World Food Prices

My Lords, according to the World Health Organisation, overweight people now outnumber the malnourished. That is not a boast; it is an indictment. One billion people in the developed world are overweight; 300 million are obese. In sharp contrast, we heard the noble Lord, Lord Taverne, saying that more than 800 million people in the developing world are chronically malnourished. For them, this global food crisis will serve only to deepen the extreme hardship in their lives. Indeed, the only reason that recent events have been elevated into a food crisis is that, for the first time in living memory, they have spread from the developing world to the developed world. For two decades, we in the developed world grew accustomed to our cup quite literally overflowing. From 1975 to 2005, food prices fell by 75 per cent in real terms. During those years of plenty, when it became cheaper for some of our farmers to feed flocks of sheep with bread from supermarkets than with traditional grain, the international community's commitment to agriculture in the developing world waned. According to the OECD, funding for agricultural projects fell as a percentage of total international aid from 19 per cent in 1979 to just 5 per cent in 2006. World Bank lending for agricultural projects also fell from 30 per cent of all lending to just 12 per cent last year. The implications of those neglectful decisions are only now becoming apparent. We all know that in the past year global food prices have risen extortionately—overall, by an average of 60 per cent. Over the past two years the price of wheat has doubled. The price of rice in Asia—a crop that sustains billions of people—has more than doubled in two months from $460 a tonne in March to more than $1,000 a tonne in May. According to the head of the World Food Programme, since January 2008 an extra 100 million people who previously were independent are now dependent on food aid. The UN Secretary-General, Ban Ki-Moon, has said that such a situation has the potential to, "““affect economic growth, social progress and even political security around the world””." All nations are vulnerable. We in Britain may be safe from the evils of hunger and starvation. We may even escape this crisis without witnessing the rioting that has erupted in other nations. But we are by no means immune. Any nation which exports less food than it imports should take note of the tortilla riots in Mexico, the pasta strikes in Italy and the tomato boycotts in Argentina. Any nation whose self-sufficiency to feed itself has fallen, as ours has, from 75 per cent 20 years ago to 60 per cent today, should be concerned about the food export restrictions adopted by countries, such as China, Russia and India. Any nation committed to international development should concern itself deeply with the warnings of hunger in Nepal, the Philippines and Africa. We are told that this global instability is a result of a ““perfect storm””, a series of events that have combined to create a crisis. Let me run through some of them. The world’s population continues to grow. One-third— 80 million tonnes—of America’s maize crop is being taken out of the food chain for biofuel production. Double what the US exports in the average year was eaten up, not by people or by animals, but by refineries last year. Fuel and fertiliser costs, which account for 25 per cent to 30 per cent of farming overheads, have rocketed as a result of the price of oil more than doubling in less than a year. We have witnessed a global credit crunch, property prices continue to fall and inflation is rising on all products. Growth is slowing and unemployment is starting to climb. There is little wonder that economists around the world are predicting stagflation, a recession or, worst of all, a depression. Our economy has never before faced such a daunting combination of challenges. The global economy has never faced a combination of these challenges—not since the great depression or the recession of the early 1990s. As if that were not enough, as we have heard, some of the most populated countries on earth are developing a taste for meat and dairy, the production of which requires more water, as we have heard from the noble Earl, Lord Selborne, and, more importantly, more cereals. Due to the awesome scale and complexity of these issues, it is hard to see how we could begin to address them in any meaningful way. However, if the analogy of a perfect storm is correct, thanks to the common agricultural policy, we in the European Union have sailed into it with all sails set. As we have heard, the CAP was established with noble intent, but the world has moved on in the half century since the policy was first introduced. Far from addressing the challenges of today, the CAP is intensifying them and making them worse. For 50 years, it has offered a disincentive to developing nations to diversify and grow their agriculture sector and it has severely limited the ability of poor farmers to compete with their subsidised counterparts in Europe and the United States. Last year, in India, more than 25,000 farmers took their own lives after being driven to despair by grain shortages and bad debt. India, a country which experienced the green revolution, has for the past two decades seen its agricultural growth rates halved. As India Today reported: "““The spectre of food grain imports stares India in the face as agricultural growth plunges to an all-time low””." I am proud to be the chairman of the UK Indian Business Council, which is supported by UK Trade & Investment. As I have said before in this House, there is no question that the main reason that the World Trade Organisation talks, the Doha round, have stalled is because of agriculture and, more specifically, because of agriculture subsidies right here in the European Union and in the United States. At a time of significant food price inflation, the European Union cannot continue to justify a policy which subsidises cows to the tune of $2 a day while 1 billion people on this planet exist on less than a dollar a day. We in the European Union can justifiably be accused of preaching free trade and practising protectionism. With the CAP’s budget of £32 billion not scheduled for reform until 2013, my question is simple: can we wait that long? Addressing protectionism will not be enough. If the international community is to meet the challenge Ban Ki-Moon set three weeks ago in Rome and increase global food output by 50 per cent by 2030, then it must also reaffirm its commitment to advancing the science of agriculture, as the noble Earl, Lord Selborne, said. I feel that I should touch briefly on the sensitive topic of genetically modified food. I can see a time, perhaps soon, when we may not have the luxury of rejecting GM, as we do now. According to the European Commission, only 21 per cent of Europeans say they will eat GM food, leaving British farmers to pay, for example, a premium of £20 a tonne for non-GM soya. The rest of the world does not share our fear of GM. For example, 95 per cent of the United States soya crop is genetically modified, and it is the world’s biggest exporter. Brazil, the world’s second biggest exporter, aims to increase the amount of its GM crop to more than 80 per cent by 2025. If necessity brings GM back on to the political agenda—and it seems inevitable that it will—I hope that a rational debate will prevail. I hope that the name Norman Borlaug will gain the recognition in Britain that it has abroad. His experiments in genetic cross-breeding doubled the wheat yields of India in five years and won him not only the Nobel Peace Prize but the Padma Vibhushan, one of India’s highest awards. I have seen for myself how productive the coupling of science and agriculture can be. Every year for the past 15 years I have returned to South Africa, the country of my wife Heather, to visit her family home—a large mixed farm in the Free State. I have seen the increasingly important role that technology plays in raising productivity on the farm. Just last month, I witnessed a new high-tech software system go live that monitors not only the location of every one of our dairy cows on the farm in every herd, but each cow’s yield, as well as monitoring at every milking various aspects about the animal. It can even predict oncoming illness. This extraordinary Israeli technology, now implemented on a South African farm, will help us on our farm to be more proactive, more reactive and more productive. I ask noble Lords to imagine the technology we could deliver to the developing world if £32 billion were not being squandered on the CAP in the EU, where many farmers enjoy great wealth and comfort compared with their counterparts in India, for example. It is worth remembering that here in the UK, agriculture represents less than 2 per cent of our GDP and employs less than 2 per cent of our workforce. But in a country such as India, more than 600 million people live in the rural areas and are dependent on the rural economy and agriculture, which represents 20 per cent of the GDP. I congratulate the noble Lord, Lord Taverne, on securing this important debate. As patron of CINI—Children In Need International—I know how, for those living on the threshold of subsistence, the smallest change in the food price can mean the difference between life and death. The short-term future for the 800 million who are malnourished, and the 100 million who can no longer afford to feed themselves looks very bleak. The World Bank has recently reported that it fully expects recent price rises to increase inequality and hit children the hardest, especially those in countries afflicted by conflict, HIV and drought. How was the global community caught unawares like this? With the World Health Organisation, the UN World Food Programme and the UN Food and Agriculture Organisation, among others, just how did this global food crisis sneak up on us like a silent tsunami? Why was Joachim von Braun, the director general of the International Food Policy Research Institute, made to feel, "““like a Cassandra in Washington””," when some time ago he tried to warn officials that 2008 would be ““a dangerous year””? Surely in this integrated and increasingly interconnected world, with all our technology, we should have been warned and we should have been prepared? The developing world need not live for ever in the shadow of hunger. The future of agriculture must not be held back by tariffs, barriers and bureaucracy, but set free through investment, technology and science to become a sustainable and vibrant industry. Together, we can deliver what Norman Borlaug called, "““the first essential component of social justice””," by which he meant adequate food for all mankind; together, if we ensure that we never, ever take agriculture for granted again.