Examination of Witnesses (Questions 32-39)
MR SIMON
MAXWELL AND
DR STEVE
WIGGINS
22 APRIL 2008
Q32 Chairman: Thank you. I am sorry to
have kept you waiting, although I know you were sitting at the
back listening to that. Perhaps, again, formally for the record,
you could introduce yourselves.
Mr Maxwell: I am Simon Maxwell,
the Director of the Overseas Development Institute in London.
My colleague is Dr Steve Wiggins, who is a specialist on this
subject.
Q33 Chairman: Thank you very much.
I am sure the questions will not surprise you very much. You are
obviously aware of the context of the discussion. This inquiry
is specifically into the role of the World Food Programme. I think
it would be fair to say that the issue has escalated since we
decided to undertake the inquiry and, as we have discussed, the
WFP is crucial but is not the only agency that has to address
this. I just wonder if we could perhaps start by exploring your
thoughts about how you think the WFP should respond to the current
situation. Hugh Bayley was asking about the role of cash and vouchers.
Do you think they should be more widely used and what are the
risks and the possible negative downsides of doing that? Tell
us really in your own terms how you feel WFP should best respond
to this situation.
Mr Maxwell: I think, Chair, you
are asking two questions. The first is about the role of the WFP.
You have seen Josette Sheeran in action. She is charismatic and
effective and one of the best UN leaders of the current generation,
engaged on a project which is hard but necessary: to move WFP
from being an agency which concentrates on the logistics of delivering
food to emergency situations to one which is concerned with tackling
hunger more widely. The move will need a different attitude by
donors and different skills in WFP but, for the kind of reasons
that Hugh Bayley was hinting at, it will put WFP in the right
position in terms of the UN as a whole. The key to the problem
is the shift between cash and food that you talked about in your
evidence session with her, which is a constant problem because
markets are constantly changing and the right answer to the question
of whether to provide food or whether to provide cash can change
at very short notice. I hope donors will support what she is trying
to do, and the strategy exercise they are engaged in is an important
one. If it is successful, that still leaves your second question
of where the UN system is as a whole. When Josette Sheeran was
a member of the High-level Panel on UN reform along with Gordon
Brown there were three sets of recommendations. One said work
more closely together at country level, and pilots are beginning
to happen, although mostly in development situations rather than
emergency situations. The second was to have one single governing
body. That has not happened at all. The third was to have one
single fund for all of this, and that has not happened at all
either. It would be interesting to explore the reasons why, but
the food crisis does provide an opportunity to make progress.
It would be very helpful if the large countries like the UK would
say to the UN system "We want one 10-page summary of what
you want to do as a UN system, signed by the Secretary-General
and delivered to the series of meetings that is happening through
the summer", the Call to Action, the G8 and so on.
Q34 Sir Robert Smith: Obviously,
the World Food Programme is looking for increased resources in
the current situation. Without those resources being delivered
there is going to be narrow targeting and tighter prioritisation,
so in the longer term how should the Programme ensure the immediate
need of food assistance for the safety net?
Mr Maxwell: The place to start
is to look from the inside out rather than the outside in. Something
that has not been very much discussed this morning is the importance
of country leadership. In the aid world more widely, the conversation,
especially this year, has been around the importance of alignment
behind country-driven priorities and harmonisation of donors.
That is an agenda driven by the OECD[12]
and known as the Paris Agenda. The first answer to your question
is to ask the countries themselves what they want to do in terms
of safety nets for poor people, and then to look at how those
can best be supported by external donors. The FAO published figures
this week that say that the total extra import cost for low-income
food deficit countries this year will be $20 billion. That dwarfs
many times over the resources required by WFP for their particular
safety nets. We know that although WFP is reaching 20 million
children, did Josette Sheeran say, there are 150 million children
who are malnourished in the world. So the whole question of social
protection and safety nets needs to be at the heart of an agenda,
driven by the countries themselves. Then we need a range of resources
to deliver support to that, most of which will be in the form
of cash.
Q35 Sir Robert Smith: Are the 20 million
the worst affected of the 150 million?
Mr Maxwell: Not necessarily, because
WFP has historically been moved to a position by donors where
it focuses mostly on long-term political emergencies, such as
Darfur or Southern Sudan. There are very many children below the
80% cut-off which marks severe and chronic undernutrition living
in south Asia and in countries in Africa which do not receive
that kind of assistance. WFP also has a school feeding programme
but that is highly selective and reaches only relatively small
numbers of schools, and there is a debate about whether or not
that is the kind of thing that should be rolled out in an emergency.
Q36 Hugh Bayley: To what extent is
agriculture the solution to food shortages, particularly in sub-Saharan
Africa?
Mr Maxwell: We know from many,
many years work on nutrition, and particularly the work of the
Nobel prize-winning economist, Amartya Sen, that people on the
whole do not die of hunger because there is not enough food in
the country or in the market. They die of hunger because they
do not have access to that food, what Amartya Sen called entitlement
to food. So in dealing with long-term problems of hunger, we need
to ask the question how people access food, what the source of
their livelihood is and how markets provide the food. Sometimes
we need to provide food directly. More often we need to provide
cash. As we then think about the needs of farmers, they will often
find the best source of livelihood growing crops which are not
food: coffee, tea, sisal and cotton are very important sources
of livelihood and very important sources of entitlement for many
poor producers. So it is important not to be driven by a kind
of food fetishism in thinking about the solution to global food
problems. This is something that my colleague works on a great
deal and may want to add to if he is allowed to, Chairman.
Dr Wiggins: Just to add a little
bit to that, the role of agricultural development is probably
best seen through two lenses. One is that agriculture is a source
of employment and income, not only to farmers and farm labourers
but also to people who are engaged in the food chain, to people
who gain their livelihoods and incomes through multiplier effects
as farmers spend additional cash. A vibrant agriculture and vibrant
agricultural development is something that can raise incomes generally
in the rural economy, where 75% of the world's poor are located.
But the other side of it is equally important. If you look at
what has happened to world food prices until recently, since round
about 1950 you have a very large fall in food prices, and that
has been driven by agricultural development. If you take a country
like Bangladesh, which at independence, just over 30-odd years
ago, faced a very poor prognosis. Between the year 1980 and the
year 2000, the wholesale price of rice on the market in Dhaka,
the capital, was just about halved. That was largely owing to
a green revolution. Halving of the real price of rice was an immense
benefit to the poor of Bangladesh, whether they were farmers or
not. This is why the recent rise in food prices is so alarming,
because if we argue that the fall in food prices is so beneficial
to the poor, we have to be alarmed about something that pushes
us backwards.
Hugh Bayley: Some strategic changes,
climate change, oil prices—I do not think they are going
to drop back—are generating a doubling of food prices. What
I am not clear on is whether the Amartya Sen truism that there
is enough food in the world and one needs to look at the economics
and the distribution systems will hold true in 10 years' time.
Do we need more food production, particularly more regional food
production? Is Africa's solution a green revolution in Africa,
new seeds to deal with the changed climate, more irrigation, or
have things not changed?
Q37 Chairman: Can I reinforce that?
Dr Clay in his evidence to us says, "The prevailing wisdom
now is that, against this strong demand scenario, aggregate foodgrain
supply response in the short term will be insufficient to pull
prices down very much", and yet DFID says prices have already
weakened.[13]
There are signs that the market is already responding. Just on
the facts—well, not the facts because they are projections,
and projections by definition are not facts—what is your
take on that? It seems pretty crucial that we actually know what
we are dealing with.
Dr Wiggins: If you look at the
history of world food prices, since 1950 there has only really
been one major spike, which was 1973-74, when the prices of most
cereals went up by something like two, three or four times between
1972 and the peak in 1974. At the time those events were seen
as almost apocalyptical because that was a time when world population
was rising faster than we had ever seen it. In fact, in retrospect,
it was the maximum rate of population growth. It was also just
after the disastrous droughts of the Sahel from 1968 to 1972 so
there was a snese of environmental crisis. But that particular
price spike was over something like 18 months after—
Q38 Hugh Bayley: It was triggered
by oil, was it?
Dr Wiggins: It was triggered by
some harvest failures, particularly in the Soviet Union, some
of which at the time were seen as the result of climate change.
It was also triggered by the oil price, which made fertiliser
much more expensive and caused a breakdown in the application
of fertiliser over a short period. However, 18 months later most
of that spike had gone and the long-term downwards food prices
trend was re-established. There was a small spike round about
1995, 1996 and again, it lasted something like 18 months. Price
spikes last about as long as it takes for the big farmers in the
world who can react to prices fairly quickly to get to work. So
we have every expectation that the current price spike will be
largely overcome once the northern hemisphere's harvest is in
in the third or fourth quarter of this particular year, but what
all the projections are showing at the moment—and there
are at least three sets of major projections—is that the
medium-term forecast over the next five to 10 years is for prices
to be at something like 20 to 40% higher than we have seen them
in the recent past. That may sound quite a long way higher and
it is not desirable, but against the historical record of declining
food prices, that takes us back to food price levels that we saw
in the early 1990s.
Q39 Hugh Bayley: What, if anything,
could be done? You are saying we should not overreact to the price
spike we are in at the moment, but what could be done to reduce
the cost of food to the poor given a market projection that basic
costs will rise by 20 to 40%?
Mr Maxwell: What we have to do
is to take short-term measures which will not undermine long-term
solutions. The big international agencies like the World Bank
are advising countries strongly against export bans or tariffs
which will inhibit trade, and strongly in favour of targeted safety
net programmes. There are some countries where that is relatively
easy because such safety nets or food subsidy programmes already
exist, for example in Egypt and in some countries in Latin America
with cash transfer programmes. There is a group of countries where
the basic social protection infrastructure is not in place which
are going to be the most problematic countries over the coming
year or two.
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