Food Insecurity

Greg Reid

There cannot be a sustainable economy without a sustainable food supply. Food here is plentiful, diverse and relatively cheap but that has begun to change. Australia produces enough to feed 80 million people but that is less than 3% of the population of China and India. As purchasing power rises in those countries we will have to compete at the checkout.

Recently the federal government has introduced limits on foreign ownership of agricultural land, but that limitation only prevents vertical integration.

Increasingly, the best food is purchased by contract, often before it is harvested and flown directly overseas without ever being offered on local markets. This trend is already decreasing the range and quality on offer and raising prices. Baby formula is a topical example but so is lamb, beef and many sea foods.

In the last few years China alone has changed from a net food exporter to the largest grain importer and to consuming 60% of the global soy meal supply.

Rising living standards is one cause but industrial pollution has permanently contaminated over 3 million hectares of their farmland and nearly half the rivers are no longer fit for human use.

Recently, nearly two thirds of domestic rice samples were found to contain chemical residues.

A broader problem is the depletion of groundwater not only in northern china but in the Indian Punjab, Pakistan, the Middle East and across northern Africa. This ancient water reserve has been over used to irrigate crops and is failing on a massive scale.

Competition for food imports has led to more frequent shortages in a swathe of countries around the globe from Egypt to Mexico. Hungry people are restive people and in recent years there have been food driven riots destabilising many nations that once had food security.

The problem is further exacerbated by futures trading in agricultural commodities. Instead of stabilising prices this trading has created artificial shortages and price spikes as occurred in the rice crisis of 2008. If this were not enough, climate volatility driven by global warming is increasing production shortfalls from droughts, storms, floods, heat waves and salt water encroachment.

The free market model ensures only that those who can pay the most will not go hungry.

Theoretically the market rewards production during a shortage, but high costs and high debt mean farmers must gamble on maximum production, which tends to amplify supply volatility and minimise investment in long term management.

If the current destructive and destabilising trends are to be countered then food must have a special economic status. This means speculative paper trading in food must be halted by mandating that all buyers take physical delivery before resale. Producers too must offer their product on open domestic markets.

Sustainable production requires a market intervention mechanism to reward higher minimum production not just maximum production and which encourages good long term management of soil and water resources.

A percentage sustainability levy, similar to the GST, applied across all food products – whether for domestic consumption, export or imports – could fill the role. After returning a proportion to poorer consumers as food credits the funds could be claimed by farmers to offset expenditure in water use efficiency, soil conservation, natural pest management etc. Critically, farmers could only claim up to a total linked to their minimum production thereby encouraging measures that stabilise supply such as diversification, waste minimisation, staged plantings etc.

Applying this non-discriminatory levy to imports would not contravene trade agreements but is essential to encourage diverse domestic production and to discourage a transfer of exploitation to lands overseas.

Greg Reid is an ERA member living in NSW