Food for All

Jeremy Oppenheim, Tristram Stuart

NOV 13, 2013


LONDONWith food prices having doubled in the past decade, food security is back on the international agenda. How can the world produce more to feed the next billion people? How can agricultural yields be raised? What is the best way to develop aquaculture?
Unfortunately, this focus on the supply side misses half the problem. The world already produces more than twice the number of calories that the human population requires. An estimated one-third of global food production is wasted. In poor countries, food is lost due to inadequate storage and gaps in the supply chain (for example, a lack of refrigeration); in rich countries, food is also wasted in the supply chain, and consumers throw a lot of food away.
Moreover, in many cases, it is poverty, not lack of food in the market, that drives hunger and nutritional deficiency. Millions of people simply cannot afford to buy the food that they need, which could still be the case if supply were increased. Fixing the demand side to get nutritious food to the poorparticularly to the mothers and children who are most vulnerable – is one of the most pressing food-security imperatives.
A broad range of initiatives can contribute to a solution. For example, micro-level food security can be enhanced through programs that deliver free meals to vulnerable population groups. Schemes that provide free meals to schoolchildren not only help to feed the young; they also create an incentive for parents to keep their children in the classroom.
Initiatives like these are especially successful when complemented with programs that provide access to clean water, energy, safe cooking stoves, and so on. Action to reduce diarrhea – so that children retain the nutritional value of what they eat – is another part of the solution.
Of course, in very poor countries and regions, where people cannot afford to buy food on world markets, the supply side should not be neglected. Boosting yields of locally grown staple foods (rather than cash crops) would increase self-sufficiency and strengthen resilience when international food prices are high.
At the same time, higher agricultural production must be balanced against the associated ecological and social costs. Output in South America, Southeast Asia, and Central Africa currently is being raised mainly by clearing tropical forests, grasslands, and wetlands. This approach contributes to climate change, interrupts hydrological cycles, and causes soil degradation, all of which undermine our planet’s ability to produce food in the long term.
If current trends continue, the majority of the world’s remaining species will be extinct by the end of the century, and it is food production, above all other factors, that has driven the decline. More than 80% of all endangered birds and mammals are threatened by unsustainable land use resulting from agricultural expansion.
The lesson is clear: We should focus our attention on making production more efficient, reducing waste, and addressing the problem of unsustainable consumption.
Reducing food waste could save more than $250 billion worldwide – the equivalent of 65 million hectares of agricultural land use – by 2030. Building a temperature-controlled supply chain with 30,000 tons of modern storage in China would cost more than $100 million a year for the next 20 years. Many developing countries simply do not have the money for such up-front investment. But, with the right focus and much more modest resources, they could dramatically improve the quality of grain silos where more than 30% of foodtypically located close to the rural poorspoils to the point of being unfit for human consumption.
There are already some positive trends that should be capitalized on globally. In the past few years, households in the United Kingdom have cut their food waste by 21% and the food industry has trimmed its waste streams by 8%. The public is more willing to forgo cosmetic perfection: “uglyfruit and vegetables are the fastest-growing sector of the UK’s fresh-produce market, last year saving 300,000 tons of produce that would otherwise have been wasted for being the wrong shape or size.
Much anxiety is directed toward growing demand for meat and dairy products in China and India. But per capita meat consumption in the United States and Europe is still more than three times higher than in either country.
In addition to eating less meat, production of it needs to be more resource-efficient. In the past, cattle, sheep, and goats fed on grass and other energy sources unavailable to humans, while pigs and chickens fed on waste, thus contributing overall to total food availability. Now one-third of all arable land is used to grow crops to feed livestock, not to grow staple crops for people. The rich buy this food to feed their animals, outbidding the poor who want to buy it to feed their children.
The United Nations Environment Program estimates that using more by-products and waste to feed livestock could liberate enough food on the world market to feed an additional three billion people. The Pig Idea campaign calls for an end to legislation in the European Union and some US states prohibiting the use of food waste to feed pigs and chickens because of the risk of animal diseases. These risks can be managed effectively through proper treatment systems (as in Japan and South Korea). The environmental, economic, and social benefits would be enormous.
The earth is capable of feeding everyone. Failing to address problems affecting supply and demand amounts to grotesque mismanagement and a crime against the world’s poor, the planet’s other species, and future generations.

Jeremy Oppenheim is a director of McKinsey & Company and a leader of McKinsey’s Sustainability & Resource Productivity Practice.

Tristram Stuart, a British author and campaigner against food waste, won the 2011 Sophie Prize.

domingo, noviembre 17, 2013


11/15/2013 11:27 AM

Euro Crisis Reprieve

End to Bailout Programs Signals Recovery

By Stefan Kaiser

Some four years after the euro crisis began, Ireland and Spain are set to graduate from their bailout programs, with Dublin planning to begin financing itself again early next year. It's a positive sign, but economists warn against premature optimism.

The summer of 2012 was horrific for Europe. The euro zone seemed on the verge of collapse, investors were reluctant to lend money to debt-burdened countries and interest on Spanish and Italian bonds breached the psychologically critical 7-percent mark. A €100-billion ($135-billion) emergency loan package to Spanish banks hardly calmed the tension. And things looked even worse for Greece, which seemed incapable of fulfilling the demands of its creditors. German Economy Minister Philipp Rösler voiced the idea throwing Greece out of the euro zone, but not even Germany was immune to the chaos after Moody's threatened to downgrade the country's top credit rating because of a potential spill-over effect.

That was all about 16 months ago, and the euro zone now appears to be in much better health. Finance ministers from the 17 countries that use the common currency met in Brussels on Thursday to discuss releasing Ireland and Spain from their respective bailouts.

Irish Prime Minister Enda Kenny had announced before the meeting that his country would begin raising its own money and financing itself again by late January or early February. It even passed on a just-in-case emergency credit line offered by European partners. In 2010 Ireland had accepted a €67.5-billion line of emergency credit from the European Union and International Monetary Fund after interest rates on the open market became unsustainable.

Spain, too, is expecting an end to its bailout program, which was given straight to struggling banks rather than the government. Ultimately the country's banking sector needed only €40 billion of the €100 billion offered.

Progress Being Made

Economic experts like Lars Feld say the former problem children of the euro zone are on the right path. "In Ireland there have been steps forward from the beginning," says Feld, who runs the Walter Eucken Institute in Freiburg.

"Meanwhile states like Spain and Portugal are also developing happily." All three countries have made it through their recessions and registered slight economic growth -- something even the euro-zone heavyweight France has not managed as of late.

A glance at financial markets, generally considered a barometer of confidence in a country's economy, also shows things have improved for ailing member states. Investors were demanding up to 7.5-percent interest on Spanish bonds in July 2012 to compensate for the perceived risk of default.

That interest rate has now fallen to just below 4 percent -- which is perfectly tolerable. Portugal has also seen its interest rates plummet, falling from more tan 10 percent in the summer of last year down to their current 6 percent.

Still, experts are far from declaring the euro crisis over. "We won't be out of the crisis for a while," says Clemens Fuest, president of the Center for European Economic Research (ZEW). "The optimism that is circulating in many places right now is overstated."

Fuest argues that the relative calm on financial markets is only thanks to the European Central Bank, and more speciifcally to the bank's president, Mario Draghi. He stated that the ECB would do everything in its power to save the euro, and started a program to buy unlimited amounts of euro-zone government bonds.

Markets have been quiet since then -- suspiciously quiet, according to critics. "The ECB has put up its protective umbrella, that's the only reason why the risk premiums on government bonds are sinking," says Fuest. "It has nothing to do with the markets' assessment." Enormous problems like billions in bad debt and high unemployment still plague Spain, he added.

Problematic Banking System

Even optimists see troubled banks in many euro-zone countries as the biggest blockade on the road out of the crisis. "There is still an immense need for recapitalization of the banks," says Freiburg economist Feld. In comparison to the United States, Europe never completely cleaned up its banking system after the financial crisis in 2008.

For all the bickering that goes on in the euro zone, all countries can agree that banks burdened by bad debt are unable to finance economic growth. A first step toward fixing that problem is giving the ECB the authority to inspect the books of the 124 biggest financial institutions in the euro zone, and unifying the bloc's national banking regulators into one big "banking union."

Of course, how that union will look and what its responsibilities will include are still highly controversial, and were on the agenda at the finance ministers' meeting in Brussels. The ministers hope to come up with a plan by the end of the year. "What will then be decisive is whether the taxpayers in the north of the euro zone will be ready to take on responsibility for the banks in southern Europe -- only then can the banking union succeed," says ZEW president Fuest.

He says he doubts European governments will come to such an agreement. "The crisis can be overcome," he says. "But first politicians have to make some immense movements. I don't know if they'll manage that."