The Finance of Food: How the Financial Crisis Affects Global Hunger

Reports are beginning to show up all over the internet of another facet of the financial crisis: the damage done to the agriculture industry. If you check out the agriculture page in the Industries section of globalEDGE, you’ll get an idea of how large the consequences are for relevant businesses. The US alone produces almost $68 billion dollars in agricultural exports yearly. The Netherlands follow with roughly $38 billion, preceded by Argentina, France, and Brazil. It’s no surprise that as consumers try and spend less, the greater agricultural industry would be bearing the brunt of the losses.

But for some countries it isn’t just about financial loses - instead, the concern is food security. According to the International Food Policy Research Institute (IFPRI), the credit-crunch has lead to a decrease in the flow of capital towards long-term investments in the industry. This leaves areas that already struggle for food at an even greater risk to go hungry, especially nations in Sub-Saharan Africa and Southeast Asia. The UN Food and Agriculture Organization says that consumers in these countries suffer twice over due to decreased purchasing power. This means that affordable options are limited to foods with low-nutritional value.

The struggle now is to ensure economic stability for these countries. Asia-Pacific Economic Cooperation (APEC), the multi-national Asian alliance for trade, recently met in Lima to discuss the impact of the downturn on agriculture. In addition to revising the APEC food system to ensure affordable prices, APEC also reaffirmed their support for increased investment in agricultural technology and biotechnology.

Illustration credit: IFPRI

The IFPRI agrees - in a recent presentation to CGIAR, they advocated not only increased investment into agriculture technology, but also reformed economic and agricultural policies. They also call upon financial institutions such as the World Bank to “maintained their renewed focus” on food and agriculture and increase their involvement in financing food science initiatives.