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Food Crisis:Zoellick’s 10 point plan

04/06/2008

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Robert Zoellick, World Bank head wrote an article for the Financial Times outlining 10 steps he wants to see taken to assist in resolving the world food crisis. It began:-

What has been described as a silent tsunami is not a natural catastrophe, but is man-made. The nexus between high energy and food prices is unlikely to be broken, and will be exacerbated by global climate change. The results have been rising production and transport costs for agriculture, falling food stocks and land shifted out of food production to produce energy substitutes. This is a 21st century food-for-oil crisis.

He then laid out a plan to tackle the problem, which Adam has given in point form only, the detail is in the article.

First, we should agree in Rome to fund fully the World Food Programme’s emergency needs.

Second, we need support for safety nets, such as distributing food in schools or offering food in return for work

Third, we need seeds and fertiliser for the planting season, especially for smallholders in poor countries.

Fourth, we need to boost agricultural supply and increase research spending, reversing years of agricultural underinvestment. We must be neither Luddite nor advocates of a single scientific fix.

Fifth, there needs to be more investment in agribusiness so that we can tap the private sector’s ability to work across the value chain: developing sustainable lands and water;

Sixth, we need to develop innovative instruments for risk management and crop insurance for small farmers.

Seventh, we need action in the US and Europe to ease subsidies, mandates and tariffs on biofuels that are derived from corn and oilseeds.

Eighth, we should remove export bans that have led to even higher world prices.

Ninth, we should conclude a Doha World Trade Organisation deal in order to remove the distortions of ag­ricultural subsidies and create a more adaptable, efficient and fair global food trade. The need for rules that are agreed multilaterally has never been stronger.

Tenth, there should be greater collective action to counter global risks. The interconnected challenges of energy, food and water will be drivers of the world economy and security.

The article has more detail on each of the above points. Adam has highlighted the start of each point for clarity.

Whilst Zoellick’s plan ,may not be perfect it is a straw man to work on and judge conference outcomes by.

He like Ban Ki-moon is calling for much freer trade in food to ease the crisis. Zoellick knows that there is currently no free trade in food, despite what the Greens think.

Zoellick notes in the article for example that only 7% of rice production is traded globally, if more was freed up from artificial restrictions much pressure could be eased.

The points Zoellick makes seem rational and sensible. No doubt many of the vested interests and activists will attack each and every one, rather than focus on what is necessary, which is, as Zoellick says ,concerted global action.

4 Comments
  1. adamsmith1922 permalink*
    13/06/2008 20:47

    Your post was very comprehensive and I am still thinking about some aspects, but I will respond where I can.

    Let me start with:-
    5. That makes sense to me and indeed to a number of other commentators. For example there are wide variations in land type, topgraphy etc, which renders a one size fits all approach inappropriate.

    On a more general level here I would say that where an approach has a general application is should be trialled, for example improved governance.

    4. Transaction levy , this smacks of social credit and I still need to think on it, especially as there is no effective global model for such a levy and you could create a worse problem with a panoply of regulation than the issue you are trying to solve, especially as I am trying to think of examples of the sort of speculative attack you are suggesting in recent years.

    3. Whilst not sure on all aspects, in principle I do not see why that sort of arrangement should be inappropriate, indeed I see no reason why you cannot have multiple different business models in a country – provided that such models do not impede productive farming. Please note I do not mean that by that all farms should be big industrial enterprises, I do not.

    3 you had two point 3s, for convenience I have retained your numbering
    Basic Universal Income is an idea I need to think through

    2 This I am not entirely sure about and am not certain that the facts are completely correct. In Hong Kong the colonial Govt effectively owned all undeveloped land and then sold it at auction.

    There was a variation of this in Singapore, not sure about the others and need to check it out.
    In both HK aand Singapore am not sure that it led to equitable disribution

    1 an interesting thesis, but you need to be a fan of Stiglitz and whilst I need to do further research I have a gut feeling that it is unlikely to achieve the objective you are aiming for

    Zoellick was I think looking at investment in research for the sector in order to finance a second green revolution. There is I suggest broad agreement that the first Green Revolution has run it’s course and that productivity is dropping due to lack of research and spend by governments.

    On subsidies, in another post I quote some research that suggests the first actions should be to reduce tariffs not subsidies per se.

    Look forward to your response.

    I will continue to think about the points you have raised and seek to respond to them.

    I appreciate the opportunity to debate the points with you.

    regards

    Like

  2. Jamesey permalink
    04/06/2008 20:09

    I posted a comment, but it hasn’t shown up. I’d appreciate it if you could upload it and perhaps provide feedback if you so wish.

    Like

  3. Jamesey permalink
    04/06/2008 20:08

    Zoellick’s a fool to expect us to believe that theres been “underinvestement” in agribusiness over the last 30 years. If anything theres been overdependance on the so-called “Green Revolution” for development.

    Whilst I recognised that agriculture and international trade itself needs to be liberalised, there are important caveats, which could have peverse outcomes.

    For example if the US and Europe dropped agriculture supports for their “farmers”, production in those areas could fall substantially

    Farmers will sell to those who can pay the highest prices so producers in the Third World could well shift their focus from supplying locally to shipping food to the West where we can afford to pay higher prices and thus limiting the availability of food on the local market.

    As prices rise in the Third World, we’d see a return to the protectionist regimes of yesteryear, with quotas, price controls, and subsidies to local production. All of which the Green’s are stupidly calling for and you oppose.

    There is a high likelihood of this happening in place like Brazil where 2.8% of landowners hold 56% of the land.

    My plan to respond to the global food price would be

    1. Reform the world’s currency reserve system and adopt a variation of John Maynard Keynes bancor proposal at the 1944 Bretton Woods Conference.

    “Keynes’s original thinking perceived that nations with too many bancors would disrupt the system just as much as those with too few— that creditors were just as dangerous to stability and prosperity as debtors.”
    http://mondediplo.com/2007/01/03economy

    The system as it currently stands, is completely unjust and unfairly favors the U.S. economy at the expense of the extremely poor.
    “Assume an enterprise within a poor country borrows $100 million short-term from a U.S. bank, paying 20 percent interest. Following the prudential guideline that countries should maintain reserves equal to the short-term dollar denominated debt, the government then -if it doesn’t want to face the threat of an imminent crisis-must add $100 million to its reserves by buying $100 million worth of T-bills, paying 5 percent interest. There is, in fact, no net flow of funds from the United States to the developing country as a result of the loan; it is simply a wash. But the U.S. bank charges much more for the $100 million it sends than the U.S. government gives for the $100 million it receives. There is a net transfer of $15 million transfer to the United States. ”
    Joseph Stigliz “Making Globalisation Work”.

    2. Recognise that not all “property rights” are legitamate and to ensure the equitable distribution of land in the Third World that suffer from residues of colonialism, by shifting taxation onto the value of unimproved land like it was succesfully done in New Zealand, Australia, California, Taiwan, South Korea, Hong Kong and Singapore.

    3. Implement a universal basic income for everyone that would be funded from the tax on land and State granted natural monopolies such as mineral, logging, and water rights, fishing quotas, transportation infrastructure, electrical spectrum licenses, rights-of-way etc.

    3. Recognise alternative communal forms, such as the Mexican Ejido system and communidads. Allow new community development institutions to access capital by using their property as security.

    http://www.colby.edu/personal/t/thtieten/macro-mex.html

    4. Institute a small Levy on international currency transaction to assure governments that the economies that they preside over don’t suffer the destabiling effects of speculative attacks that have had damaging effects on many countries since the world began liberalising capital markets.
    http://tinyurl.com/6mlxpq

    5. Examine and enhance if possible, local solutions if practical, rather than attempting to transfer technologies and solutions and try to transplant them to regions where they’re unsuitable.

    Like

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