Global price volatility? I'm more worried about income stability!

MANILA - We have about 1 billion poor people in the farmlands of Africa and Asia, and the latest report on "The State Of Food Insecurity In The World" says the United Nations is worried about global "price volatility" - a euphemism for the prices of food items that soar while the incomes of the poor stay at ground level.

Food prices are no respecters of persons, especially the small. The worry of the UN is found in that 57-page (pdf) joint report of the Food & Agriculture Organization (FAO), International Fund for Agricultural Development (IFAD), and the World Food Programme (WFP) (fao.org). This Food Insecurity document by these UN agencies notes that "high and volatile food prices are likely to continue" (page 11), compounding the problem. To simplify, this is because of a conflict between food and fuel. The report says food demand will grow along with biofuel demand; while the population grows, so does the use of food items to produce biofuels.

Reading the manuscript, I have received an unintended revelation. As a global ISI-achieving Editor in Chief (Philippine Journal of Crop Science, 2001-2008), I note that the Food Insecurity report is well-informed, even erudite, and well-documented, as in fact it has a very long list of references. As an award-winning creative-writing alumnus (UP Los Baños, October 2011), I get the impression that the report is the product of a committee whose members did not agree 100% with each other. It happens to the best!

I mean, I find that there are actually 2 separate sets of major recommendations embedded in separate parts of the report, but neither refers to one or the other, and the 2 sets are neither mentioned nor integrated in the Executive Summary.

On page 4, the UN report says, "We also continue to highlight the importance of the twin track approach - improving both short-term access to food and food production in the medium term - in achieving long-lasting improvements in food security."

On page 42, the UN report says, "The challenge is to find cost-effective ways to reduce (food) waste and losses." This is after pointing out that 1.3 billion tonnes of food go down the drain every year all over the world. The report in fact points to the wasteful countries: "Most of the waste is in developed countries and most of the losses are in developing countries."

So, as I see it, the Food Insecurity report is actually recommending, as basis for government policies, 4 major steps towards long-term food security:

(1) improving access to food, for the hungry and starving
(2) producing more food, for the rest of us
3) reducing food waste, in the First World
(4) minimizing food losses, in the Third World.

The Food Insecurity report doesn't mention it, but I will. Take the case of corn. Corn goes into food for humans and feeds for animals; today, corn is being used to produce bioethanol, and this literally eats on what the bipeds and quadrupeds eat - driving food and feed prices up. Driving the poor crazy.

That is why, for Africa and Asia, I'm worried for us and the poor farmers about food prices that are volatile, trending to stay up! But I'm more worried about the poor farmers' incomes that are stable, trending to stay down! Volatility is not a virtue in economics when you're up; neither is stability when you're down.

I will leave policies to governments. I will leave access to food to the United Nations; I will leave reducing food waste to the United States; and I will leave minimizing food losses to the Asean in Asia and the United States of Africa in Africa. For the world´s poor farmers to produce more food, I will now go to India and visit the Patancheru campus of the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) because I have known for the last 5 years that ICRISAT is focused on the poor farmers of Africa and Asia.

For a little bit of history, my very first essay on the Institute was "The Yankee Dawdle. On Discovery Sorghum, The Great Climate Crop," 04 February 2007, American Chronicle). In that essay, I pointed out that the new & improved ICRISAT variety of sweet sorghum can "make richly productive the poor soils in the rainfall-challenged parts of much of the world, the millions of hectares of wastelands," where you will find the poorest of the poor. With sorghum technology from ICRISAT, Rusni Distillery in India is now producing bioethanol from sweet sorghum, decreasing pressure on corn for bioethanol.

Aside from sweet sorghum, ICRISAT has produced more new & improved varieties of chickpea, peanut, pearl millet, and pigeon pea that have proved to be not only high yielders but also disease- and drought-resistant.

But planting the better varieties guarantees only good yields even in bad soils; it does not guarantee that the poor farmers will rise from poverty, because while they are part of the value chain, they do not share the values added along the way, from production to consumption. The traders knock at the farm gate, pay what they may, and move on, leaving the farmers holding the empty bags with some cash at hand - that is all that they will get.

What if the farmers became their own middlemen? Good idea. Is that possible with poor farmers? Good question. ICRISAT Director General William Dar has a great answer: Producer Marketing Groups (PMGs).

Already, the PMGs in Kenya take care of production, distribution and marketing. They have so far managed to increase local producer prices up to 25% in Nairobi and Mombassa after linking with wholesalers. Thus, the collective actions of PMGs benefit poor farmers. "PMGs are owned and run by the farmers or jointly with private sector partners," William Dar says. The PMGs are an ICRISAT advocacy along with partners such as NGOs, government agencies, and other research institutes. ICRISAT and partners have been supporting PMGs in Kenya since 2003. (For more details, see my earlier essay, "New coffee in Kenya. In Emali, women show who's the better half," 26 February 2009, American Chronicle.)

Enlarging on the model of the PMGs, ICRISAT has come up with a strategy based on the concept of inclusive market-oriented development (IMOD) in its "ICRISAT Strategic Plan to 2020" (see my "ICRISAT's iMODe. The village as minimum development goal," 10 December 2010, American Chronicle). With the IMOD, ICRISAT and partners advocate and assist the poor farmers so that they gain control of the whole production-to-marketing process. They become their own suppliers of inputs, producers, traders, processors, and marketers - or have effective control of the entire value chain so that they get what they deserve of the value added along the chain. The poor farmers' income need to rise, if we follow Abraham Maslow's Hierarchy of Needs, beyond the Physiological (breathing, food, water, sex, sleep, homeostasis, excretion), up to at least the next, the Safety needs (security of body, employment, resources, morality, the family, health, property). And such income must sustain a minimum Safety lifestyle.

Given continuing Climate Change and food price shocks, the stability of the benefits accruing to all poor farmers all throughout the value chain is, to borrow from Shakespeare, a consummation devoutly to be wished.