The world economy has run into a brick wall. Despite countless warnings in recent years about the need to address a looming hunger crisis in poor countries and a looming energy crisis worldwide, world leaders failed to think ahead. The result is a global food crisis. Wheat, corn and rice prices have more than doubled in the past two years, and oil prices have more than tripled since the start of 2004. These food-price increases combined with soaring energy costs will slow if not stop economic growth in many parts of the world and will even undermine political stability, as evidenced by the protest riots that have erupted in places like Haiti, Bangladesh and Burkina Faso. Practical solutions to these growing woes do exist, but we'll have to start thinking ahead and acting globally.
The crisis has its roots in four interlinked trends. The first is the chronically low productivity of farmers in the poorest countries, caused by their inability to pay for seeds, fertilizers and irrigation. The second is the misguided policy in the U.S. and Europe of subsidizing the diversion of food crops to produce biofuels like corn-based ethanol. The third is climate change; take the recent droughts in Australia and Europe, which cut the global production of grain in 2005 and '06. The fourth is the growing global demand for food and feed grains brought on by swelling populations and incomes. In short, rising demand has hit a limited supply, with the poor taking the hardest blow.
So, what should be done? Here are three steps to ease the current crisis and avert the potential for a global disaster. The first is to scale-up the dramatic success of Malawi, a famine-prone country in southern Africa, which three years ago established a special fund to help its farmers get fertilizer and high-yield seeds. Malawi's harvest doubled after just one year. An international fund based on the Malawi model would cost a mere $10 per person annually in the rich world, or $10 billion in all. Such a fund could fight hunger as effectively as the Global Fund to Fight AIDS, TB and Malaria is controlling those diseases.
Second, the U.S. and Europe should abandon their policies of subsidizing the conversion of food into biofuels. The U.S. government gives farmers a taxpayer-financed subsidy of 51¢ per gal. of ethanol to divert corn from the food and feed-grain supply. There may be a case for biofuels produced on lands that do not produce foods--tree crops (like palm oil), grasses and wood products--but there's no case for doling out subsidies to put the world's dinner into the gas tank.
Third, we urgently need to weatherproof the world's crops as soon and as effectively as possible. For a poor farmer, sometimes something as simple as a farm pond--which collects rainwater to be used for emergency irrigation in a dry spell--can make the difference between a bountiful crop and a famine. The world has already committed to establishing a Climate Adaptation Fund to help poor regions climate-proof vital economic activities such as food production and health care but has not yet acted upon the promise.
What is true for food will be true for energy, water and other increasingly scarce resources. We can combat these problems--as long as we act rapidly. New energy sources like solar thermal power and new energy-saving technologies like plug-in hybrid automobiles can be developed and mobilized within a few years. Environmentally sound fish-farming can relieve pressures on the oceans. The food crisis provides not only a warning but also an opportunity. We need to invest vastly more in sustainable development in order to achieve true global security and economic growth.