World Food Prices

My Lords, I, too, congratulate my noble friend Lord Taverne for raising this extremely important issue. He is always in the lead in such matters. I have to declare what I hope is a very time-limited interest, which several noble Lords with a longer time commitment to it share. My father was a farmer on the South Downs and would very much have applauded what my noble friend had to say about the importance of investment in agricultural research. When he became ill and died in the autumn of 2006, I found myself having to take over his tenancies as his estate was gradually wound up. That autumn, I sold his barley out through Shoreham harbour as he had done; it was a new experience for me. He had a small arable area and his barley sold for about £10,000. Imagine my astonishment in early 2007 to find that the same acreage was then priced at three times that amount. I thought that I had misread it. Unfortunately, teenagers smoking in the fields just before harvest actually meant that a third of it went up in smoke—but such is life. When I found that these prices were real, as the spokesperson on international development for the Lib Dems in the Lords I found myself wondering, at the beginning of 2007, when those prices were predicted for me, what on earth the effect would be around the world. I was hearing little from others at that time. We are only just beginning to address this issue, together with related issues on the rise of oil prices and climate change. We have already heard an enormous amount about the impact of the increase in food prices. There are opportunities here as well as threats, but of course it is those at the margins who are most threatened, as they are often already in the most fragile states. The opportunity is there to bring prosperity to some of those whose farms were barely viable. I think that my father, although not quite on such margins, might have benefited from the situation. As a small farmer, he was not on the scale of the noble Lord, Lord Haskins, or other noble Lords who have spoken in this debate, to say the least. But after all, in Britain and the west it was the agricultural revolution which then paved the way for the industrial revolution. But if you cannot afford to eat and cannot be self-sufficient on your farm, reaching a point when you can benefit from the sales of your crops may be beyond your reach, and those are the people to whom we must pay particular attention. As populations flooded into the cities, in Britain and other western industrialised countries, as they are in developing countries now, we know—as the noble Lord, Lord Alton, said—that usually their living standards declined. The urban poor will be particularly hard hit by soaring prices. They might have benefited and they may benefit later, but initially they often lose out in that move. Many others in this debate, such as the noble Lords, Lord Bilimoria and Lord Alton, the noble Earl, Lord Sandwich, have made very clear the terrible impact of rising food prices on the poorest. As the Overseas Development Institute, on which I am a council member, put it: "““Soaring food prices pose problems for three groups. First, the poor whose ability to buy food is undermined. Second, governments of low-income countries facing higher import bills, soaring costs for safety net programmes and political unrest. Third, aid agencies juggling increased demands for food, cash and technical advice””." The real price of food had been falling since the 1950s, and maybe this can be seen as a correction. The green revolution, to which other noble Lords referred, began in the mid-1960s, and saw increases in yields, falling food prices and reductions in poverty in some parts of the world. But food prices have risen over the past few years and particularly since 2006. Why has this happened? Clearly more research needs to be done, but a number of explanations have been given today. As the noble Lords, Lord Taverne, Lord Grantchester and Lord Bilimoria, and others, have said, there have been a number of factors ascribed to this. Oil price rises have increased costs for fertilisers, machinery and transport; there has been speculation on commodity prices and some exporting countries have imposed taxes, minimum prices, quotas and bans on foodstuffs. Increasing prosperity and changing diet in India and China has increased grain and meat consumption. Support for biofuels has diverted grain from food to energy. There is a whole range of possible issues. Possibly prices will drop a little but it is anticipated that they will not drop substantially in the medium term. As the noble Lord, Lord Alton, pointed out, the devastation and social unrest that could result is of key importance to all of us. Higher food prices could raise farmers’ incomes, if farmers can respond, as in some cases in the Asian green revolution. I look forward to the battles between the noble Earl, Lord Sandwich, and the noble Lord, Lord Bilimoria, over the plusses and minuses of how that may work through. Exactly whether we should go down the route of large farms, as the noble Lord, Lord Haskins, says, or small ones, will also be hotly debated and is of key importance. In Cambodia, to take that as a case study, a higher rice price stimulated a 13 per cent increase in rice production and rice exports rose by more than 80 per cent. Rice farmers benefited but the rest of the economy suffered. Resources shifted from other farm activities to rice-growing, so livestock and fish production declined. Higher rice prices reduced household spending on other goods and services, depressing the economy; GDP fell by around 0.2 per cent; farming households were better off, with incomes for surplus producers—it is significant that they are big enough to benefit from this—rising by almost 4 per cent; but other households saw incomes fall by around 2 per cent. So it is a complex pattern of winners and losers. In the short term, as other noble Lords have mentioned, and this is of key importance, we will need social protection—I am glad to see that DfID has recently been moving in that direction—transfers to the poor, as with the introduction of universal old-age pensions in India and South Africa, and general food subsidies. It is an issue that has been particularly addressed in concern about AIDS and the impact on orphans and vulnerable children, and how best to support them. The area of social protection is developing. More will need to go to the World Food Programme, which itself will need to be transformed to make it more effective. In the medium term, investment in infrastructure and agricultural research, as mentioned by my noble friend Lord Taverne, will be required, together with support for small farmers so that they can access finance and expertise. Other noble Lords have made these points very tellingly. All areas of agricultural research, especially in areas with limited water, as we have heard, and with the pressures of climate change, will need to be investigated. There are major questions about how this can be done with limited land and water, and with anxieties over conservation and pollution. A few noble Lords have talked about the impact of population growth—the noble Lord, Lord Alton, and my noble friend Lord Taverne particularly referred to this. Clearly, far more needs to be done to ensure that reproductive rights are respected and that women have access to education and, where they wish it, to contraception. We know what an effect this has, and that already the growth in population is showing signs of levelling off. We know what to do here. Therefore, we have to ensure that there is the political will to carry this through. I should like to put a number of questions to the Minister. This crisis will, as Save the Children points out, impact the reaching of the MDGs, which we are a long way off in many cases anyway. Governments must therefore judge their performance in responding to the current crisis by the effect, for example, on malnutrition rates. I would like the noble Lord’s comment on that. What will be done to support the social protection programmes I have referred to? Again, in the United Kingdom, it is significant that the early social protection programmes, pensions and so on, of the early 20th century underpinned our own development. The move towards social protection programmes is extremely welcome. What will be done to investigate the role of financial speculation in fuelling price rises and volatility, and examining means of protecting consumers from the effects of such speculation? Will the Government be seeking a moratorium on the targets for the use of biofuels, a matter the noble Lord, Lord Alton, described as the unintended consequence of seeking greener policies? How will the Government target support at small-scale farmers—if the noble Lord, Lord Haskins, will allow them to remain so—and how might they be given increased access to microcredit and other financial services? Christian Aid, Oxfam, World Vision and other NGOs rightly emphasise that particular support must be targeted at women, partly because they suffer first when there is extreme poverty—men are expected to have a larger share of food, boys are kept in education longer in a financial crisis than are girls, and so on. As Christian Aid points out, with the proportion of women in agriculture as high as 70 per cent in some countries, we need to ensure that they have good access to education, information, science and technology, as well as credit schemes and income generating activities, and of course reproductive health. Given the cutbacks in DfID, what is happening in relation to gender? How many people are working on this area, and what plans are there for expansion or contraction? There will be new problems associated with climate change, which will need to be addressed in this context. Natural resources such as seeds, agricultural land and water must be protected in the face of climate change, and competition from cash crops. I welcome the Minister’s comments on that. We are coming up to the G8, as has been mentioned, and I know that this will be on the agenda. What does the Minister anticipate will be the G8's plans? What proposals will be put in September at the MDGs’ assessment meeting? What changes will be advocated for Doha at the end of the year? The noble Lord, Lord Haskins, made very clear how important this round has become, and the pressures on it. At the beginning of 2007, I received the anticipated prices for my father’s barley. I was stunned by their extraordinary increase. At that time there seemed to be little talk of increases in food prices. Now that discussion is widespread. That is surely welcome. My noble friend Lord Taverne has stimulated us to take this further. He has said that we must restore aid for agriculture to the top of the agenda and that we must support the best of agricultural science. Everything that other noble Lords have also said from their long and wide experience endorses the essence of what he says, whatever they may feel about certain aspects of it. I hope that our Government can rise to his challenge.