Sophia Murphy, guest blogger
Part of the Triple Crisis Spotlight G-20 series.
This critique of the G-20’s new interagency report on smallholder productivity appears in Spanish in the newsletter Puentes
When the Heads of State of the G20 countries meet in Los Cabos, Mexico on June 18-19, they will have plenty to discuss – not least, the fragile global economy and the instability of international finance. Food security is on their agenda as well. Yet after the intense focus on agriculture and food security under the leadership of France, both ahead of and during its time as host of the G20 in 2011, this year’s efforts are low-key.
The host government, Mexico, is preoccupied with national elections in July. The President chose to advance the Heads of State summit to mid-June, ahead of the election, rather than wait for later in the year, when G20 summits are more normally held. The change of program has left the different working groups without much time to do their work. Mexico also chose a much narrower set of issues for the Agricultural Ministers’ contribution this year: agricultural productivity growth, with a linked focus on small family farms.
The more ambitious agricultural agenda for 2011 did not produce particularly satisfactory results. Faced with the broad question of food price volatility in agricultural markets, and in particular the need to make difficult changes to domestic policy in areas such as biofuels, the G20 governments found it difficult to agree on much of anything, even trade liberalization. The two main outcomes of the Agricultural Ministers summit in 2011 were the establishment of a new mechanism to coordinate and publish information on the supply of different agricultural commodities, called the Agricultural Market Information System or AMIS, which is housed at FAO; and, a feasibility study and pilot project to test the possibility of a regionally-based humanitarian food reserve, an initiative nursed into life by the World Food Programme and now housed with ECOWAS in West Africa with the name PREPARE.
What does the interagency report say?
As it did last year, the G20 called on the UN and Bretton Woods agencies to write a research report with recommendations for action as part of its preparations. As in 2011, ten or so multilateral agencies were involved in creating the resulting report. Last year’s interagency report, on food price volatility, was considerably more ambitious than the final outcomes from the G20 summit might suggest. The interagency recommendations included a call to end biofuels subsidies and mandates and another to increase transparency in agricultural commodity futures markets. But it proved too difficult for the governments to agree on all but a very few of the proposed actions.
This year’s interagency report on agriculture tackles a much smaller agenda. The report considers the problem of agricultural productivity growth, looking at it as both a problem because existing technology approaches have slowly stopped delivering their fantastic levels of growth, and because there is such a pronounced gap between agricultural productivity levels in industrialized countries and elsewhere, and between small and larger farms.
There are ten recommendations in the report. They are: to invest in agricultural productivity growth at home (recommendation 1) and internationally (rec. 4); to strengthen disciplines on import and export restrictions (rec. 2), an agenda that seems as likely to be stuck this year as it was last; implementation of various frameworks for foreign investment in agriculture, with a view to attracting increased FDI (rec. 3); the establishment and enforcement of strong, TRIPS-based, IP systems and internationally shared databanks of information on plant and animal genetic resources (rec. 5); improved efficiency, use and governance of water in agriculture (rec. 6); and, the introduction of “market–smart” input subsidy programs (rec. 7). The tone of the recommendation captures the economists’ fear that once created, input subsidy programs are very successful at increasing production but are very difficult to disband when the original need is gone.
The last three recommendations are: to create “market-based” risk management tools, eg. weather insurance (rec. 8); to ensure well funded safety nets that focus on small-scale producers and youth, meeting immediate needs but also supporting the adoption of new technologies (rec. 9); and, finally, to fund agricultural education, and to recognize the importance of women in agriculture, captured, for example, in the new Women’s Empowerment in Agriculture Index (rec. 10).
Overall, the interagency report is about supply, considered by and large from the global level, with no discussion of how people access food. The tragic irony for many G20 countries is that hunger co-exists with gross levels of malnutrition within their borders. In Brazil, for example, the world’s fourth largest food exporter has a population of some 66 million people (roughly 30 percent of the population) who face food insecurity every day, of which 12 million face severe hunger.
The most basic assessment of hunger, of course, must include not just supply questions, but distribution and access. This is especially vital if the G20 is truly interested in small-scale family farms. Many of these farmers, and the workers on their farms, are net food consumers. At certain times of year, they must buy food for their households. Raising productivity is of course important for these farmers, but it is not a problem that can be tackled in isolation from the other problems they face with storage, processing and marketing, let alone their lack of political and market power, which are fundamental to understanding their situation and to any policy attempt to change their condition. The report does discuss some of these issues, including post-harvest losses, but never the lack of political voice or deeply asymmetrical market power in agricultural commodity markets.
Nor does the report consider the nature of demand in agricultural markets. The report somehow implies that existing demand will continue, and grow, and must be met – when in fact there are powerful environmental, human health and economic reasons to challenge current trends in global agriculture. The world has as many obese as hungry people. It’s like a discussion of energy shortages that never considers whether existing demands make sense – it is impossible to make good policy decisions on such a basis.
The interagency report gives a relatively detailed account of the environmental challenges facing agriculture, including natural resource limits, pollution, inefficiency and waste. Yet the report does not discuss these problems explicitly as they concern the industrial agricultural systems that dominate output in G20 countries. Instead, the report focuses on other countries, mostly giving examples from non-G20 members.
The environmental problems confronting agriculture seem in the report to only concern poorer countries and small-scale production systems. Adaptation to climate change for small-scale producers is emphasised as a priority, which is important and still not adequately addressed in the UNFCC discussions. But there is no mention of how the G20 – the world’s biggest greenhouse gas emitters – must change their agricultural practices to mitigate their own emissions.
The role of private investment
The treatment of the private sector is somewhat puzzling. Since 2008, private investors, together with a few state-owned companies have moved into acquiring and leasing land in some of the world’s poorest countries on a massive scale. The land is operated to grow crops for export. As critics of these trends note, the challenge for the host governments is not how to attract investment but rather how to regulate it. It is very hard to find examples where land investment deals are not to the detriment of the local communities where the land is located.
The interagency report notes the importance of both PRAI (principles for responsible agricultural investment) and the UN’s Voluntary Guidelines, as steps towards better regulation. These are two separate multilateral efforts to create at least voluntary standards to guide both donors and recipients in how they handle contracts involving land and other investments in agriculture. Yet the rest of the discussion on investment is focused on how to increase it, with no discussion of the possible risks nor the kinds of return that host governments, and communities, might want to insist upon to ensure long-term and sustainable outcomes.
For example, the report cites references for both positive and less positive experiences of private investment and public-private partnerships. But there is no explicit discussion of the kinds of regulation that could better protect agricultural workers and farmers in their contracts with foreign investors, nor any discussion of what kind of taxation policy might ensure that local communities benefit from the investments by being able to capture a reasonable share of the profits.
More generally, as the interagency report notes, private sector interest in agriculture tends to be on higher-end products and on marketing, neither of which offers much to small-scale farms in particular. The report notes that less than one percent of all FDI world wide goes to food, beverages and tobacco (US$87 billion out of a total of US$1.2 trillion), and that a much smaller share still (US$5 billion) is invested in primary agriculture.
Demands from the private sector, such as their insistence on strong intellectual property (IP) legislation and enforcement, are given significant space in the report. The report is silent, however, on the failings of that IP system to serve the public interest. The failures of TRIPS, for example, have been widely explored by ICTSD and others, and ought to be discussed in a report on productivity and technology.
Similarly, the benign view of genetic engineering in the report belies the prohibitive costs small-scale producers face in accessing the technologies and the long history of the private sector’s failure to successfully shape the technology to fit small-scale producer priorities. There is not a single mention of the 4-year long, interagency and inter-governmental process that produced the IAASD reports in 2008, although so much of that content is pertinent to a report on agricultural productivity and technology.
Final remarks
It is not yet public what G20 governments will agree to say about agriculture when they meet in Mexico. This year’s interagency report offers them some politically safe ideas to choose from, some of them useful. Disappointingly, however, the report confirms that the G20 is pulling back from any of the structural challenges that confront the international agricultural economy today.
The G20 comprises, among other things, the agricultural powerhouses of international markets. Together, they could make changes that would be truly significant for small-scale producers everywhere. Instead, they seem to be narrowing their look at agriculture to focus on “them” (low-income countries – who, by definition, are not G20 members) and thereby replicating what other UN and donor forums can do much better than the G20.
Perhaps Russia, G20 host in 2013, can steer the group back to what should be the group’s core business in agriculture: sorting out their own problems first, especially those that distort markets for everyone else.
Sophia Murphy is a senior advisor at the Institute for Agriculture and Trade Policy and the coauthor, with Timothy A. Wise, of the report, “Resolving the Food Crisis.”
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very nice piece. thanks.