Higher Food Prices Can Help to End Hunger, Malnutrition and Food Waste

In this column, Andrew MacMillan, former director of the Field Operations Division of the U.N. Food and Agriculture Organization (FAO) and joint author with Ignacio Trueba of ‘How to End Hunger in Times of Crises’, counters conventional wisdom – which holds that low food prices are a “good thing” and can reduce hunger – with a call for higher food prices backed by targeted social protection programmes.

ROME, Jun 25 2014 (IPS) – The choice of foods displayed on supermarket shelves can be quite bewildering. This abundance encourages us to take it for granted that we will always be able to buy the food we want at affordable prices.

Any customers who give thought to how and where all the different foods are produced and end up in their shopping trolleys will start to uncover a rather disturbing situation.

They will find that in most countries, people working at all levels in the food system – in supermarkets, in meat processing and packing plants, as fruit harvesters or farm labourers, or as waitresses in fast-food restaurants – are among the worst paid of all workers.

Andrew MacMillan

They will discover that many of the skilled families that run the small-scale farms that produce most of the world’s food live precariously  They are exposed to multiple risks caused by fluctuating markets, pests and diseases and extreme weather problems, whether frosts, hailstorms, floods, typhoons or droughts.

They will also learn that in most developing countries hunger is heavily concentrated in rural areas, where some 70 percent of the world’s 842 million chronically hungry people live, largely dependent on farming, fishing and forestry. Much urban poverty results from people fleeing rural deprivation. And many of the conflicts that threaten global stability have their origins in areas of extreme poverty.

It seems dreadfully wrong that the very people who produce so much of our food should be those who suffer most from deep poverty and food shortages.

One reason for this apparently unjust situation is what economists call asymmetrical relationships in the food chain. For instance, supermarkets engage in cut-throat competition for customers by lowering their prices, reducing what they pay to their suppliers who, in turn, cut back on their workers’ pay.

Most governments like to keep food prices “affordable”, claiming that it makes food accessible to poor families, thereby preventing hunger and malnutrition. The main policy instruments used by rich and emerging nations include tax-funded subsidies that compensate their farmers for low-priced food sales. They also set low taxes on most foods.“It seems dreadfully wrong that the very people who produce so much of our food should be those who suffer most from deep poverty and food shortages”

The idea that low food prices will reduce the scale of the hunger problem is flawed since the main reason for people being hungry is that they cannot afford the food they need, even when prices are low.

Rather than, as now, shielding all consumers from paying a full and fair price for food, it seems to make more sense to let prices rise and increase the food buying power of the poor. As customers have discovered, higher retail prices can be passed back to all those involved in the food production chain, especially farm labourers. They probably offer the best market-driven option for cutting rural poverty and hunger.

But to eliminate hunger quickly, income transfers, targeted on poor families and with their value indexed to food prices, are also needed, at least until countries begin to manage their economies more equitably.

Policies that support low food prices, apart from exacerbating rural hunger, also add momentum to the other big food-related problems now facing the world, including:

The serious mismatch between healthy diets and what people choose to eat as their incomes rise. This is most visible in the rapid rise in over-consumption of food, leading to more than 1.5 billion people being overweight or obese, creating a massive future health burden and huge losses in human productivity. It also shows up in the fast growth in demand for foods with high environmental footprints;