The World Food Crisis

Dr. Pasour is Professor of Economics at North Carolina State University at Raleigh.

Socrates said that the best sauce for food is hunger. Today, as in the age of Socrates, there is no lack of hunger sauce. There is widespread concern about the relationship between population and food supply throughout the world. Questions are being raised about the appropriate response by the western world to meet the world food crisis.

Numerous actions have been proposed. Senator Humphrey has urged us to reduce our consumption of hamburgers by one per week. Jean Mayer, the famed nutritionist, holds that a 10 per cent decrease in meat consumption by Americans would release enough grain to feed 60 million people.

The U.S. delegation to the 1974 World Food Conference in Rome proposed a resolution to restrict the non-agricultural use of fertilizer to alleviate the world food problem. Many churches are sponsoring World Hunger Appeals to provide food relief. Individuals are encouraged to change their life style—to eat less food, to eat less meat, to use less energy, and so on. Is the world hunger problem becoming more acute? If so, why? How effective will measures such as those indicated above be in alleviating world hunger?

The concern about the relationship between population and the food supply is not new. Sir Thomas Malthus predicted in 1798 that population would continually increase faster than the food supply, causing chronic food shortages.

Today, in much of Asia, Africa and Latin America the Malthusian specter still stalks the land. The prospect of world famine is held before us with hundreds of millions of people starving. Yet, it was not always so. A decade ago food production was increasing in many of these areas which today appear hopeless.

Why has the hunger problem suddenly become more acute? Conventional wisdom holds that the world food crisis is caused by a population explosion. But this is not the case. World food production has increased twice as fast as world population during the past 25 years. Why, then, has the hunger problem suddenly become more acute? Numerous reasons have been cited—war, droughts, floods, earthquakes, and the like. Examples probably can be found to support each of these reasons. Yet, there is a more fundamental reason for the recent worsening of the food problem.

Much of the cause for the current world food crisis can be attributed to the destruction or reduction of private property rights of food producers in countries where the hunger problem is most acute. Numerous example can be cited where governments have weakened or destroyed economic incentives by confiscating private land, forcing farmers to work on collectivized farms, instituting price controls on food, and other such measures.

India provides a good example. India has a serious hunger problem which gets worse each day. Only a few years ago, the food situation appeared fairly bright. There was an agricultural boom, with food production doubling from 1950 to 1970. Yields increased, stocks of food were built up, and India produced more food than it consumed as weather and technology contributed to bumper yields in a Green Revolution. Today, however, the hunger problem in India commands the world’s attention.

Government Interference

Why has the situation changed? Although other factors (such as the Bangladesh refugees) have contributed to the worsened situation, much of the food crisis in India can be attributed to actions taken by the Indian government affecting incentives of food producers. After her big electoral victory in 1972, Mrs. Gandhi’s party reduced the amount of land that could be held by an adult male from 30 irrigated acres to 18 acres. The confiscated acres went to the landless. In addition to the direct effect of land confiscation on incentives, the policy also affected the profitability of tractors and implements. The reduced acreage was not large enough to support the machinery. The government also nationalized the wholesale grain trade, forcing farmers to sell their crops at fixed prices below the market level, whereas previously farmers were permitted to sell half of their grain to wholesalers at the higher market price. The impact of such actions on the quantity of food produced and marketed is predictable. (Black markets and corruption forced the government to rescind this action.) The adverse effect of price controls on output has been confirmed in scores of cases on every continent.

Quantitative estimates are not available of the effect of these government actions in India affecting producer incentives. However, the effects of these actions are undoubtedly important in the food crisis in India today. (The actions described were all taken well before Mrs. Gandhi suspended civil liberties and increased police powers in June 1975 in order to preserve democracy in India.)

The situation in India is not unique. A reduction (or the threat of a reduction) in private property rights of food producers (and the accompanying reduction in economic incentives) has also resulted in decreased food production in Chile, Mexico, Peru, Argentina and Tanzania in recent years.

Irving Kristol concludes that "every country, e.g., Chile, Peru, Mexico, which has launched experiments in collectivized agriculture has quickly witnessed a decline in agricultural productivity." The experience in Russia when peasants were forced to join the government-operated collective farms in the early 1930′s is also consistent with this conclusion. Russia, which had a huge surplus of grain before the Communist Revolution, has had to import grain since abolishing private farms.

The Best Response?

This poses an interesting question. What is the appropriate response by people in highly developed countries in cases where food shortages are due to conscious government policies which restrict food production? Providing aid in such cases may only exacerbate the problem. That is, relief of hunger in countries which have confiscated private property, instituted price controls and otherwise reduced food production can help to perpetuate the system (whether the statism is despotic or benign) that is to blame for much of the suffering to begin with. Providing food aid which is used as a crutch to institute land reforms, price controls and the like which stifle initiative and reduce food production is analogous to the gift of money to an alcoholic with no strings attached.

How about eating less, using less fertilizer, and similar conservation measures to provide more food for the hungry? Such actions may be effective in assuaging guilt but provide no solution to the world food problem. Indeed, eating less by U.S. citizens may well be counter-productive since, if effective, it would decrease demand, resulting in a lower price and consequently decreased production.

Temporary relief can and often should be provided when food problems are worsened by droughts, floods, and other disasters. Long-run food aid, however, is almost certain to have a disincentive effect on agricultural production in recipient countries. Thus, the long-run solution to world food problems must lie within the countries facing food problems rather than in food aid programs.

Does the population explosion in the developing countries mean that these countries must inevitably face chronic food shortages? Population is an important factor in the demand for food. Yet, population increases are now being used as a scapegoat in connection with the food crisis. Lifeboat ethics which involves saving a limited number of lives while deliberately letting others die is now being seriously discussed. In recent years, however, there has been a dramatic decrease in the birth rate in the U.S. and throughout the temperate zone.

The population problem in developing countries is closely related to the income problem. As per capita incomes increase, the birth rate decreases. Thus, the food problem in developing countries cannot be separated from the problem of economic development. Both income and hunger are closely related to the kind of economic incentives facing producers of food and fiber (and other goods and services).

Incentives to Produce

There is little doubt about the relationship between economic incentives and food production. A recent USDA study supports this view: "Among the major impediments to increasing food production in both the developing and the planned economies are policies designed to maintain low and stable food prices to consumers." Thus it seems paradoxical that population control (including Draconian controls such as compulsory sterilization of population in India and other countries) has received more attention than measures affecting economic incentives and food production in developing countries.

There is a great deal of evidence that farmers are most productive when individual incentives prevail and the market is relied on to provide signals to consumers, middlemen, and producers. Yet, this evidence appears to be largely ignored in discussions of world hunger problems. The November, 1974 World Food Conference held in Rome recommended a number of programs to increase food production, including water management, increased production and use of fertilizers, pesticides, improved seeds and other inputs and extension efforts to adapt agricultural technology to developing countries.

Nowhere in the recommendations of the Rome Conference is recognition given to the widely demonstrated relationship between food production and producer incentives. The recommended programs are likely to have little impact on food production in developing countries if this relationship is ignored. As a recent Forbes article on the hunger problem in India concludes: "There is, after all, more social justice in a loaf of bread than in schemes for a fairer distribution of wealth. Putting it another way . . . Adam Smith, however unfashionable, can feed more people than Karl Marx can."

Further Reading