a call for a strategic u.s. approach to the global food crisis

A Report of the CSIS Task Force on the Global Food Crisis Core Findings and Recommendations

Cochairs Senator Robert P. Casey (D-PA) Senator Richard G. Lugar (R-IN)

Project Directors J. Stephen Morrison Johanna Nesseth Tuttle july 2008

CENTER FOR STRATEGIC & CSIS INTERNATIONAL STUDIES a call for a strategic u.s. approach to the global food crisis

A Report of the CSIS Task Force on the Global Food Crisis Core Findings and Recommendations

Cochairs Senator Robert P. Casey (D-PA) Senator Richard G. Lugar (R-IN)

Project Directors J. Stephen Morrison Johanna Nesseth Tuttle july 2008

CENTER FOR STRATEGIC & CSIS INTERNATIONAL STUDIES About CSIS In an era of ever-changing global opportunities and challenges, the Center for Strategic and Inter- national Studies (CSIS) provides strategic insights and practical policy solutions to decisionmak- ers. CSIS conducts research and analysis and develops policy initiatives that look into the future and anticipate change. Founded by David M. Abshire and Admiral Arleigh Burke at the height of the Cold War, CSIS was dedicated to the simple but urgent goal of finding ways for America to survive as a nation and prosper as a people. Since 1962, CSIS has grown to become one of the world’s preeminent public policy institutions. Today, CSIS is a bipartisan, nonprofit organization headquartered in Washington, D.C. More than 220 full-time staff and a large network of affiliated scholars focus their expertise on defense and security; on the world’s regions and the unique challenges inherent to them; and on the issues that know no boundary in an increasingly connected world. Former U.S. senator Sam Nunn became chairman of the CSIS Board of Trustees in 1999, and John J. Hamre has led CSIS as its president and chief executive officer since 2000. CSIS does not take specific policy positions; accordingly, all views expressed in this publica- tion should be understood to be solely those of the author(s).

© 2008 by the Center for Strategic and International Studies. All rights reserved.

Cover photograph: AP Images (Amritsar, India shot by photographer Aman Sharma)

The CSIS Press Center for Strategic and International Studies 1800 K Street, N.W., Washington, D.C. 20006 Tel: (202) 775-3119 Fax: (202) 775-3199 Web: www.csis.org csis task force on the global food crisis

COCHAIRS Laurie Garrett Amr Moubarak Senior Fellow for Global Health, Center for Global Development Senator Robert P. Casey Council on Foreign Relations (D-PA) Phillip Nieburg Helene D. Gayle Task Force on HIV/AIDS, CSIS Senator Richard G. Lugar President & CEO, CARE USA (R-IN) Rajul Pandya-Lorch Charlotte Hebebrand Chief of Staff, International PROJECT DIRECTORS Chief Executive, International Food Policy Research Institute Food & Agriculture Trade J. Stephen Morrison Policy Council John S. Park Co-Director, Africa Program Senior Fellow & Director, Julie Howard Northeast Programs, U.S. and Executive Director, Executive Director, Institute of Peace HIV/AIDS Task Force, CSIS Partnership to Cut Hunger and Poverty in Africa Eric P. Schwartz Johanna Nesseth Tuttle Executive Director, Vice President, Strategic Jofi Joseph Connect U.S. Fund Planning, CSIS Foreign Policy Legislative Assistant, Office of Senator Ann Tutwiler TASK FORCE MEMBERS Robert P. Casey Former President & CEO, International Food & David Kauck Agriculture Trade Policy Rev. David Beckmann Senior Policy Analyst, Council President, Bread for the World CARE USA Connie Veillette Neil Brown Jim Kolbe Senior Professional Staff Professional Staff Member, Senior Transatlantic Fellow, Member, Senate Foreign Senate Foreign Relations The German Marshall Fund Relations Committee Committee of the Frank A. Verrastro Marc J. Cohen Gawain Kripke Director & Senior Fellow, Research Fellow, International Director, Policy & Research, Energy & National Security Food Policy Research Institute Oxfam America Program, CSIS

Mauro De Lorenzo Sarah O. Ladislaw Cathy Woolard Resident Fellow, American Fellow, Energy & National Executive Vice President, Enterprise Institute for Public Security Program, CSIS Global Advocacy & External Policy Reasearch Relations, CARE USA Nora Lustig Jeralyn Eddings Member, Board of Directors, Frank J. Young Independent Consultant Center for Global Development; Vice President, Strategic Visiting Professor of Planning, International Line Charles Freeman International Affairs, of Business, Abt Associates Freeman Chair in China George Washington University Studies, CSIS Rev. James L. McDonald General Carlton Fulford Vice President for Policy & U.S. Marine Corps (ret.) Program, Bread for the World

ii | Global Food Crisis preface

In May 2008, in response to the growing global CSIS hosted a dinner at which Ms. Sheeran food crisis, the Center for Strategic and Inter- engaged with representatives from the Senate national Studies (CSIS) launched a task force Appropriations Committee, the U.S. Depart- to assess the rising humanitarian, security, ment of State, the U.S. Agency for Interna- developmental, and market impacts of rising tional Development, the U.S. Department food costs and shortages. Its cochairs, Senators of Agriculture, CARE, the Center for Global Richard G. Lugar (R-IN) and Robert P. Casey Development, the International Food Policy (D-PA) charged the task force with identify- Research Institute, the Gates Foundation, and ing, by late July 2008, a feasible but bold plan the military. Sentiment at that session was of action that the Bush administration, the strongly in favor of CSIS launching the task presidential campaigns, Congress, and the next force in order to better clarify for a Washing- administration could embrace on a bipartisan ton audience the gravity of the threat present- basis. The result, outlined in the following ed by the global food crisis, the major factors report, is an argument for modernizing and driving it, and a way forward. Subsequently, doubling emergency assistance, elevating rural we were fortunate to receive, on a rapid basis, development and agricultural productivity to support for the task force from the Connect be new foreign policy priorities, revising the U.S. Fund and special thanks are reserved for U.S. approach to biofuels so that fuel and food executive director Eric Schwartz. security objectives are effectively de-conflicted, acting on an urgent basis to conclude the Doha The task force is especially grateful to Sena- Development Round, and creating a strategic tors Lugar and Casey, both champions of U.S. approach to global food security that inter- development, agriculture, health and nutri- links approaches to relief, development, energy, tion, foreign affairs, and energy policy, and and trade and that is backed by new robust both highly supportive of the CSIS effort. Jofi organizational capacities. Joseph in Senator Casey’s office and Connie Veillette in the office of Senator Lugar were The task force grew out of extensive prior each also very helpful in guiding our efforts. work CSIS carried out with the UN World The task force was led by J. Stephen Morrison Food Program on global food relief issues, and Johanna Nesseth Tuttle of CSIS and com- particularly with respect to Afghanistan, prised a diverse group of senior-level repre- Sudan, Myanmar, Zimbabwe, and Somalia. In sentatives of nongovernmental organizations, April 2008, Josette Sheeran, executive director food relief experts, and former government of the World Food Program, delivered a major officials who generously gave their time and policy address at CSIS on the rising global energy. Jeralyn Eddings, independent consul- food crisis. The evening prior to the address, tant, provided extensive drafting and editorial

Morrison and Nesseth Tuttle | 1 expertise. Karen Meacham, Kate Hofler, and Program; and Kirsten Knoepfle Thorne, Pub- Kate Schuster of CSIS contributed mightily to lic Policy Advisor, Chevron Corporation. organizing the task force. Both the analysis and recommendations of The task force convened two high-level this report reflect a strong majority consensus meetings in May and June 2008 that featured among task force members, but it is not as- expert presentations by Henrietta Holsman sumed that the members necessarily endorse Fore, administrator, U.S. Agency for Inter- every finding and recommendation. national Development, and director of U.S. foreign assistance; Helene D. Gayle, president and CEO, CARE USA; Rajul Pandya-Lorch, chief of staff, International Food Policy Re- search Institute; Colonel Daniel Pike, Office of African Affairs, U.S. Department of Defense; Karen Monaghan, national intelligence officer for economics and global issues, National Intelligence Council; Laurie Garrett, senior fellow, Council on Foreign Relations; Doug Arent, director, Strategic Energy Analysis and Applications Center, National Renewable Energy Laboratory; Ambassador Al Johnson, Al Johnson & Associates, and former ambas- sador and chief agriculture negotiator, Office of the U.S. Trade Representative; and Suzanne Hunt, independent consultant and bioenergy specialist. All of these busy, gifted individuals gave generously of their time and energy.

The task force also received expert input from representatives in the fields of food sup- ply, energy, biofuels, trade, relief efforts, and agriculture. We are particularly indebted to Ronald Trostle and other senior economists at the U.S. Department of Agriculture; Susan Offutt, chief economist, U.S. Government Accountability Office; Nazanin Ash; Josette Lewis, biotechnology adviser, U.S. Agency for International Development; Daniel Gustafson, director, Food and Agriculture Organization, Washington; David Jhirad, vice president for research and evaluation, Rockefeller Foun- dation; Michael Usnick, UN World Food Program; Jennifer Parmelee, UN World Food

2 | Global Food Crisis the stakes

The global food crisis is hitting with alarming ■■ A developmental threat, which is erasing speed and force, challenging the United States, the economic gains of the past decades, other nations, and key international organiza- while putting at risk the recent historic tions to respond with a strategic and long- investments in public health and nutrition, term approach. improved education, and community devel- opment in poor countries. Without effective The crisis is historic and a call to conscience. It action to reverse these trends, developing is global in reach, not confined to a particular countries could see a disabled generation, region of the world, or caused by a single disas- stunted both physically and mentally and ter or event. It is a moment of great opportuni- chronically in need of assistance. ty. It presents the chance for American leaders, ■■ A strategic threat, which is endangering joined with others, to place hunger, poverty, the stability of developing countries due to and rural development at center stage and to rising cereal prices combined with rapidly upgrade dramatically the United States’ and rising fuel prices. The surge in prices has re- others’ approaches to food relief, energy, global duced the purchasing power of poor people trade, and foreign assistance. It presents the and inhibited the ability of poor countries chance for accelerated growth of rural produc- to import food for their hard-pressed popu- tion and wealth in the developing world. lations. Thirty countries have experienced food-related riots and unrest in 2008, half The crisis poses three fundamental threats. in Africa. Acutely at risk are large, heavily urbanized nations such as Egypt, Pakistan, ■■ A moral and humanitarian threat, which Ethiopia, and Afghanistan. The forecast for is pushing an additional 100 million people the next several years is that a wide range of into poverty and deepening global hunger developing countries will struggle to access and chronic malnutrition, with the grav- affordable, adequate food supplies, with est impact among poor pregnant women uncertain consequences. and children. Efforts of the UN World Food Program (WFP) to meet immedi- ate emergency shortfalls have risen from $3.1 billion in 2007 to almost $6 billion in 2008. Such radically elevated emergency demands will persist into the future.

Morrison and Nesseth Tuttle | 3 the drivers

The root causes of the global food crisis are tinues, the structural shift in global cereal complex, fluid, persistent, and multidimen- demands will intensify. sional. This is not a simple problem. ■■ Bad weather, linked possibly to global ■■ Soaring global energy prices contribute to climate change, has hampered production cost increases in agricultural production in key food-exporting countries. Severe and transportation, impacting all points weather events have impacted harvests across the farm-to-market chain. from Australia to West Africa to Bangla- desh and are now striking at America’s ■■ The rise in the production of biofuels heartland. Although we know that climate based on food grains has contributed to change is a factor, we know less about how global food price increases since 2006, it will shape specific global food outcomes though estimates vary widely over the im- in the near to medium term and what spe- pact, ranging from 3 percent to 65 percent. cific ameliorative steps to take today. High oil-price trends drive the demand for biofuels, while preferential tariffs, ■■ A gross underinvestment in the past subsidies, and mandates contribute to the several decades in agricultural production rise of American and European producer and technology in the developing world— preferences for biofuel crops. This is a by donors and developing countries global phenomenon, affecting markets alike—has contributed to static produc- for wheat, maize, sugar, oil seeds, cassava, tivity, weak markets, and underdeveloped palm oil, and beyond. The shared dilemma rural infrastructure. The question now for and the United States is how is how to correct systematically for this to respond responsibly and effectively to historic underinvestment. intensifying pressures to promote food and fuel security simultaneously. ■■ The present global agricultural production and trading system, built on subsidies and ■■ Demand for cereal grains has outstripped tariffs, creates grave distortions. It struc- supply over the past several years, gen- turally favors production among wealthy erating a global imbalance and a decline countries and disadvantages producers in in surpluses. Rising demand from China poor developing countries. Imperiled devel- and India—resulting from their growing oping countries are today responding to the middle classes—has increased the strain on current crisis by restricting or banning food global supplies. China has almost doubled exports. Until macro incentives are reor- its consumption of meat, fish, and dairy dered to open the way for investment and products since 1990 as over 200 million production in developing countries’ rural people have been lifted out of poverty. So sectors, no durable solution is in sight. long as the rise of China and India con-

4 | Global Food Crisis ■■ An antiquated international system of sures have been taken recently to ameliorate mobilizing and deploying food relief slows the immediate food relief crisis. The Bush the response to emergencies and imposes administration requested $770 million in unacceptable costs and inefficiencies. Un- emergency food and development assistance, der the current U.S. system, U.S.-procured and Congress built on the president’s request commodities (mandated by law, and ac- by enacting FY 2008 supplemental funding counting for over 40 percent of WFP’s sup- legislation that allocates more than $1.8 bil- plies) can take up to six months to reach lion in emergency food assistance and related intended beneficiaries; shipping, handling, disaster relief. Saudi Arabia committed $500 and other management costs were con- suming 65 percent of budgets as of early million toward the WFP. The World Bank 2007, with the percentage continuing to allocated $1.2 billion and allowed emergency rise; and U.S.-origin grain often arrives budgetary support. The late and dampens rural grain prices. It is launched the Secretary General’s High-Level a broken, expensive, $1.6-billion per year Task Force on the Global Food Security program that is yielding declining returns Crisis, which issued a comprehensive action at the very moment when performance to plan. In early July, the (G-8) meet urgent new needs is most acute. Any nations made food security a top priority at effective U.S. long-term strategic approach its Hokkaido Summit, reinforcing the call for has to somehow transcend this inheritance a coordinated response and comprehensive and devise policies in tune with emerging strategy. These steps are all very welcome, new global realities. but more is needed to address the structural roots of the current crisis. what is to be done? an opening for u.s. leadership The stakes in this crisis are high. Demand and supply for global food have changed With the current crisis, a window has opened. fundamentally, are out of synch, and gener- Today’s food crisis is an abrupt wake-up call ate human, developmental, and security and a powerful incentive to put together a havoc. The crisis is expected to persist at least new, coherent vision that is not piecemeal into the next three or four years, and even or business as usual, but instead strategically though food prices may eventually decline integrates U.S. approaches to emergency relief, somewhat, experts believe the era of cheap development, global trade, and energy. food and fuel is over—at least for the foresee- able future. Urgent action is needed on two The United States has the opportunity, fronts: emergency relief and related safety net through intensified bilateral and multilateral programs; and longer-term efforts to reduce initiatives, to put global hunger and malnutri- poverty and hunger. tion at the forefront of U.S. policy concerns. U.S. leadership is essential, as it has been tra- UN secretary general Ban Ki-moon, World ditionally in earlier global crises, in devising Bank president Robert Zoellick, and WFP durable solutions. executive director Josette Sheeran have each demonstrated exceptional leadership. Internally, within the U.S. government, a new And several important emergency mea- strategic approach to the global food crisis

Morrison and Nesseth Tuttle | 5 will require sustained high-level leadership, It is essential that the United States focus on greater interagency coherence and flexibility, immediate adjustments, on bold new steps, and new resource levels. Success will hinge on and on taking care not to worsen matters. the current and future administrations work- A special challenge is answering immediate ing with Congress to cement a new bipartisan short-term emergency needs without com- compact on redressing the global food crisis. promising long-term development require- ments. If not careful, expanded international Bold U.S. leadership, carried out over several engagement might focus overwhelmingly on years, will not be easy. There will be new costs, immediate response, reinforce urban biases to difficult trade-offs, and sensitive issues that the detriment of long-term rural development cut across domestic and international bound- needs, and encourage more migration into aries, such as changes in subsidies for devel- urban areas. oped country food production, adjustment of subsidies and mandates for biofuel production in the United States and Europe, and enlarge- ment of trade access to global markets by developing country producers.

The challenge comes at a time when Ameri- cans are anxious about rising food and energy prices at home, when floods and other severe weather events have damaged farm crops and displaced many in the farming community.

But Americans understand and have always embraced the core values of U.S. global humanitarianism. They empathize with poor, vulnerable populations whose ability to feed their children is under siege. They also understand that it runs counter to U.S. global security interests to see rising violence and social upheaval among weak states.

We are also at a moment in history when our leaders are being called on to restore Amer- ica’s weakened standing in the world and to demonstrate a new ethic of close cooperation with partner states, international organiza- tions, and civil society in redressing transna- tional threats. The global food crisis is a zone where U.S. strengths and moral commitments can generate major returns.

6 | Global Food Crisis five priority recommendations

The CSIS Task Force recommends: will be set aside for U.S.-origin food shipped on U.S. carriers. 1. Modernize emergency assistance. ■■ Pursue a robust multilateral approach: re- ■■ Increase the scale of U.S. commitment constitute the Food Aid Convention to bet- and significantly improve the speed, agil- ter reflect current tonnage and nutritional ity, liquidity, and flexibility of the U.S. needs and reinvigorate donor commit- response. In the face of this massive crisis, ments; renew regular international consul- the United States should concentrate on tations on emergency food relief response; devising the means to deliver assistance actively test the feasibility of emergency to larger numbers of people earlier, more regional food stocks and the capacity for reliably, and at a much lower cost per rapid regional purchases (“virtual stocks”). beneficiary and with much higher nutri- ■■ Intensify U.S. food security diplomacy: ent benefits. The United States should encourage major oil-producing countries also give priority to the development to contribute more to food relief; press for of improved national policies and local more stable and predictable international emergency response capacities within at- financing mechanisms for supporting the risk countries. WFP and its implementing partners. ■■ Double the U.S. level of annual commit- ■■ Enlarge, bilaterally and multilaterally, ment to emergency food relief from $1.6 emergency social safety net programs such billion to $3.2 billion. It will be essential as budget support, school feeding, and also to monitor volatile global market food for work. Pursue innovative financial conditions closely to ascertain whether this and risk management tools such as vouch- increased level of U.S. assistance is ad- ers and insurance schemes. Expand nu- equate to deliver the intended tonnage and tritional assistance programs to pregnant nutrient content. women and children. ■■ Require that no less than 25 percent and as much as 50 percent of these expanded emergency funds be available for local 2. Make rural development and agricul- and regional purchases. The targets for tural productivity U.S. foreign policy local and regional purchases should be priorities. raised over a five-year period, so that ulti- ■■ Elevate agriculture to be a top priority of mately at least 50 percent and as much as the U.S. foreign assistance strategy. Set 75 percent of emergency funds is available an official target to significantly increase for local and regional purchases. Under productivity in the developing world in this scheme, no less than 25 percent of the next decade and to significantly reduce U.S. emergency assistance ($0.8 billion) hunger, poverty, and malnutrition.

Morrison and Nesseth Tuttle | 7 ■■ Commit $1 billion per annum of U.S. bilat- efforts at promoting agricultural develop- eral development assistance toward: ment in Africa. The Chinese have become ȎȎ Improved, pro-growth developing a major player in Africa and will focus on country policies; expanded delivery of agriculture at the next Forum on China- seeds, fertilizers, extension services, Africa Cooperation (FOCAC) summit in rural credit; improved access by small Cairo in late 2009. farmers to markets; and development of new farming technologies. 3. Revise the U.S. approach to biofuels. ȎȎ Investment in a global network of uni- ■■ Issue an official policy statement outlining versities committed to training, applied the steps the United States will take to ex- research, and exchanges. pand food crops for consumption purpos- ȎȎ Expansion of public-private partner- es and to decouple food and energy issues ships that mobilize the U.S. government, so that the debate progresses from one of private foundations, universities, and fuel versus food to fuel and food security. corporations to bring forward new seed ■■ Accelerate efforts to bring on line the varieties and other new biotechnologies. next generation of cellulosic-based and ȎȎ Expansion of research and pilot proj- other biofuels in order to reduce depen- ects to ameliorate the effects of climate dence on corn. change on agricultural production. ■■ Bring into force new sustainability criteria ■■ Support the doubling of agricultural pro- to assess the life-cycle costs and carbon re- gramming by multilateral institutions such quirements for alternative biofuels. Adjust as the World Bank and the International subsidies to reflect true input costs. Fund for Agricultural Development in the ■■ Aggressively foster trade in biofuels to al- least-developed countries. low the most efficient producers and feed- ■■ Better coordinate and integrate U.S. for- stocks access to U.S. and world markets: eign assistance programs—including U.S. through a phaseout of barriers to trade, HIV/AIDS programs under the Presi- including preferential tariffs; improved dent’s Emergency Plan for AIDS Relief technical standards to facilitate biofuels (PEPFAR) and the Millennium Challenge trade; and expanded trade from countries Corporation (MCC)—to ease food insecu- that currently have access to the U.S. mar- rity. MCC has the potential to strengthen ket under free-trade agreements (FTAs). agricultural productivity and affordable ■■ Commission analyses of agricultural pro- market access to food by the poor, and the duction’s dependence on energy inputs, in next administration and Congress should both developed and developing countries, consider augmenting MCC programs to including options for reducing agriculture’s more directly address food insecurity chal- reliance on fossil fuels. lenges in present and future MCC-compact countries. Worsening food insecurity and 4. Focus U.S. trade policy on promoting malnutrition directly affect many PEPFAR developing country agriculture. beneficiaries and, by implication, threaten the integrity of mass antiretroviral programs ■■ Make the promotion of developing country and related prevention and care efforts. agriculture a goal of U.S. trade policy. ■■ Open a dialogue with the Chinese, Indian, ■■ Press on an urgent basis for a success- and Brazilian governments to coordinate ful conclusion of the Doha Development

8 | Global Food Crisis Round that promotes investment and cultural production and trade capacity in trade in developing country agriculture developing countries. and reduces long-standing subsidy and ■■ Create a Food, Agriculture, and Nutrition tariff barriers. Focus U.S. executive-con- Bureau at the U.S. Agency for Interna- gressional dialogue on concrete measures tional Development (USAID) charged that could expedite U.S. approvals of Doha with leading U.S. operational programs. outcomes. Make the successful conclusion Ensure that bureau is restaffed with ad- of the Doha Development Round a foreign equate career expertise. policy priority in diplomatic relations with member states of the European Union ■■ Conclude a National Intelligence Estimate (EU), member states of the African Union on global food security by the end of 2008. (AU), and emerging markets such as India This should be ready for the next adminis- and Brazil. tration and for public dissemination. ■■ Pursue targeted international and regional ■■ Authorize and fund the U.S. Africa, South- trade discussions that can bring rapid ern, and Pacific Commands to initiate follow-on benefits to developing country civil-military dialogues and exchanges on agriculture. Examine how existing U.S. nutrition and food security, including infor- trade preferences, already in place for many mation sharing and analysis. developing countries, might be used to re- duce technical barriers to developing coun- the challenge try agricultural exports to the United States and build trade capacity in those countries. The current crisis is unlike any food emergen- cy the world has faced in the past. It is caused ■■ Take deliberate bilateral and multilateral by a web of interconnected forces involving diplomatic action to ease export bans and restrictions that have contributed to higher agriculture, energy, climate change, trade, and food prices, including strengthening World new market demands from emerging markets. Trade Organization (WTO) rules on export And it carries grave implications for economic restrictions. The World Bank says that 26 growth and development, international secu- net-food-exporting countries have main- rity, and social progress in developing coun- tained or introduced such measures, mak- tries. Time is of the essence in formulating a ing it hard to acquire and ship food to the response, and U.S. leadership and bipartisan- most needy even when funds are available. ship are essential, as well as expanded U.S. coordination with international organizations. 5. Strengthen U.S. organizational capacities. The Bush administration, the presidential campaigns, the congressional leadership, and ■■ Create a White House–led standing interagency mechanism on global food the next administration all have a responsibil- security. Charge that body with rapidly ity to move U.S. leadership forward. devising and overseeing a comprehensive, long-term strategic vision on global food insecurity that interlinks U.S. approaches to food, energy, development, and trade; that better coordinates with partner coun- tries and with the World Bank, the World Food Program, and other UN organiza- tions; and that prioritizes building agri-

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