Two weeks ago I wrote a blog emphasising the need to ‘think small’ as a response to the food crisis. Since then we’ve seen the price of cereals sky-rocketing, the UK holding a ‘Global Hunger Event’ and big business announcing their pleasure in the potential profits that can be made out of such a crisis.
G20 leaders are making it clear they are deeply concerned by the potential of another food crisis in the wake of recent price hikes. They had planned to hold a tele-conference this week to discuss whether an emergency meeting will be called in late September or early October. According to the Financial Times, “the meeting would be the first of the Rapid Response Forum, a newly created body to ‘promote early discussion among decision-level officials about abnormal international market conditions’ ”. The Vatican and President Lee Myungbak of Korea are amongst those who have called on the G20 to hold such an emergency meeting and respond to this issue as a matter of urgency.
With mounting pressure on the G20 to respond to the crisis it would be easy to forget that attempts to stabilise food security in the past has repeatedly failed the world’s poorest by refusing to tackle the underlying factors determining who goes hungry as a result of these spikes.
The G20 and others are right to be outraged at the implications of these hikes on food security; for the poor in developing countries where up to 70% of their household spending goes on food, compared to DEFRA figures of a little over 11% in the UK. These communities are already living without financial buffers, and food price hikes push them into extreme poverty where they can no longer purchase the basic food and nutrients essential for daily living. To compound this, volatility also causes uncertainty, increased economic risk, employment and livelihood instability and can lead to increases poverty.
An example of this can be seen in Cambodia where a result of the economic crisis and the 2008 food price shocks was that 70% of rural households reported incurring new loans between January and June 2009. These loans were for food and consumption rather than investment; as a result there could be no return on investment and the long-term financial sustainability of the household was affected as the levels of debt rose. Despite accessing these loans, households reported that they still had less access to food with 63% eating only 2 meals per day.
This highlights the interactions between food and livelihood security that are accentuated in situations of economic crisis or price spikes. As CAFOD research found, “temporary set-backs can have long-term, dire consequences for individuals, as well as negative impacts for the businesses that they run – either farms or informal firms. For example, for most small businesses, personal and business finances are not separate. Private consumption loans will therefore affect the viability of their business. As their businesses tend to rely on the labour of household members, changes in health and food expenditure will also have an impact.”
While the G20 is rightly concerned about the impacts of the price hikes on the global economy and on the food security of the poorest; what they repeatedly fail to address are the devastating implications of this price volatility for poor smallholder farmers as viable enterprises and as a potential solution to the scandal of persisting hunger in a world where enough food is produced.
These farmers cannot benefit from price hikes as businesses as they are insufficiently integrated into markets. Furthermore, and more severely problematic, the volatility they face as consumers causes long-term livelihood instability and means that they cannot invest in their future. According to a recent CIDSE report, poor farmers, in general, do not have enough investment capital to sustain such unpredictability. This affects investment decisions and compromises production in the long term. There is evidence that with the right support (note, not just any support) these small farmers have the capacity to deliver more to the food system. Current aid and investment is not sufficiently targeted to reach or empower these important economic players. As a result their potential remains unrealised and they are easily exploited
This policy blind-spot must be addressed: We need to think small! Policies which respond to smallholder farmers’ needs (such as macroeconomic and price stability) need to be prioritised; and aid and advice needs to be well targeted and empowering. It is essential the G20 stops thinking of smallholder farmers as farmers in need of charitable assistance, and instead starts thinking of them as viable and potential-filled businesses that can play a positive role in the global food system. Without these measures in place the real crisis in the food system will continue to go unchecked.
 Research conducted by the Cambodia Economic Association cited in CAFOD, 2011.
 NGO Sothath, 2010. ‘Impacts of the Economic Downturn on Households and Communities in Cambodia.’ Cambodia Economic Association. Cited in CAFOD, 2011