The World Bank, IMF, and the US and other developed country governments are ‘shocked, shocked’ by the global food and hunger crisis: is this cluelessness or dishonesty?



(April 18, 2008) The rise in world food prices and its effects on poor people is a major concern. It is certainly one for Hunger Notes. Nonetheless, I, as Hunger Notes editor, have watched the emergence of the hunger crisis with concern, but also bemusement. The concern is for poor people, the bemusement is a response to the international response, including the World Bank, the IMF, and developed country governments.

The World Bank, the IMF, and the US and other developed countries have actually played a major role in creating the world food crisis. News stories–see our front page– that suggest that they are promptly responding to the world food crisis completely miss this central point. Let me focus on the World Bank and the US government–the World Bank because it is (nominally) the major international institution focusing on helping developing countries, the United States (government) because it is actually the major international institution due to to its military and political power, because it is my country, and because it has undertaken specific US government actions worthy of mention.

The World Bank and the US government, and the world food crisis: Cluelessness, dishonesty or straightforward response–you be the judge

1. Why is either the Bank or the US government surprised about lack of agriculture production? Both are aware of the statistics, the issues (some of which are presented below), and the foreign assistance record. Considering first foreign assistance to agriculture, both the World Bank and the United States government know assistance to agriculture has fallen dramatically. Both had key roles in this decision–the Bank as the largest donor and the US as (more or less the largest developing country donor, and the more or less largest donor to the World Bank). Agriculture’s share of Official Development Assistance (ODA), including funding from the World Bank, declined sharply from 1985-86 to 2005-06, from over 12 to just 3.1 percent. [1] In absolute terms, support for agriculture went from a high of about $8 billion in 1984 to $3.4 billion in 2004.[2] Although donors have declared that they wanted to increase their support for agriculture and rural development, these declarations have not resulted in actual funding increases for agriculture, as Figure 1 below shows.[3]

In light of these figures, World Bank president Robert Zoellnick’s response calling for a ‘new deal’ was minimal, mainly oriented towards public relations–‘we are responding to the situation,’ and dishonest, partly because it called forth a major US response to a crisis in the past, Franklin Delano Roosevelt’s New Deal, as a fig leaf for a minimal program.

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2. Both the World Bank and the US government know that their specific programs for agriculture have declined substantially. (Tracking this is very difficult for an outsider.) In the United States Agency for International Development’s program, for example, there used to be what was termed a ‘functional account’ for agriculture, along with other functional accounts such as health and education. With functional accounts, agriculture spending was easy to measure from year to year. USAID decided to get rid of functional accounts, so that it could decide what was the best allocation for foreign aid funds. Very possibly in large part as the result of this decision, all of the USAID development assistance account is now no more than the agriculture account was in past years. Evidentially USAID, within the US government budget process, was not able to obtain increased funding (or even worse, did not want to–USAID is a ‘team player’ in the US government foreign policy structure) and thus USAID funding for agriculture has declined substantially.

3. The World Bank knows–should know?–that its structural adjustment programs (continuing from the 1980s to the present day and strongly supported by the IMF and the US and other country donors) drastically reduced country government funding tor agriculture (as well as other key sectors such as education and health).

4. The same World Bank structural adjustment programs also reduced fertilizer subsidies to poor farmers (in the name of ‘end subsidies–let the market provide’). Unfortunately this approach not only did not increase, but substantially decreased fertilizer use in Africa, so much so that fertilizer use in Africa among small farmers is nearly non-existent, and increasing fertilizer use is a key part of the new Gates foundation agriculture initiative. It is possible to suggest that foreign aid creates a problem and then tries to solve it!

5. The United States provides a large subsidy for ethanol production, diverting land from food production. In addition it and the European Union have major other farm programs negatively affecting farmers in developing countries. I am glad the US government is fearlessly speaking out against these subsidy programs!

6. Genetically modified food. The United States government has been a strong supporter of genetically modified food. I believe that the United States government (in this as other issues) is in a very substantial degree acting in behalf of corporate interests, rather than for example the large religious community that thinks we should help the poorest people in the world. There are major issues involved in genetically modified food. I mention only one. The seeds are the property of the corporation which has patented and sells them. The seeds do not reproduce by themselves, but must be purchased every year. This is a major and disastrous change. Seeds in developing countries (and really everywhere before seed companies and GMOs) are the result of harvests, kept by individual farmers (and selected for their qualities), and replanted the next year. Now seeds are to be ordered from a corporation? This is progress? To set aside 10,000 years of fundamental human procedure, a procedure on which human civilization is based, seems to me to be the height of folly.

So for me World Bank and US concern for the world food and hunger crisis is ‘crocodile tears.’

Lane Vanderslice is the editor of Hunger Notes

Citations

[1] OECD/DAC, Statistical Annex of the 2007 Development Co-operation Report, December 2007
[2] WDR, pp 41-42. While this decline was common to bilateral as well as multilateral aid, the decline in the latter was more pronounced.
[3] FAO, Reducing Poverty & Hunger
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