The View from Europe

By David Jessop

On April 7 in Port-au-Prince five people died when thousands of Haitians tried to storm the presidential palace to protest against the high price of staples such as rice, corn, beans and cooking oil that in some cases had virtually doubled over the last six months. It was the Caribbean’s first food riot in living memory albeit in the region’s poorest nation.

This troubling phenomenon is happening across the world as basic food prices pass beyond the reach of ordinary people.

It is a development that could occur almost anywhere in the Caribbean if global demand continues to exceed supply, commodity prices continue to rise and hard-pressed governments reach the limit of their ability to subsidise basic foodstuffs.

In recent months the acceleration in food prices has been compounded by the turmoil in the financial markets. As both a source of energy and an ‘asset class’ for investors, food has become the subject of unbridled speculation. So much so that in just two weeks in April the price of rice for example rose by more than fifty per cent.


The seriousness of this and the challenge it presents to Caribbean growth and stability has not been well understood either within or beyond the region. Neither has the opportunity it offers those Caribbean nations with underutilised fertile land to give priority to incentivising farmers and the business sector to deliver a revolution in agriculture.

Instead the response of most but not all governments seems to be based on the premise that what is happening is short-term in its nature. As a consequence most measures have been defensive and have failed to recognise that food and energy price rises almost certainly represent a systemic and irrevocable shift in the structure of the global economy.

To be fair this may be because the crisis is occurring just as governments have significantly less room for manoeuvre as most are trying to adapt their economic systems to accommodate freer trade while striving to maintain growth, fiscal income and a continuing commitment to a social provision.

In this the Caribbean is not alone. As food prices have risen, governments across the developed and developing world have been variously removing export subsidies, banning exports, incentivising domestic production, removing protective tariff barriers and trying to build strategic reserves as they respond to the social consequences of high food prices and the dangers of resulting instability.

Unfortunately the consequence of such actions is to further limit world supply and push global prices still higher at a time when global food stocks have never been lower or the opportunities greater for speculators to further drive up prices in response to any suggestion of further market tightening.

Despite this the underlying reason why this is happening, and demand is far in excess of supply, largely relates to economic globalisation, and the rapid growth of nations like China, India and Brazil requiring more of everything from energy, to minerals to food to fuel to sustain their rapid growth.

This is a welcome and unstoppable process but increased world demand for food from ever wealthier populations; the movement of people away from the fields to the cities; the use of cereals as an energy source; and the movement of capital in ways that are oblivious to sovereignty or local norms, are all changing the relationship between every citizen/consumer in the world and governments’ ability to support their basic needs.

What this suggests is that neither energy prices nor the cost of food is likely to go down soon, if at all, and that small economies will be particularly vulnerable.

If there are lessons in history, the experience of Europe in the mid nineteenth century suggests that this is potentially destabilising. Then the unrest caused by rapid urbanisation, food shortages and poverty created the basis for revolutions in those nations that had not understood the need to deliver cheaper food.

To their credit Caricom governments have begun to recognise the challenge, have agreed to cut the Common External Tariff on specific food items, are in dialogue about how to encourage investment in the production of food in Guyana for regional distribution and are discussing with Trinidad the establishment of a fast ferry service in the Eastern Caribbean for farm products.

Despite this the region still imports US$3.5 billion of food annually, a figure that is now quite literally rising week on week.

This suggests there is a need to think more fundamentally about the role of agriculture in Caribbean societies and what must be done to increase food production, and to integrate both agriculture and fisheries with domestic demand and the requirements of the tourism sector.

It requires setting aside for ever any thought of a protected export agricultural model based on preference and undertaking an agricultural revolution based on sound business practice with appropriate government incentives and international support if the region and its development are not to be destabilised by rising global food prices.

A changed approach also implies bringing to an end to the pervasive sense that agriculture is either about the production of commodities for export or the small scale production of food for personal or local consumption. It suggests governments rapidly engage with multilateral institutions to develop new initiatives that support increased agricultural output and training. It also suggests the need to introduce new technology of the kind used in the developed world to increase agricultural productivity and the provision of much better transport systems to take food to market both within and between the nations of the region.

Above all it requires a sea change in the way in which farmers and agriculture and the large areas of uncultivated and under-cultivated land are regarded.

As noted earlier, governments across the world that had once protected farmers are now rushing to limit the political damage of high food prices on consumers through changing their approach to tariffs and export subsidies. This is despite the fact that the US and the EU continue to provide incentives and subsidise the production and import of bio-fuels.
This and the structural changes taking place in the global economy almost certainly mean that trade related adjustments are not a sustainable response.

Without new land being brought into production, new farming methods introduced and attention paid to transport especially in developing nations, food prices will continue to soar.

As events in Haiti and elsewhere show, electorates will be unforgiving to any government that does not act rapidly to provide long-term solutions.

David Jessop is the Director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org

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