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The debt crisis, not the food crisis, still hits the headlines

Two crises pummelled the planet in 2008. One was the financial crisis, which almost nuked the global banking system after the collapse of Lehman Bros.

The other was the food crisis. Soaring food prices and suddenly falling incomes and yanked credit lines – thanks in part to the financial crisis – threatened mass hunger and famine. Food riots broke out in dozens of countries. All that was lacking to make the year perfectly tragic was a plague or two of Biblical proportions.

Four years later, both crises are still officially intact. Or are they? Certainly the debt crisis is grinding forward, spreading economic ill throughout Europe. Sovereign bond yields are still at dangerous levels in Italy and other countries. A Greek default and damaging exodus from the euro zone has gone from unimaginable to somewhere between possible and probable. The euro zone is slipping back into recession. If it were not for almost €500-billion ($648-billion Canadian) in cheapo loans injected into the banking system by the European Central Bank, lending would have come to a standstill.

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And the food crisis? Go to the home page of the United Nations Food and Agriculture Organization (FAO), whose headquarters are in Rome, and you get hit with the stark headline, in black and white: "1,000,000,000 People Live In Chronic Hunger," followed by "We're Not Going To Take This Anymore" (without apologies to Peter Finch in the film Network).

So there you go. The food crisis hasn't gone away either – one in seven people goes to bed hungry. But where did that figure come from? And is it really that high? The FAO has been using the round, riveting figure for some time. In 2010, the FAO estimate was 925 million. For PR purposes, one billion is certainly better. "We don't know really know how many people are hungry," says Marco Ferroni, executive director of the Syngenta Foundation, an independent agricultural development foundation that is funded by Syngenta of Switzerland, one of the world's biggest agribusiness companies.

A new report by the U.S. National Research Council, called "Measuring Food Insecurity and Assessing the Sustainability of Global Food Systems," pretty much concludes that the FAO's measure of the number of hungry people is at best a good guess. FAO generally relies on national data supplied by member countries, which can be unreliable. The authors said the FAO database's "accuracy is very much open to question."

The FAO itself was not in total disagreement. "The FAO is currently working on a comprehensive revision of its methodology," Pietro Gennari, director of the agency's statistics division, said in the Research Council report.

In all likelihood, the number of hungry is less than a one billion, depending on your definition of hunger, which is not to be confused with malnutrition (you can be malnourished and not hungry since hunger is technically a measure of caloric intake).

To be sure, there are tragic regions where extreme hunger is rampant, such as the Horn of Africa. In South Sudan, the UN's emergency food agency, the World Food Program, and other humanitarian groups are feeding three million people a day. In some regions with adequate food, grinding poverty ensures that many families don't get enough to eat. In many parts of the world, hunger is more of a purchasing power problem than a supply problem.

Even more worrying is the FAO data on cereal productivity growth compared to population growth. Productivity growth – the extra crop yield produced each year by the same amount of land – has been on the wane because all the easy solutions, from irrigation to fancy fertilizers, have already been implemented. The productivity growth figure is now about 1 per cent, versus 3 or 4 per cent in the 1960s, 1970s and 1980s. But guess what? Population growth is now slightly higher than yield growth.

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That poses two dangers. The first is generally tight supplies, leaving the food system vulnerable to production shortfalls triggered by, say, flooding or drought. The second is the spectre of mass hunger if population growth exceeds yield growth year after year. Eventually, the planet would not have enough food to feed its population.

Now the good news. Food prices, while still high by historical standards, are coming down. This week, the FAO reported that its food price index fell 2.4 per cent in December over November, taking it down 11.3 per cent below its February, 2011, peak. Record cereal crops helped drive down prices, proving that the best cure for high prices is high prices, which stimulates extra production.

The other good news is that crop productivity may be on the verge of a rebound, however modest, thanks to improved irrigation techniques, genetically modified seeds (tailored, for instance, to resist to certain bugs or diseases, or to be suited to saline conditions). Clever financing will also play a role. The Syngenta Foundation and Canada's International Development Research Council are to host a conference in Ottawa next month on agricultural public-private partnerships.

The food "crisis" has disappeared from the headlines. The debt crisis has not. That's because more progress has been made in fighting hunger than fighting debt, though it may be partly because the one-billion-hungry figure is considered unrealistically high. To the hungry, excess debt is a rich country's problem that they could only dream of having.

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About the Author
European Columnist

Eric Reguly is the European columnist for The Globe and Mail and is based in Rome. Since 2007, when he moved to Europe, he has primarily covered economic and financial stories, ranging from the euro zone crisis and the bank bailouts to the rise and fall of Russia's oligarchs and the merger of Fiat and Chrysler. More

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