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Dr Dirk Bezemer: ‘The West must put a stop to food speculation’

01 February 2012

Countries presently suffering from food shortages – especially those in Africa – need to start producing more food themselves. And they have the capability to do so. Modern agricultural techniques can increase production, but only if the governments of the affected countries are prepared to lend their full support. This is the opinion of Dr Dirk Bezemer, Associate Professor of Development Economics at the University of Groningen. ‘The role of the West will diminish in the long term, but in the meantime Western countries can help by curbing food speculation. This could make a huge difference as the current high food prices are partly to blame for the growing number of starving people in the world.’

Dirk Bezemer
Dirk Bezemer

During the past fifteen years, and especially since 2005, the number of people suffering from hunger has been on the increase again, both relatively and absolutely. According to the FAO, the UN’s food organization, the number of starving people in the world fell from 870 million in 1969 to 770 million in 1995. Today that number is probably more than one billion. Ironically, the causes of the fall and the increase in world hunger are related to each other, says Bezemer. ‘The current increase in hunger is partly the consequence of increased food prices. And that increase is caused by the success of South East Asia. Back in the 1960s, countries like China, Indonesia and India had high hunger rates, but thanks to their economic growth these have decreased significantly. These countries are consuming more, and in particular more meat, with rising prices as a result.’

Speculation and land grabbing

Moreover, there are clear signs of food speculation, says Bezemer. ‘Thanks to flexible monetary policies since 2002, after the dotcom bubble burst, a lot of money has been created. Of course, all this money has to generate more money and when shares and real estate failed to pay off, many investors turned to commodities. There has been a tripling of options and futures contracts, i.e. speculation, in the food market since 2002. Meanwhile, food prices have doubled and research has shown there is a connection.’

As poor people in developing countries typically spend two thirds of their income on food, price increases result directly in more hunger. Bezemer is in favour of more control of food speculation through regulation. ‘Another factor is the land grabbing we suspect is happening, whereby countries like China, South Korea and various Gulf states are buying up huge tracts of agricultural land in Africa. Oxfam estimates that foreign investors own an area of agricultural land in Africa about four times the size of France. The harvests are mainly exported, so that there is less food available locally and prices rise. In theory such investments can be a boost to the local economies, but in practice there is no evidence of this.’

Development aid

Bezemer believes that the long-term solutions lie in the countries with the food shortages themselves. In Africa, agriculture has hardly developed at all in the last 25 years, since the 1980s. Bezemer: ‘It was thought that there was more to gain by developing other sectors, but that was a major mistake. In 2008, the World Bank’s Agriculture for Development report was published, which emphasized how agriculture in fact forms the basis for broader development. This, after all, is also how the Netherlands became great.’

Innovation

Innovation is seen as the key to achieving a world free of hunger. More land must be developed for agriculture, but above all we need to improve the yields per hectare though irrigation, fertilization, new breeds and improved agricultural techniques. The West can help to achieve this, but the real responsibility lies with the governments of the affected countries, says Bezemer. ‘Successful transformations to more capital-intensive agriculture in the past were always underpinned by stable governments with long-term visions who did not rely on free market mechanisms. This does leave me rather sceptical about whether Africa, with all its instable governments, can be successful in the short term. Farmers tend to have little influence on politics because they are poor. However, many countries do in fact have the resources to invest in agriculture, partly thanks to the high commodity prices of recent years. There are signs of agricultural investment and increasing productivity. If this trend continues, then Africa will experience its own Green Revolution in the 21st century.’

Curriculum Vitae

Dr Dirk Bezemer (1971, Nieuwkoop) is an Associate Professor at the University of Groningen, where he lectures in Development Economics. He has published on the role of agriculture in the development process and contributed to reports for the World Bank, the OECD and UNCTAD.

Last modified:15 September 2017 3.10 p.m.

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