Recent falling food prices are not here to stay, according to Jane Harrigan, Professor of Economics and Food Studies Centre member at the School of Oriental and African Studies.
Speaking to guests at a recent forum on food security, Harrigan said that the fundamental reasons for food price hikes in 2007-08 and again in 2010-11 will not change for some time on the back of protracted and historically low food prices, she added.
“There is a new global context for food security,” she told guests at the event organised by New Silk Road Forum in association with Ashurst, the law firm, and the Royal United Services Institute on Tuesday.
Price shocks, caused by poor harvests resulting from climate change, for example, will create volatility and could push major food producing countries to embargo exports, according to Harrigan.
“The effects of shocks on net food importers, which include malnutrition, poverty, political unrest, increased domestic inflation and fiscal pressure, are not sustainable,” she said. “So in reappraising their approach to food security, food importing countries want to increase their control of food supplies even if it’s against the economic forces of demand and supply.”
The Food and Agriculture Organisation’s Food Price Index fell 1.8 points in February, to 14 percent below the February 2014 level. Prices of cereals, meat and sugar contributed the most to the dip, while dairy rebounded.
The Middle East and North Africa region is one of the most food-insecure in the world and heavily reliant on imports. Countries in this region are attempting to produce more food domestically and there are some initiatives appearing that involve protected cultivation through greenhouse technology and aquaponics, and solar-powered desalinisation plants.
Qatar’s National Food Security Programme, established in 2013, aims to bring the country as close as possible to self-sufficiency by 2023, for example.
More commonly, Gulf States have been buying or leasing farmland abroad and between 2006 and 2010 some 20 million hectares of farmland in developing countries was targeted by overseas buyers, according to Harrigan. Saudi Arabia is targeting 100,000 hectares of foreign farmland, she added.
But overseas land acquisitions create several problems for both the host country and the investor country, she argued.
Lack of transparency, labour abuses, threats to the food security of the host country, loss of land by locals, environmental issues, national conflicts over water, domestic farm lobby opposition, weak institutions that can’t protect local people, weather risk and political instability are among the risks Harrigan mentioned.
“Land acquisitions have led to displacement [of local people] and there have been uprisings in Indonesia and Kenya so investors really do need to address these issues. This makes due diligence by the investor country essential,” she said. “If investor countries invest into local infrastructure projects or people and enter into joint ventures with local farming populations, they might avoid some of the negativity around land grabbing.”
Some agriculture investment managers were skeptical that those measures would stop a host country from banning exports when the time came, however.
Agreements where an investor country is guaranteed a certain amount of produce each year should also be avoided because it puts the host country at risk, added Harrigan.