For food supply, reliable should trump efficient

This “marketization” of agriculture has not, to be sure, been fully carried through. Subsidies are still endemic in rich countries and poor, while developing countries often place tariffs on imported food, which benefit their farmers but drive up prices for consumers. And in extreme circumstances countries restrict exports, hoarding food for their own citizens.

Nonetheless, we clearly have a leaner, more market-friendly agricultural system than before. It looks, in fact, a bit like global manufacturing, with low inventories (wheat stocks are at their lowest since 1977), concentrated production (three countries provide ninety per cent of corn exports, and five countries provide eighty per cent of rice exports), and fewer redundancies. Governments have a much smaller role, and public spending on agriculture has been cut sharply.

The problem is that, while this system is undeniably more efficient, it’s also much more fragile. Bad weather in just a few countries can wreak havoc across the entire system. When prices spike as they did this spring (for reasons that now seem not entirely obvious), the result is food shortages and malnutrition in poorer countries, since they are far more dependent on imports and have few food reserves to draw on. And, while higher prices and market reforms were supposed to bring a boom in agricultural productivity, global crop yields actually rose less between 1990 and 2007 than they did in the previous twenty years, in part because in many developing countries private-sector agricultural investment never materialized, while the cutbacks in government spending left them with feeble infrastructures.

These changes did not cause the rising prices of the past couple of years, but they have made them more damaging. The old emphasis on food security was undoubtedly costly, and often wasteful. But the redundancies it created also had tremendous value when things went wrong. And one sure thing about a system as complex as agriculture is that things will go wrong, often with devastating consequences.

If the just-in-time system for producing cars runs into a hitch and the supply of cars shrinks for a while, people can easily adapt. When the same happens with food, people go hungry or even starve.

That doesn’t mean that we need to embrace price controls or collective farms, and there are sensible market reforms, like doing away with import tariffs, that would make developing-country consumers better off. But a few weeks ago Bill Clinton, no enemy of market reform, got it right when he said that we should help countries achieve “maximum agricultural self-sufficiency.” Instead of a more efficient system, we should be trying to build a more reliable one.

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