Institute Notes: A Dialogue on Overcoming Hunger and Poverty

Progress in Africa

There are a couple of stories this week that serve as a reminder that progress can be made under challenging circumstances--Time and CNN report that many African countries are experiencing strong economic growth and steady improvements in governance. Good news is indeed a rare commodity these days but I'll take it! The financial crisis is taking up much of the oxygen and understandably so. But as my colleagues Eric Munoz and Charles Uphaus have noted in recent blog posts that developing countries are especially at risk in this crisis, both in terms of access to the financial resources needed for development and because of the impact of slower growth in rich countries on exports from developing countries. An unintended consequence of this financial crisis, coming on the heels of a surge in food and fuel prices, may be a growing setback in the progress against poverty that we have seen in recent years. It is absolutely clear that if the global community doesn't step in, the gains we have made will be lost.

Not All Economies Are Gloom and Doom

Burgeoning Economies, By the Numbers

2%:  an optimistic economy growth rate this year
6%:  the average in Africa

$39,000,000,000: foreign investment to Africa

18: stock exchanges in Africa, up from 5.

15%: annual return rates since 2000 for the African stock exchanges
144%: record year return rate

$230,000,000: invested in Rwanda’s tourism sector from Dubai World

63,000: new jobs created in Uganda by the private sector
30%: of population in Uganda living on less than $1 day
50%: decrease in those living in extreme poverty in Uganda in the last decade

300,000,000:  Africans considered a new segment of sub-Saharan Africa, “upwardly mobile, low-to middle-income consumers”

18:  Target-style superstore, Nakumatt, chains being built in sub-Saharan Africa
$350,000,000: Nakumatt’s annual sales for this year
$1,000,000,000: expected annual sales in the next decade.

Investors are looking for the “next India” and it seems that they need to look no further than Africa. Two recent Washington Post articles, “Foreign Investors Recognize Allure of Sub-Saharan Africa” and “In Africa, a New Middle-Income Consumerism” by Stephanie McCrummen highlight an emergence of foreign investment and individual financial gains in Africa.

A quick news round up

There are a few articles that I think are worth calling attention to:

There are signs that farmers in India, China, Australia and other parts of the world are beginning to respond to higher food prices by planting more food crops. This will certainly ease pressures on the record high prices that we have seen in the last 18 month--but particularly in the last six months. This is good news for consumers. The story suggests that rice and grain prices have not come down as much as wheat and soybean. A WSJ article and reports from the World Bank and USDA suggest that while prices have and will continue to decline in coming months as a result of a supply response, it is unlikely that they will go down to pre 2004 levels, when they were quite low. Grain prices in particular will remain high because of the ethanol mandates and subsidies in the US that are diverting corn and land away from food and feed production. For people living in extreme poverty and hunger, an easing of food prices may be of some comfort but they are still very vulnerable to even the slightest fluctuations and will continue to face enormous challenges feeding their families. They need the skills, tools and physical strength to lift themselves out of poverty once and for all and that is where development assistance, trading opportunities, and good governance come in.

This morning's New York Times has a piece by Roger Cohen about Ghana--the kind of story you don't see much in our media about Africa or anywhere in the developing world quite frankly. But many developing countries are making progress, leap frogging technologies, facing up to challenges and there is an energy and intensity about the changes that is quite enticing. Of course there are a great many challenges, far too many people (862 million) go to bed hungry but as Cohen acknowledges, very few of these type of stories make the papers.

Development at Work

After half an hour of hard driving down a rutted dirt-track road, we arrived at the Arrata Churfa Small Scale Irrigation program in the Ethiopian countryside.  More than 300 farming families are finding improved agricultural productivity as a result of improved irrigation supported through the combined support of the Governments of Ethiopia and Japan and the International Fund for Agricultural Development.

The program channels the flow from a small stream to irrigate 100 hectares of land. A simple engineering project, the irrigation scheme is a major feat for the small farmers who live in this area and have seen the productivity of their land increase substantially since the program’s inception in 1993.

Barreling down the dirt road to Arrata Churfa I was struck by two things.

Rising in Food Prices: Ethiopia’s Response

It is unfortunate that an already food insecure country like Ethiopia now has to cope with the sudden hike in food prices. As I indicated in a previous post, Ethiopians were feeling the price increase for a long time. As long as I can remember, it has been a common household conversation. If my middle class family complains about this price increase, how can those living on urban slums - whose income to feed themselves and their family depends on selling tissues or other commodities for a few cents - survive the current price increase. This concern is also shared by WFP Executive Director Josette Sheeran. She indicated that “the price hike witnessed in Ethiopia has also been challenging urban dwellers all over the world”.

In a recent report, the World Bank noted that governments may pursue any different strategies to address higher food prices. The following chart survey’s some of the policy choices governments have made in response to the crisis. It shows that many countries taken in this sample have reduced taxes, instituted price controls and provided consumer subsidies. Some of these approaches address prices directly, but a more appropriate response may be to increase the purchasing power of the poor through, for example, targeted safety nets or cash transfer programs like those currently used in Brazil, China, Ethiopia, Egypt, Indonesia, Mexico, Mozambique, South Africa, Sri Lanka, and Tunisia.

World Scientists’ New Proposal to Feed the Poor

The International Assessment of Agricultural Science and Technology for Development (IAASTD) launched their report, April 15. Four hundred experts on agriculture and development worked on the report which outlines ways in which “agriculture can feed a world with an exploding population and a changing climate, while reducing poverty and environmental degradation”

The report is a result of a four year assessment involving scientists from more than 100 countries. It engaged non-governmental organizations, consumer groups and the private sector. The central question of IAASTD is core to what Bread for the World’s mission. The report is extensive (it is more than 2000 pages) and looks at the potential of agricultural knowledge and science and technology to reduce hunger and poverty, improve rural livelihoods, and achieve environmentally, socially and economically sustainable development in poor countries.

The report’s release coincides with heightened concern over rising world food prices and the IAASTD report responds to this growing concern by arguing that global farming needs to change radically to avoid future food shortages.

The report advances several important arguments. Among them:

• In the past agricultural science has emphasized increasing agricultural production at the expense of environmental, social or economic sustainability.
• Trade liberalization in agriculture has not benefited all countries that have opened their markets. This is because some developing countries which have liberalized agricultural trade have not made improvements in basic infrastructure and institutions that are necessary to relieve hunger and poverty, and improve and protect the environment. And;
• Agricultural research and development efforts have focused on only a handful of crops without advancing knowledge or improvements in other staples foods, some of which are important to Africa, for instance tef in Ethiopia. In advancing agricultural science in similar countries, the IAASTD report acknowledges that “Genetic erosion is of particular concern in sub-Saharan Africa because many countries have a wide range of crops and livestock species that are considered relatively unimportant on a global level but are important as local staples.

The report also stresses that “we have little time to lose if we are to change course. Continuing with current trends would exhaust our resources and put our children’s future in jeopardy.”

The Real Cost of Rising Food Prices

Liberian Finance Minister Antoinette Sayeh, likely in town for the  IMF/World Bank Spring Meetings, spoke to an audience this morning in a presentation hosted by the Center for Global Development entitled Liberia on the Move: Economic Growth, Debt Relief and Poverty Reduction. The Spring Meetings are themselves interesting as the current economic moment is one of deep uncertainty and volatility. One of the key concerns at the Bank and for countries around the world is the steep rise in food prices experienced over the past year (and dramatically over the past six months). World Bank President Robert Zoellick provided an interview this morning on NPR’s All Things Considered. It’s worth a listen (even if I think the biofuels aspect is somewhat overemphasized), and the Recent Bank report on rising food prices is also worth reading.

On the broader issue of what to do about rising food prices, I think the policy interventions recommended by Joachim Von Braun of the International Food Policy Research Institute are spot on. Recognizing that the price increase is largely structural and will not likely reverse course in the short term Von Braun recommends the following:

David Beckmann talks hunger on Bill Moyers Journal

Bread for the World Institute President David Beckmann was a guest on Bill Moyers Journal last Friday. David was asked to view and respond to an excellent short documentary on food distribution and relief and recovery operations in the Democratic Republic of the Congo. The whole piece provides gripping images of life in the war torn country, and focuses much of its attention on a food distribution program operated by Concern Worldwide. The food program is critical component of humanitarian activities taking part in the country. Currently an estimated 45,000 people are dying each month from hunger and disease. A staggering 70 percent of the population is undernourished, making the DRC one of the most severe hunger hotspots in the world.

David's noted that the affects of hunger in that country are going to create lasting scars in terms of educational attainment, health and human productivity, and economic growth. This last point cannot be emphasized strongly enough. Paul Collier has made the calculation that slow growth increases the likelihood of war (and correspondingly, in his book The Bottom Billion, that "each percentage point added to the growth rate knows off a percentage point" from the risk of war). And since countries emerging from conflict already have a high likelihood of falling back into war, the problem of hunger and its impact on economic growth is all the more critical if the DRC is to exit conflict permanently.

A Modest Proposal

The Cato Institute today hosted a seminar on the provocative topic: “Let Failing African Governments Collapse: A Radical Solution to Underdevelopment.” The main speaker, Ed Luttwak, from the Center for International and Strategic Studies, took the position that the state of governance in most African countries is analogous to the state of the economy: the part of the economy that “works” – is dynamic, growing – is the informal sector; the “modern” economy of factories (many government-owned), marketing boards and crony capitalism is going nowhere and, in many cases, is a net drain on the economy. So with governments: The modern state provides little or nothing in the way of services and is, in fact, parasitic. The hope for improved governance lies in the informal sector of traditional structures and local governments. When the colonial powers left Africa, they left in place a state, but with no distinction between the state and the government, i.e., the “superstructure” of laws, institutions and moral suasion that prevents a minister from treating the public purse as his or her own. His thesis is that with the collapse of post-colonial states, something more indigenous, suitable to African conditions would emerge.

Is GM the Answer?

The debate to feed the world hungry through increased production using genetically modified (GM) crops is back. At one point in the past, GM crops were seen as a crucial way to reduce poverty and hunger. But these days there is more controversy over their safety and environmental impacts.

In a great resource on increasing food prices, The Financial Times asks two very important and timely questions:

1) “Are GM crops the answer to the challenge farmers and consumers face as changing weather patterns disrupt agricultural production;” and

2) “Do GM seeds increase crop yield as demand raises?”

Here are the answers from two opposing groups on the prospects and problems of GM crops. A recent report from International Service Acquisition of Agro-Biotech Applications (ISAAA’s) indicated that GM crop in the world will double by 2015.  ISAAA’s “mission is to contribute to poverty alleviation, by increasing crop productivity and income generation, particularly for resource-poor farmers, and to bring about a safer environment and more sustainable agricultural development”. Their report also highlights overall agricultural use in the world have shown a tremendous increase in the past 10 years.