Editorials Christmas 2009

World hunger: a reasonable proposal

BMJ 2009; 339 doi: https://doi.org/10.1136/bmj.b5209 (Published 11 December 2009) Cite this as: BMJ 2009;339:b5209
  1. Frederick Kaufman, professor
  1. 1City University of New York Graduate School of Journalism is 219 West 40th Street, New York, NY 10018, USA
  1. fredkaufman{at}verizon.net

    Commodity markets explain why so many people are going hungry in a world of plenty

    Last year saw 250 million people added to the ranks of the starving and malnourished, pushing the world total past one billion, or one in every six people on the planet.1 As I read reports of the dramatic upsurge I was reminded of a rainy afternoon in Cambridge two summers ago, when I interviewed Amartya Sen, the Harvard professor who had won the Nobel prize for economics in 1998 for his work on poverty and famine. According to Sen, hunger was not only entirely preventable but profoundly unreasonable.

    I had come to Amartya Sen’s house to discuss the recent efforts of the Bill and Melinda Gates Foundation and the World Food Programme to help eradicate world hunger by means of a new programme, called Purchase for Progress. And while our discussion began with the specifics of global food aid, it eventually ranged beyond the particulars of poverty.

    “I believe in reason,” Sen told me. “There are those who want to repress reason: Christian, Muslim, and Hindu fundamentalists, and those who pick a totem market economy, the liberal economic state. These are all anti-reason.”

    Ironically, at the time of my visit to Cambridge the world’s markets were in the throes of one of the greatest food commodity bubbles of all times, a deeply unreasonable surge of speculation that had already doubled the costs of wheat, rice, corn, cooking oil, and numerous other staples and sparked food riots in 39 countries across the globe. Such price spikes in world food markets had little basis in rationality—the wheat harvest of 2008 eventually proved larger than any wheat harvest in human history. But the damage had been done—a quarter of a billion more people had been relegated to a status the “hungercrats” euphemistically call “food insecurity.”

    As world hunger numbers rocketed, the Gates Foundation and the World Food Programme continued to back Purchase for Progress, which has made a totem market economy a panacea for starvation. It is common knowledge that markets do not always behave rationally, but that has not stopped one of the world’s premier capitalists and the world’s largest humanitarian organisation from pursuing various strategies to foster more robust grain markets in the world’s least developed countries. Indeed, one of their chief anti-hunger efforts centres around the creation of commodity markets.2

    How can commodity markets resolve the tragedy of world hunger? In theory, the forward contracting methods developed by Purchase for Progress will give small farmers the opportunity to arbitrage—and thus stabilise—prices for their product. Instead of all farmers going to market at the same time of year, and thus driving post-harvest grain prices lower and lower, Purchase for Progress will provide the farmers of least developed countries a guaranteed sales price in advance of their harvest. Such price guarantees will provide a measure of financial security; collatoral for loans from local bankers; and thus the opportunity to purchase fertiliser, farm equipment, and perhaps even some day labour for the upcoming harvest.

    All this may sound like a pretty good idea, but programmes like Purchase for Progress take for granted the idea that free market dynamics can transform the indigent peasant into a bona fide agribusinessman, and that assured future sales of grain will increase output, help alleviate local conditions, and thus mitigate world hunger.

    But as the titans of global food aid seek solutions to mankind’s greatest health threat—a hunger related death every four seconds—they may do well to remember Amartya Sen’s warning and retain a healthy scepticism regarding the worship of a totem market economy. Free markets may have worked well for oligopolists like Bill Gates, but the World Food Programme cannot simply will them into existence. In fact, the imposition of commodity markets within the world’s least developed countries has a history of failure.3

    It took hundreds of years for modern commodity markets to develop in London, Chicago, and New York, and these markets rode the back of heavy investments in infrastructure, transportation networks, and agricultural education. The Chicago Board of Trade may have facilitated American farmers, grain storers, and millers in their efforts to produce and manage grain surpluses, but futures markets cannot resolve the intractable political, economic, and social ills of—for example, Uganda or Guatemala, and provide a short cut to food security. Such programmes will benefit bankers more than farmers, and perhaps further alienate the rulers from the ruled, an alienation that lies at the heart of hunger.

    Indeed, the dirty secret of world hunger is that the creation of a grain surplus is no solution. There is plenty of food on earth, more than double that needed to feed all 6.5 billion of us.4 The problem is not food availability, but price. People starve when the daily pay check doesn’t cover the daily bread.

    All of which is not to say that small farmers do not need our help. But instead of installing futures markets and teaching the nuances of arbitrage, Bill Gates and the World Food Programme might consider expending their manifold resources on emergency income creation and employment programmes. Perhaps even more important, small farmers and landless peasants need to be supported in their efforts to gain political voice and power. As Amartya Sen has often pointed out, there has never been a famine in a representative democracy.5 A political voice is often the shortest path to a full stomach. Finally—strange as it may seem—the best early warning system for a hunger crisis is not a futures market but a free press. Rulers do not like to see their starving subjects on the front page.

    Gates and the World Food Programme could spend their money to much better effect than on a programme like Purchase for Progress, because the totemic worship of liberal free market economics is not a reasonable solution to world hunger. And in this particular case, not being reasonable has fatal consequences.

    Notes

    Cite this as: BMJ 2009;339:b5209

    Footnotes

    • Competing interests: None declared.

    • Provenance and peer review: Commissioned; not externally peer reviewed.

    References

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