On whom do the high food prices put a strain?

On whom do the high food prices put a strain?


“Both high and low food prices result in winners and losers”, says professor Johan Swinnen in an article that was published in the scientific journal Science. He is of the opinion that development-aid organizations aren’t consistent. When food prices are low, they argue the fate of the farmers, when food prices are high, they argue the fate of the poor city dwellers who cannot buy food anymore. What is Vredeseilanden’s view on this? A few comments…

When reading professor Swinnen’s study, you get the impression that we have a binary choice. Either low food prices so city dwellers can feed themselves cheaply, but it decreases the farmers’ income. Or high food prices and higher income for farmers, but higher food prices for city dwellers which cause social upheaval.

This is a false dilemma.

First of all, this line of reasoning skips the fact that the price of a food product is only partly determined by the price received by the farmer. The rest of the pricing can be found elsewhere in the chain: with the processing and distribution industry. There are less analyses available about the size of these margins, but there are signs that these margins have increased.

Secondly, farmers do not automatically benefit from high food prices. Most farmers in developing countries are into survival farming. They can feed their family but they do not produce sufficiently to be able to sell the excess production on the market. If you do not produce it, you cannot sell it at a higher price. Farmer families are net consumers and the increase in prices also puts a strain on them.

Neglected farming

This brings us to the underlying cause: the state of farming in developing countries. Today, we are confronted with the outcome of decades of neglect and the naïve conviction that cheap import food can meet the needs of the crumbling domestic farming market. This caused a downward spiral which we described in the paper De Tijd in January 2011:

"Domestic farming and the rural areas are being neglected. People leave for the cities. There is also barely work in the cities but the people there need food. Food that must come from the rural areas but farming there is paralysed or there is only farming left which is aimed at export. So they import food and/or they ask for food aid. And this must be done in the cheapest possible way or the people will protest. Local farming cannot compete with the imported food and it continues to slip into this downward spiral which results in more people leaving the countryside for the cities.”

As long as the world market is able to provide cheap food, there’s nothing wrong. However this won’t stay the case. There was already a first crisis in 2008. And this is what it is all about. One is not protected against the caprioles of a volatile world market if you don’t have your own farming sector and if you fully have to rely on that world market.

Cost-effective pricing

It’s not about choosing between high or low food prices. There is only one way which opens up possibilities: setting up a solid farming sector. This can only be done by striving for stable, cost-effective prices in the long run. This way, investments are being encouraged and there is a transition from survival farming to productive family farming which in turn rouses the development of other sectors.

The rest needs to focus on a stable, regional food market. Must a region be able to protect its market temporarily? Yes. So be it. Must the government invest more in rural infrastructure? Definitely. So be it. Do farmers need extra support? So be it. And are artificial food prices no longer possible then? So be it. The best way to help people who are too poor to buy food, is to set up a social safety net (allowances, food stamps,…). Not to paralyse your own farming sector.

All parties involved in food production profit from stable, cost-effective pricing. Therefore, farmer’s organisations, food processing companies and distributors are in charge together with governments and consumers to strive for a properly functioning food system.

Swinnen concludes by saying that: “We need a more nuanced debate on how global developments and policies affect food security. All changes cause winners and losers, also among the poor. If the objective is to assist those who are hurt by price changes, this is no excuse for simplistic messages.” We couldn’t agree more. Can NGO’s communicate in a better way about this subject? Undoubtedly. But in the current media context nuancing a 15-second message is as challenging as desalting the North Sea.

Jelle Goossens (communications officer) & Chris Claes (expert in sustainable farming chains)