George Alagiah travels the world to reveal a growing global food crisis that could affect the planet in the years ahead. With food riots on three continents recently, and unprededented competition for food due to population growth and changing diets, the series alerts viewers to a looming problem and looks for solutions.

George joins a Masai chief among the skeletons of hundreds of cattle he has lost to climate change, and the English farmer who tells him why food production in the UK is also hit. He spends a day eating with a family in Cuba to find out how a future oil shock could lead to dramatic adjustments to diets. He visits the breadbasket of India to meet the farmer who now struggles to irrigate his land as water tables drop, and finds out why obesity is spiralling out of control in Mexico.

Back in Britain, George investigates what is wrong with people’s diets, and discovers that the UK imports an average of 3000 litres of water per capita every day. He talks to top nutritionist Susan Jebb, DEFRA minister Hilary Benn and Nobel laureate Rajendra Pachauri to uncover what the future holds for our food.

It’s a solid analysis, identifying climate change, oil-dependency and water depletion as the biggest challenges facing the world as it tries to feed a growing population. Perhaps too much is made of the virtues of self-sufficiency as compared to trade and comparative advantage.

If you’re in the UK you can watch it on demand on your computer anytime over the next three weeks, via the BBC iPlayer. The next epsisode will look more closely at fish.

Asked if we were moving towards a ‘new productivism’, the Duke of Northumberland professor at Newcastle University said: ‘Much of what I hear sounds like the old productivism. The characteristic of the old productivism that prevailed until the 1990s was that it sought recklessly to boost primary production. Although it claimed to do this with attention to efficiency, this only embraced the so-called factors of production: land, labour and capital.’

The RELU boss continued, ‘So we encouraged a form of agriculture that was wasteful in its use of water, energy, soils and caused pollution problems and diminished biodiversity. We must not return to the old-style productivism – of expansion of food production at any cost.’

‘No,’ Lowe declared, ‘the new productivism must be constructed on the basis of economic and ecological efficiency which thereby protects the capacities of individual ecosystems to deliver a range of valued a life-supporting services.’

Rationale for agricultural product quality policy

The Commission sees agricultural product quality policy as an important competitive instrument for EU producers in the global marketplace. There is a growing consumer demand for food quality in its broadest sense, encompassing attributes such as taste, authenticity, sustainability, animal welfare and ethical production methods. EU farmers already have to meet some of the most stringent farming requirements in the world with respect to environmental protection, animal welfare and use of pesticides and veterinary products. The Commission believes that EU agriculture can build on these high baseline food quality standards to further differentiate its products as part of a strategy to improve competitiveness and profitability.

“Instead of seeing [high food quality] demands as a burden, EU farmers have a real opportunity to turn them to their advantage – by delivering exactly what consumers want, clearly distinguishing their products in the marketplace, and gaining premiums in return”. [Green Paper]

There is a catch, however. Despite consumers’ apparent willingness to pay for food quality, there is a perception that EU farmers are not remunerated for the higher standards met by EU products. This is seen in the many complaints against third country imports which, while they have to meet EU food safety and hygiene requirements, are not required to meet other food quality attributes. EU farmers cry foul and say they are facing unfair competition.

Hence the rationale for agricultural product quality policy which seeks to inform buyers and consumers about product characteristics and farming attributes. The Communication notes:

“Unless buyers and consumers have accurate, useful and guaranteed information about these characteristics and attributes, they cannot be expected to pay a fair price”.

The Commission’s proposals

The Commission’s conceptual framework for agricultural product quality policy is set out in the figure below. It distinguishes between certification schemes and labelling, and notes that both types of schemes can be used to show either that a product has met baseline standards or to indicate value-adding qualities beyond baseline standards.

Agricultural marketing standards are designed to ensure fair trade and to avoid consumer deception about product qualities. They ensure basic product identities (what can be called ‘butter’ or ‘chocolate’?) and define product classifications (‘what is the minimum fat content of ‘semi-skilled milk’?). The proposals here are to simplify marketing standards by consolidating compulsory rules in a general basic standard, to consider appropriate place-of-farming labelling, and to examine the feasibility of adding optional reserved terms for ‘product of mountain farming’ and ‘traditional product’.

Place-of-farming (or country-of-origin) labelling is included in a separate Commission Proposal on the provision of food information to consumers. This latter legislation has been very contentious. So many amendments were proposed that the European Parliament recently voted to delay further consideration until the new Parliament is elected after June.

The EU’s main quality schemes are those for geographical indications (GIs) and organic products. The GI schemes provide protection of intellectual property rights for products described by registered geographical indications. While the consultation process revealed general support for the system, modifications to integrate the various GI schemes into one integrated scheme, to improve consumer recognition of GIs and to simplify the registration process are proposed.

Organic farming certification has been in place since 1991 and was revised in 2007, but there is continuing market segmentation because of the lack of mutual acceptance between private organic labelling schemes and a proliferation of organic logos. The Commission proposes to mandate the use of a new EU organic logo from 2010 as a way of breaking down barriers to trade in organic products in the single market.

Assessment of agricultural product quality policy proposals

The Commission’s proposed quality strategy raises a number of questions. There is evidence that at least some consumers are willing to pay for food quality attributes, and quality premiums can be observed in the marketplace for organic produce, for free range eggs, for fair trade coffee, and so on.

Given this willingness-to-pay, there is an incentive for farmers, processors and retailers to propose voluntary labels and private standards in order to exploit this consumer demand for quality. Indeed, most promotion of food quality takes place in the context of the wide variety of private food certification schemes, to the extent that the Communication asks whether there is a role for public intervention to reduce confusion or to improve the transparency and credibility of the claims that are made. The Commission rules out legislation and limits itself to proposing the development of good practice guidelines for private and national certification schemes in consultation with stakeholders.

The two important public initiatives proposed concern country-of-origin labelling (COOL) (referred to as place-of-farming labelling in the Commission Communication) and the promotion of GIs. These are also contentious because of their trade policy implications.

The use of place-of-farming labelling is already mandated in the EU for a range of primary agricultural products (beef, fruits and vegetables, wine, eggs, poultrymeat) but consumer groups want this extended to multi-ingredient processed products. Currently, there is confusion between the place of processing and the origin of a food product. The Commission proposal is for voluntary labelling at the EU level, while leaving the decision to introduce mandatory COOL to the member states.

Producers hope that consumers will interpret an EU country-of-origin label as evidence of high food quality and that these labels will encourage greater consumption of home-grown produce (see Verbeke and Roosen 2009 for evidence on consumer reaction to country-of-origin labels in the EU). For this reason, exporting countries see COOL as a protectionist device and Canada is currently challenging US COOL regulations introduced earlier this year under WTO dispute settlement rules.

GIs are the other main public policy tool to help farmers to benefit from consumers’ demand for quality. Apart from improving the administration of GI schemes, the Commission Communication promises to seek enhanced protection in non-EU countries through negotiations in the WTO and through bilateral agreements with trading partners. To assess the advantages of GIs in contributing to the improved competitiveness of EU farm production, more information on who benefits from the rents created by these schemes would be desirable. Do they really benefit the farmer/producers, or is a disproportionate share taken by the retailers at the end of the chain?

Nonetheless, even in a context where most attention is focused on dealing with the financial crisis and the strengthening recession hitting Europe, Europe’s agricultural and food industries continue to be required to address regulatory issues affecting the governance of the sector. One of these issues concerns the regulatory environment for genetically modified products (GMPs), and I am indebted to EurActiv for drawing my attention to the outcome of a meeting of the Environmental Council in early December which gave a series of political directions to the Commission on this issue.

The regulatory issues around GMOs concern the rules for approval, coexistence and labelling. I listened to an excellent plenary paper by GianCarlo Moschini at the European Association of Agricultural Economists’ Congress in Ghent last August which surveyed some of the economic implications of these rules.

The Environment Council Conclusions on GMOs were reached after a six-month process by the French Presidency which aimed to overcome the Council’s inability to take authorisation decisions on new GM products for cultivation within the EU.

The Council upheld the current approval framework while calling for the strengthening of environmental assessment and monitoring arrangements undertaken by authorisation holders. It also asked the Commission, in conjunction with the Member States, to prepare a report by January 2010 on the socio-economic implications of the release and placing on the market of GMPs.

The Council did not add anything to existing rules on co-existence (which currently put all of the onus on the farmer introducing a GM crop) while noting that the Commission will produce a report later this year on the implementation of national co-existence strategies.

The Council also did little more than reiterate the existing position on the vexed question of declaring GM-free zones. It noted that, under existing legislation, restrictions could be placed on GM cultivation in protected and sensitive areas, including prohibition, provided there was sufficient scientific justification. It also noted that GM-free zones can be created by volunary agreement, provided all concerned operators are given adequate notice. This is hardly different to the position in 2003 when the Commisison rejected a request from Upper Austria to ban the use of genetically-modified seeds.

Whether this will be sufficient to break the political impasse surrounding the approval of GMOs particularly for cultivation is a moot point. But this remains an important element in the response of European agriculture to the challenges posed by the food price crisis in the years 2006-08. We need to make use of modern biotechnology in a properly regulated way if Europe is to be able to maintain and increase its food production capacity in the years ahead.

Whereas carbon dioxide emissions have increased 31 per cent over the past 250 years, methane, which has a higher warming potential and a longer atmosphere lifetime than carbon dioxide has increased by 149 per cent over that time. Dr Thorpe commented that

‘Methane emission growth … has been increasing exponentially in the developing world due to a rise in incomes leading to an increased demand for meat and the “hamburger connection” where developing countries make a lucrative profit supplying meat to developed countries.’

Attempts to curb animal methane emissions have included feeding grazing animals on cottonseed and alfalfa, using food additives, and vacinnating animals with drugs, but it is not clear if they will work on a large scale. A reduction in the amount of livestock kept for meat and milk would only put pressure on other food sources, such as cereals.

Animal methane emissions from developing countries have increased to 75 per cent of the global total, with India and Brazil in the lead. It is thought that atmospheric methane is responsible for one-fifth of the global warming since 1750.

Cows, sheep, goats and camels have an additional stomach and produce large amounts of methane as they digest their food. A dairy cow in New Zealand will typically produce around 80kg of methane a year, just through burping.

The policy pressures this produces is shown by complaints from the Irish Dairy Industries Association that the Republic’s commitment to reduce greenhouse gas emissions is piling further economic pressure on the country’s beleaguered dairy industry. It was argued that because Ireland’s greenhouse gas emissions (GHG)were closely linked to methane from cattle, a 20 per cent cut in GHG emissions would result in a 20 per cent cut in Ireland’s dairy herd.

The association complained that there is no international standard for measurement of emissions from enetric fermentation in cattle. The background to these concerns is a sharp drop in prices from 40 cents a litre in 2007 to around 24 now.

Vegetarians would no doubt argue that the GHG emissions of cattle reinforce the case for not eating meat. In practice, it is difficult to see how the problem can be tackled given that the livestock sector is under heavy economic pressure.

By stimulating the production (and consumption) of foods that are high in fat and cholesterol, researchers based at Liverpool University in the UK have concluded that “The cardiovascular disease burden attributable to CAP appears substantial”. The research focusses on subsidies for full fat milk and butter and use the hypothesis that without CAP subsidies for dairy products, per capita saturated fat consumption would be 1 per cent lower and that consumption of poly- and monounsaturated fats would be 0.5 per cent higher. The results show that there are approximately 9800 additional deaths by coronary heart disease and 3000 additional deaths by stroke each year because of the CAP in the EU-15. The researchers stress that this was a very conservative estimate. The countries worst affected are France, Germany, Italy, Spain and the UK.

The research points to the case study of Poland in the years 1990 to 2002 where farm subsidies that stimulated the production of fatty and high cholesterol foods were reduced:

“Recent evidence of the potentially powerful impact of reducing dietary saturated fats is graphically illustrated by the recent large falls in CHD mortality in Poland, between 1990 and 2002 (by 38% in men and 42% in women). This reduction across socioeconomic groups was attributed to the abolition of national food subsidies for saturated fats and the emergence of new, competitive markets, greatly increasing consumption of polyunsaturated vegetable oils. Ironically, this beneficial decline could now be threatened as Poland implements CAP after joining the EU in 2004.”

There can be no doubt that the CAP directs its support to exactly the wrong kinds of food for a healthy diet – milk, butter, cheese and red meat. Support for arable crops also benefits the livestock sector, by making feed cheaper and let’s not mention the EU’s substantial subsidies for ‘booze and fags’. The Single Farm Payment specifically excludes land used to cultivate fruit and vegetables. Until recently the EU was spending hundreds of millions on the disposal of surplus fruit and vegetables in landfill as a way of keeping prices high.

Estimating the cardiovascular mortality burden attributable to the European Common Agricultural Policy on dietary saturated fats. Ffion Lloyd-Williams, Martin O’Flaherty, Modi Mwatsama, Christopher Birt, Robin Ireland, Simon Capewell. Bulletin of the World Health Organization. Volume 86, Number 7, July 2008, 497-576

Today’s Commission press release states:

“The fund would be worth €1 billion and would operate for two years, 2008 and 2009. This money would be in addition to existing development funds and would be taken from unused money from the European Union’s agricultural budget. It would be provided to developing countries which are most in need, based on a set of objective criteria. The facility would give priority to supply-side measures, improving access to farm inputs such as fertilisers and seed, possibly through credit, and to safety net measures aimed at improving productive capacity in agriculture. The support would be paid via international organisations, including regional organisations.”

Last week European Voice reported that German Chancellor Angela Merkel and her farms minister Horst Seehofer were voicing concerns about the plan. Some have said that Merkel’s concerns relate to the the principle of spending EU money (much of which is contributed by German taxpayers) on purposes other than those originally budgeted.

Seehofer, whose ministry frequently appears to be a wholly-owned subsidiary of the German farm unions, would probably rather keep the money in the farm budget, as would a number of farm ministers from the CEEC member states who made a statement demanding that any underspend in the CAP budget be used to top-up farm subsidies in their countries. To her credit, Commission Fischer Boel has roundly rebuffed these demands.

Meanwhile, it seems that vanity is to be clouding the judgment of some MEPs. Jutta Haug, the German social democrat MEP, who is responsible for drafting the Parliament’s position on the 2009 Budget, said it was important that the EU claimed credit for any additional funding. “We’re the biggest aid donor but we don’t have the visibility”, she said, according to European Voice. The Commission proposal gives examples on how it would want to channel the money through the international agencies with the greatest expertise in the field:

“Assistance channelled through International Organisations could for instance apply to FAO (emergency input delivery programme), IFAD (e.g. rural finance), UNICEF (child nutrition, nutritional safety nets), WFP (humanitarian food assistance, transitional safety nets), the ICRC (food assistance) and the World Bank (market-based risk management, safety nets).”

Ms Haug’s notion that getting good PR is more important than feeding the world’s hungry shows just how out of touch some MEPs can be. Surely the most important consideration is how to get the job done, not who gets the credit.

Amid all the debate over the current ‘global food crisis’ one thing that analysts agree on is that the best chance for increasing world food production is to tackle the low productivity of many developing country farm sectors through investment in irrigation, micro-credit, provision of fertlisers, agronomic advice and research into new strains of crops resistant to drought, flooding and other climatic challenges.

Funding this second ‘green revolution’ is difficult at a time when the world’s biggest economies are close to recession, tax revenues are down and organisations like the UN World Food Programme and other aid agencies are having a hard time just standing still and meet the growing needs of the world’s hungry, as food prices continue to rise.

The figures involved are significant. Of the 53 billion euros spent on the CAP each year, and a ‘development fund’ of around 500 million to 1 billion euros is conceivable, according to Commissioner Fischer Boel. The prospect of the CAP’s ‘spare change’ being devoted to this noble cause has been widely welcomed, and is proving a bit of a PR coup for the beleaguered Commission which has been on the back foot over the Irish No vote on the Lisbon treaty and is reaping the hurricane of its unduly enthusiastic support for biofuels.

The proposal is not guaranteed success as many EU farm ministers would rather like to keep the money for their own farmers. Last week Ministers from the CEEC countries that joined the EU in 2004 and 2007 wrote asking Commissioner Fischer Boel to use the money for their farmers instead (direct payments in the CEEC countries are less than in the EU-15, although they are ramping up to parity by 2013). French farms miniser Michel Barnier has suggested using the money to help EU farmers become energy efficient. Quite how that squares with President Sarkozy’s call for an EU-wide cut on VAT on fuel is not immediately apparent. One must assume that like Walt Whitman, the French government is broad enough to contradict itself.

At the informal Agriculture Council meeting in Maribor, Slovenia, last month, we witnessed the extraordinary spectacle of EU farm ministers arguing that giving farmers more money is not the solution. Of course, when EU farmers are in trouble, the solution according to farm ministers is always to give them more money. When the question is how to help developing country farmers, according to the very same ministers, the solutions are not to be found in handouts, but in ‘capacity building’ and the like. The hypocrisy of these clowns is breathtaking.

So far, Fischer Boel has roundly rebuffed such calls, and appears committed to the development fund idea. This is one to watch with interest.

Yesterday the Governor of the Bank of England wrote a letter to the Chancellor explaining why the UK had exceeded the inflation target of 2 per cent and had reached 3.3 per cent. The letter cites the cause as “unanticipated increases in the prices of food, fuel, gas and electricity”.

The UK runs a large trade deficit in food and agricultural products, at around 22 billion euros or 13 per cent of GDP (see table below). This makes global food price increases especially damaging for reasons that I’ll explain below. By contrast, France runs a trade surplus in food of almost 5 per cent of GDP. For net food importing countries the rising cost of food is just as bad for consumers as in net food exporting countries, but it is less pernicious for the economy as a whole since more of the increased cost of food will accrue as increased income for French farmers, as opposed to leaving the country altogether.

Imported inflation is worse than what might be termed ‘home grown’ inflation because it represents a net drain on the economy as a whole and it is harder to cure by raising interest rates, the traditional curative for home grown inflationary pressure. Since UK interest rates have zero effect on the world price of food they are useless as a way of controlling food prices. Worse still, imported inflation causes a depreciation of sterling, which further erodes the population’s purchasing power vis à vis imports.

Since people cannot do without food, when food prices go up they will either have to spend less on something else (consumer goods, leisure, saving) or ask their employer for a pay rise. Wage inflation (known as a second round effect) is likely to provoke a response from the central bank in the form of higher interest rates, which will slow economic growth and send the economy further towards recession. Imported inflation plus successful claims for wage rises, and thus further increases in producer prices, higher interest rates and less economic growth is the toxic cocktail known as stagflation, a feature of many economies in the late 1970s following the oil price shocks.

So what should be done? The first task for central banks is to evaluate the nature of the rise in food price: is it a one-off increase or a long term trend? If it’s a one-off increase it can much more easily be set aside. Central banks need to decide whether to focus on ‘headline inflation’ (CPI, RPI or any number of other flavours) or ‘core inflation’ (which generally excludes things like fuel and food, due to their highly cyclical nature and the fact that their prices are determined on world markets). The US Federal Reserve has a reputation for focusing on core inflation while the Bank of England has a remit to keep headline inflation at or around 2 per cent.

Chris Allsopp, a former member of the Bank of England’s monetary policy committee, now director of the Oxford Institute for Energy Studies is quoted in The Observer as endorsing a the view that core inflation should be the target of monetary policy, not headline inflation:

“So far, as far as I can see, though we have had a lot of headline inflation, a very large proportion is actually due to the feed-through of oil prices and food prices, and the standard, conventional response is to let through those effects.”

The second task for central banks is to assess whether food price rises are likely to result in successful claims for wage increases. This in large part depends on the willingness of employees to hold out for higher wages as opposed to accepting real terms cuts to their wages as a result of higher food prices. A lot of this comes down to psychology and expectations about the future prospects of the economy. If people feel that the economy is heading for a fall and that any job is better than no job at all, they may be willing to accept that they’ll be less well off as a result of rising food prices. The slump in the housing market triggered by the global credit crunch is already contributing to the notion of economic gloom that may dissuade people from pressing for big wage increases. The decision of the ministers of the UK Government to forgo their annual pay increase suggest that they are hoping to spread the idea of wage restraint among the rest of the population. The Governor of the Bank of England indicated that ‘pay growth has remained moderate’ and an economic slowdown is already ‘in train’ and that this will dampen the pressure for ‘second round’ wage and price rises.

The problem is that the harmful impacts of food price rises fall most heavily on the poor, for whom food represents a higher proportion of household outgoings. Thus food price rises are very regressive, and there is every chance that poor people will be facing very tough choices: whether to eat or to heat their homes or whether to feed or clothe their children. In the UK this looks likely to set back the government’s progress towards meeting its high-level targets of reducing child and pensioner poverty.

In the long run the only sure way to get food prices back down is to increase agricultural productivity, and the best way to do this is by research and investment in agriculture, especially in parts of the world where productivity is lagging behind (such as in sub-Saharan Africa). The problem is that this kind of policy takes a long time to come good. We may be stuck with higher food prices for a long time to come, and in the mean time governments would be wise to use redistributive flanking measures to protect the purchasing power of the poorest and most vulnerable.

Further reading:

ITEM Club Special Report – Food For Thought: How Global Prices Will Hit UK Inflation and Employment.

HM Treasury: Global commodities: a long term vision for stable, secure and sustainable global markets

The next technological revolution is likely to involve GM crops, but they face intense resistance in Northern Europe with the concerns of consumers fanned by environmental groups. This applies as much to imports as to local production. The phrase ‘Frankenstein foods’ has lodged itself in consumers’ minds.

Spiralling food prices are placing supermarkets under pressure from farmers’ leaders to put poultry fed with genetically modified products back on the shelves. The English National Farmers’ Union has held talks with the product managers of all the major supermarkets to explain that shortages of non-GM soyabeans – the key protien source for poultry – was making it both extremely expensive and increasingly difficult to source the GM-free products demanded by retailers.

There is no sign yet that the campaign has forced a change in policy. Supermarkets are very jealous of their green image which they see as giving them an edge over competitors, particular in value added markets where price is not the only differentiator. Sainsbury’s have sad that they are investigating ‘potential sustainable solutions.’ Two of the greenest supermarkets, Marks and Spencer and Waitrose, have said that they will not change their policy.

As the world’s biggest exporters have devoted more land to GM crops, the cost of unmodified soyabeans is rising. British farmers are currently paying around £276 per tonne for GM soya and £293/t for non-GM. With the US, the world’s biggest producer, now 95 per cent GM, the UK has looked to Brazil for a GM-free alternative. But Brazil, the world’s second biggest soya exporter, is expected to increase GM plantings from 54 per cent of its total crop to 65 per cent next year and 80 per cent over the next decade.