link between over- and under-consumption of food. A third option would be devise a mechanism around the concept that restrictions on the international freedom of movement of people represent a case of induced market failure in the globalized economic system, requiring compensatory measures to raise the Socio-Economic Carrying Capacity (SECC) of countries whose citizens are prevented from taking advantage of the global labour market and hence of improving their food security through migration. Finally the concept of a "Tobin Tax" on currency speculation as a means of raising funds for addressing issues of global concern could be revived.
Such mechanisms have the advantage that, once created, they can be administered by existing institutions. Thus the management of funds could be entrusted to the multilateral financing institutions, while organizations such as FAO, WFP or UNEP could be enlisted to jointly monitor compliance with the terms and conditions of reciprocal agreements.
Powerful ethical arguments can be advanced for creating non-dependence inducing transfer systems which expand the flow of resources from developed to developing countries to enable the latter to increase the effectiveness and scale of their programmes to combat food insecurity in the broader context of reducing poverty. The moral outrage which has been so effective in stimulating serious international action on the problems of developing country debt is evidence that there is a powerful constituency in developed countries in favour of a more egalitarian world. But it is undoubtedly also in the self-interest of developed countries to contribute handsomely to improved global food security, in that it would (a) expand global markets, (b) reduce migratory pressures, and (c) cut the high costs of coping with food emergencies, which in some cases may be the consequence of conflicts induced by food shortages and extreme poverty.
The fact that conspicuous wealth and consumption can co-exist with widespread abject poverty, hunger and diminished life expectancy within an increasingly global economic system suggests that there is something fundamentally flawed about the current forms that globalization and, within many developing countries, economic liberalization, have assumed. An international effort is required as a matter of urgency to search for practical strategies and mechanisms through which to harness these processes to ensure that they really benefit those most in need, our fellow beings who do not have enough food to eat for a normal healthy life. Perhaps the solutions are easier than we tend to think, if the will is there to tackle the problem.