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This article was published 21/7/2015 (1518 days ago), so information in it may no longer be current.
The experience of the last four decades has made it clear there are two important economic pillars of globalization in this neo-liberal era. The first is austerity — fiscal and monetary contraction at all times, except when it induces crisis. Then, enormous stimulus packages are handed over to corporations. The second is the removal of all barriers to trade between nations.
These two policies combined, have played havoc with employment and with food security. While the employment aspects are quite well known, the seriousness of the food security question has not been adequately appreciated.
Global grain output per capita declined from the early 1980s for the next quarter-century. This long-term supply trend, completely ignored by the economics profession, played an important part in the eruption of the food price crisis from 2008. The food security picture in developing countries in particular, including those with high GDP growth rates such as India and China is far less rosy than is commonly depicted.
First, some history. Barriers to free trade had been put by developing countries trying to delink from the earlier colonial pattern of specialization imposed on them under which they had to devote more and more of their limited land and resources to export crops.
This meant a fall in food grain consumption for their own people. The industrially developing countries in cold temperate regions wanted this shift, along with increased imports from the tropical countries, because for climatic reasons they could never produce for themselves all the foodstuffs and raw materials they needed. The colonizing countries which had direct political control over the tropical world were very successful in their objective.
In India, for example, during the half-century before independence in 1947, the export crops grew 10 times faster than food grains and per capita grain availability fell by a whopping 50 kilograms. Since grain provided three-quarters of the calories as well as the protein intake of the average rural person even as late as 2005, the nutritional decline was huge. Similarly, Java, under the Netherlands during the same period, saw booming sugarcane and rubber exports while rice availability per capita fell by a quarter. Korea, colonized by food-deficient Japan, had half its rice output going to exports and a large fall in nutritional standard of its population.
Initially after independence, by spending on irrigation and on research for raising yields, developing countries did succeed in reversing the decline. By 1990, with four decades of effort, India raised per head grain availability by 30 kg, ameliorating somewhat the earlier decline. Similar trends were seen in other countries.
All this came to an end with neo-liberal economic reforms starting in the late 1970s in Latin America and Africa, reaching Asia a decade later. The state everywhere was put under pressure from international financial and trade institutions and as a result cut back drastically on development spending while removing barriers to free trade.
As a result, there was a compression of mass purchasing capacity which reduced internal grain demand which supported the large-scale area diversion to export crops. Since yield rise was not possible under the regime of falling spending on irrigation and research, per capita food grain output declined. Sub-Saharan Africa saw a drastic fall in per capita grain and tubers output within a decade, and by 2005 India had diverted eight million hectares of grain land to export crops. It lost all its food security gains, slipping back to the era of the 1950s.
Most of the global fall in per head grain output is due to the fall in developing countries which have not been compensated by the rise in advanced countries. A serious misconception is that with rising income, people diversify away from grains and towards animal products (milk, eggs, meat and so on) so there is nothing to be worried about.
On the contrary. The more diets are diversified towards animal products, the higher the demand for grain. With rising income, a much larger volume of grain is used for animal feed.
There was no unusual inflation before 2008 only because mass-purchasing power was getting compressed by austerity measures, but inflation was finally triggered by large-scale conversion of grain to ethanol especially by the U.S. which reduced global market supplies and led to food riots in 37 countries. Speculation then kicked in to further produce high volatility in food prices which affect the poor adversely.
The solution lies in reversing the misguided policies which have produced these outcomes. Raise employment and mass demand through sensible methods of public spending and at the same time ensure that output growth keeps pace with demand.
Utsa Patnaik is professor emeritus at Jawaharlal Nehru University in New Delhi, India. She was recently on Winnipeg for the Geopolitical Economy Research Group's summer academy on food security and sovereignty.