Somalia: Tip of the Iceberg?

For years famine has haunted the Horn of Africa.  Remember “Live Aid” in 1985?  Celebrities like Bob Geldorf and the egregious Bono have made careers out of pushing famine relief so very unfortunately it has almost become a cliché.  The South Park cartoon series actually has a hilarious episode deriding Bono; we get inured to the awful pictures on the BBC and CNN.
Get used to the fact that famine is not unusual, it will increasingly become the norm, and that Somalia (and Ethiopia and Northern Kenya) represent the tip of an enormous iceberg.

Let’s deconstruct what’s happening.  And for those wondering why this is relevant to the commodity markets, the issue of famine is at the very sharpest end of demand for food, so it is essential to understand this aspect of the supply-demand equation that determines prices on the international markets.

In the 18th Century one Very Reverend Thomas Robert Malthus pointed to the problems of population growth within a space of finite resources.  Subsequent experience in the 1960s and ‘70s showed that the resource boundary can be pushed back through innovation and technical change.  The Green Revolution is a classic example in agriculture with increasing yields and understanding of how to grow crops in adverse conditions (e.g. zero till).

So everyone went back to sleep.  The EU produced literally mountains of grain and butter and the US had its PL480 program to giveaway grain.  We monetized Canadian grain to start the famous Dairy Development Board in India and a myriad other schemes to help the disadvantaged. Never mind the impact on local farmers or on incentives to actually invest in productive areas.

By the way, the industrialized countries insisted that while we could subsidize and otherwise protect our agriculture developed countries had to de-regulate, abolish subsidies and open their trade.  So the terms of trade turned unequivocally against those poorer countries where the most investment in agriculture and food production was needed. And all was right in the best of all possible worlds.

But now we re-awake to the fact that innovation in agriculture, by its nature a slow process, has been further slowed by a lack of investment (especially by governments in the poor countries), incompetent development agencies, NGOs that love the local people but fail to understand agricultural systems (which – God forbid – require agribusiness and capital and traceability and international hygiene standards), and concerns  about poor margins of profitability by the private sector investors.

The latter are slowly revising their models based on the highest prices we’ve seen ever, but for the rest the best they can do is make warning sounds, write reports and issue ineffective communiqués (e.g., G20 recently).  Needless to say the NGOs wring their hands and the bureaucrats (as they are wont to do) do nothing except siphon off the funds into salaries, study tours, “fact-finding” missions and lots of other goodies.

Yes, Dear Reader, this is the reality of agricultural development.

So with some modification it could be that Malthus was right after all.  Ironically the highest rates of population growth are in the least wealthy countries and in those countries where the ratio of persons to domestic food supply is the highest.  These are the countries where domestic agricultural capacity has been systematically undermined and whose ONLY hope now relies on private sector investment.

Some hard numbers will make the point:  even with the current disaster, outmigration and other woes, the Somali population is growing at 1.6% (2011 estimate). This implies a doubling time of 43 years.  Ethiopia, population grows at 3.2%, doubles in just 21 years; Kenya – 2.5%, doubles in 28 years.  Africa has the highest fertility rates in the world (for some countries the norm is up to 8 children per family). Sub-Saharan Africa  – including the poorest and most dysfunctional countries – held 800 million people in 2007 and was growing at 2.3% – so by 2038 (27 years from today) we can expect a population in this region alone of 1.6 billion people.

Do any of my readers seriously believe that agriculture can catch up? The author has been working in agricultural development for the last 30 years in many of these countries.  There has been no indication whatsoever that our approach has the slightest hope of feeding even the current Sub-Saharan population, let alone double that number of people.

According to the UN’s Food and Agriculture Organisation (FAO) growth rates in agricultural production are the lowest since 1960. The growth rate for 1994 to 2001 was just 1.5%. FAO (which in this case may be regarded as an authority on the subject) says, “Growth (or decline) in total factor productivity (Auth. i.e, for agriculture) results predominantly from public investment (or lack of investment – Auth. my italic) in infrastructures (irrigation, electricity, roads) and in agricultural research and extension, and from efficient use of water and plant nutrients”.

It is true that FAO goes on to say elsewhere that it believes agriculture can keep pace with population growth, but ONLY on the assumption that demand drops! Good grief! FAO also says this will be, “provided that the necessary national and international policies to promote agriculture are put in place” (Ed. my italic).
Is there any reason to believe that they will be?

The irony is that some of our most successful development projects have been in the area of health, specifically tackling HIV/Aids.  USAID’s budget for the Health Sector was (FY 2010 obligation to programs) US$5.95 billion, for agriculture (including their nicely named but more or less ineffectual “Feed The Future” Program) the obligation was only US$1 billion.

Health programs save lives and do so rather rapidly with the minimum of innovation (malaria nets, for example) and we welcome that.  But agricultural innovation even when we do it right takes years to succeed. And for the most part unfortunately and despite some people’s best efforts (usually those working in the field and not behind a desk) we do it wrong.

So we are successful at increasing the population growth but singularly unsuccessful at feeding the very people whose lives we have saved in infancyResult! 

And USAID and the other donor agencies are staffed by PhDs paid with YOUR tax money and YOUR national debt.

We estimate that any single innovation in agriculture takes a minimum of five seasons to be fully adopted (and a lot longer in some places where traditional agricultural systems prevail).  So even if fully successful, that leaves just under 6 project cycles to come up with technologies and related infrastructure to feed double today’s population of Sub-Saharan Africa.

Does anyone out there believe it can be done with present approaches?

We should mention climate change (as one has to do these days in every consulting report to the donors).  The fact is that we really have no idea of the long-term effects of climate change and even less what to do about it. But it does seem from an anecdotal perspective that many areas are becoming warmer and drier (drought is the basis of the current Somalia crisis). We do have technology that copes with changing environments (water management systems, adapted crops) but again what is needed is not more hot air from the lips of governments, but coherent action across a wide range of disciplines. Judging from the programs we’ve looked at, none of that coherence exists, so we face the prospect of decreased productivity where increases are most needed.

The fact is that famine and starvation in Africa (and maybe elsewhere) are unfortunately going to remain the norm unless we radically change our approach.  

To an extent the same logic and calculations will apply in other parts of the world; India still has the largest single group of persons below the poverty line of any country, Pakistan’s agriculture is under-performs by a huge degree and countries like Burma (we insist on not calling it Myanmar) and Bangladesh will also struggle with the problem.  Indonesia is rapidly approaching the limits to its agricultural potential.  In China population growth may be under control (though with enormous but necessary costs in human rights and in distortions of the male-female ratio) but income growth rates will equally suck in food.

Our analysis concludes as follows:  for a very significant part of the world’s population – perhaps 2 billion persons – food scarcity will remain the norm (remember – this is the basis of FAO’s assumption that overall agricultural production will keep pace with population growth!).  There will be increasing incidents of famine.  Agriculture development will largely fail to tackle this problem not because of a lack of natural resources but because of a failure of policy and decision-makers to grasp what needs to be done.  Bureaucrats will not change their spots because the sociology of bureaucracy is such that it prevents radical change and effective action “outside the box”.

For other parts of the world (e.g., China, South-east Asia) income growth will push diets towards the Western obesity model.  Food demand will be for processed products high in sugar and fat, Starbucks (expensive) coffee, “organic” (i.e., high cost) fruit and veg, meat and dairy products and high-value fish (stocks are in decline).  In this segment of the market, i.e., the growing middle class transitioning from a basic diet of products grown on their own smallholding to sophisticated products which they now consume as urban dwellers, food will be available but at a high cost (not least in terms of the energy needed to process and transport it).

Is there any hope in what we have to say on this subject? There is perhaps some.

We believe firmly in markets and that high crop prices (and more particularly good margins) will bring in the investment, innovation and technology that is required. It will come from the private commercial sector aimed at making money (anathema to many in the development community).

  • NGOs have to stop whining about GM crops and the depredations of large-scale farming and start making positive suggestions that lead to the development of integrated systems that include smallholders and agribusiness.
  • Developing country governments have to step out of the way if they cannot facilitate this investment.
  • Donor agencies need to clue in to what’s happening rather rapidly or else hand the money back to the taxpayer and go out of business.
  • Private investors should look very seriously at LONG TERM investments in agriculture and agribusiness that are sustainable and integrated with the local community and stakeholders.

Or  else we will undoubtedly live in a world where a very significant minority lives as our ancient ancestors did, ill-fed, short and brutish lives.  I find that quite unacceptable – and probably they will too with consequences we can only wonder about.
Geoffrey Quartermaine Bastin

Bangkok, July 2011

The author’s views are his own and do not reflect the opinions or policies of any of the companies or agencies or clients with which he is associated or has been associated.