4.3 Other forces affecting food security: trade, global finance and new technology

In addition to the growing constraints on producing adequate food, there are a number of other forces which will increasingly have an impact on food security.

4.3.1 Globalization of trade and food supply

A major driving force which has already influenced nutrition and food security, and which will be increasingly important in the future, is the process of globalization. The human food chain is being rapidly transformed into a global market with industrialized countries intent on providing its populations with a huge variety of primary products and processed foods, regardless of season and at ever lower prices. Never before have foods moved so rapidly and been used in such complex ways. Thus a single source of food from a developed or developing country may be used in over 100 different food products which in turn are sold hundreds or thousands of kilometres away.

Trade negotiations with the aim of abolishing artificial barriers and opening borders to international trade began in 1948. The latest round of negotiations - the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) - culminated with the establishment of the World Trade Organisation (WTO) in 1995. Although the WTO operates on a "one member, one vote" principle, in reality the power base within WTO lies with the major trading countries - principally North America and the European Union. An analysis of the decision-making process within the W Codex Alimentarius session found that 60% of participants represented northern industrialized countries -collectively home to only 15% of the world's population - (Avery et al., 1993). Furthermore, industrial interests are very heavily represented - in the same study, 140 corporations were represented, compared with 105 nations. Thus, the interests of the developing world are poorly represented.

There are many aspects of the globalization process which may have an impact on food security and nutrition. The huge cross-border flows in international finance and the speculative nature of financial trading have a serious impact on national financial markets and currency valuations. Losses in foreign exchange, for example, will reduce incomes which will, in turn, reduce the capacity to buy food imports. This may result in increasing dependency on aid which is itself under pressure. At the same time, the loss in trade revenue will be felt by governmental programmes to develop the necessary long-term infrastructure. Another example is the effect of the pattern of direct foreign investment. Collectively, North America, Europe, Japan, the eight coastal provinces of China and Beijing have received more than 90% of the total direct global foreign investment (UNDP, 1997). These flows of foreign investment are often tied up with the transfer of new technologies - so large areas of the world (and a large proportion of the world's population) are excluded from technological advancement.

Globalization has resulted in a weakening of economic control by national governments - leaving developing countries vulnerable to economic factors beyond their control - and to fluctuations in world prices. This makes it harder for governments to plan for the future and to invest in other areas necessary for longer-term economic development. A confounding factor is the fact that for heavily indebted countries, foreign creditors may have first claim on any export earnings. Countries which have benefited in the short term from increasing global trade are now more vulnerable to fluctuations in the global market. Given recent intense concern about the future of the global economy, such vulnerability could spell disaster for many countries.

4.3.2 Agricultural trade

Since the Second World War, farmers in North America and Europe have been heavily protected by their governments. These support mechanisms led to over-production and intensification of agriculture in both areas. Their governments responded to the accumulating surpluses by dumping excess products -including grain and dairy produce - on world markets, to the detriment of farmers in other countries where domestic support has not existed.

One feature of the GATT Uruguay Round is that an Agreement on Agriculture was reached. Governments in North America and Europe, however, managed to avoid radical cuts to their producer-support regimes when negotiating the agreement (Consumers International, 1996). Precisely who wins or loses as a result of the liberalisation of agricultural trade depends on a variety of factors including: the types of agricultural produce, the other countries which produce competitive products, and the balance of exports and imports.

There is an incoherence in international policies for developing countries, resulting in effects of trade liberalisation which may directly undermine existing efforts of support. Box 4.2 describes an example of such incoherence, in this case within the European Union, which strengthens the argument that international institutions should establish mechanisms to predict the impact of policy measures and prevent such crises.

4.3.3 New threats and opportunities: global food safety standards

In most Western societies, epidemics of food poisoning are steadily gaining ground in association with huge changes in the distribution and use of farm products. Animal foods are now seen as a particular problem, with bovine spongiform encephalopathy (BSE), E. coli, Salmonella, Shigella, Campylobacter and Listeria now becoming of great concern in many countries. Response to early concern about BSE brought developments in the EU, Australasia and North America which may induce major restrictions on the free trade of food due to risks from animal products. These products range from meat and milk as such to the huge variety of food and pharmaceutical uses of tallow and gelatine.

Efforts to combat BSE alone may restrict market access for meat products from many developing countries which do not have adequate animal health surveillance systems. Few countries are likely to pass the stringent requirements emerging from EU, Australasian and North American policy-makers. The experience of BSE is also likely to transform attitudes to the potential inflow of other transmissible forms of spongiform encephalopathies which are endemic in a number of wildlife species in many developing countries.

The development of food standards agencies and their amplified power in many countries is likely to place major constraints on importers and food industrialists in the developed world who will bear the responsibility if contaminated foods are transferred from the developing world and incorporated into food or animal feed. There are currently major imports of feed stocks, bones, meat and other animal products into the developed world with little or no assurance of their safety (James, personal communication).

Vegetable and plant products contaminated by human or animal sewage - in organic farm systems - have also been shown to induce major outbreaks of life-threatening food poisoning. The demand for farm assurance schemes with new requirements to limit or eliminate foods with an inappropriate level or range of micro-organisms may place a heavy burden on the developing world. Western food exporters may also gain preferential access to the urban communities of the developing world on the basis of their claimed food safety, backed by suitable marketing techniques.

Another aspect of the globalization process is the development of global food safety standards, with the WTO and Codex acting as final adjudicator in any disputes over particular food safety or standards issues. It is important to consider how these global food standards might affect consumers and producers in developing countries. A two-tier food safety system may be developing in many countries - where products for export conform to international standards but domestic consumers are left with food which does not meet these standards. Some African countries have already felt a heavy burden of compliance with imposed safety standards, when other countries rejected their fish on the basis of a cholera infection. The Codex Commission decided, however, that this ban was not justified on health grounds.

4.3.4 Structural adjustment programmes, financial crisis and nutrition

The nutritional health of children and adults often deteriorates as a result of cutbacks and austerity programmes imposed by international institutions such as the International Monetary Fund (IMF). There is a great temptation to cut budgetary allocations for nutrition programmes, at a time of major nutritional need when the very elements of adjustment may be adding new constraints on the capacity of ordinary people to meet their own food, health and nutritional needs. The IMF-negotiated adjustment programmes normally focus on an immediate balancing of the budgets even at the cost of human hardship. It is evident that this seemingly temporary sacrifice prejudices the lives of future generations - balancing budgets at a cost of unbalancing children's lives.

There is great anxiety that these effects are under way in East and South-East Asia, where international remedies for a short-term liquidity crisis may well lead not only to reduced growth and high levels of unemployment, but also to more undernutrition for vulnerable groups (see Section 1.3). If this happens, the supposed financial benefits may well be outweighed by the hidden costs of the deteriorating nutrition of mothers and children, these costs lasting a generation or more.

Deteriorating nutrition and health can have serious, irreversible long-term consequences. The World Bank now recognises these and is supporting a wide range of analyses on how to maintain, and indeed improve, the social structures of countries during financial crises. In East Asia, the World Bank and other partners are targeting children and pregnant or lactating women as the focus for short-term action in response to the current economic crisis.

Chapter 7 outlines some recommendations for ensuring that structural adjustment and development policies work in the interests of the world's poor. These recommendations need to be considered by the UN Agencies heavily involved in nutrition. Considerable resources have been allocated to the support of 'safety nets'. Notwithstanding these efforts, evidence exists that health and nutritional status have been worsening in parts of East Asia, and in Central and Eastern Europe. As already noted, in Sub-Saharan Africa as a whole prevalences of preschool underweight and stunting have stagnated for many years.

4.3.5 The challenges of the biotechnological revolution

As we enter a new century, we can look back on the progress made globally and nationally in raising the rate of growth in food production above the rate of growth in population. Economic access, rather than availability of food in the market, has become the more important cause of hunger and undernutrition today. However, there is no room for complacency in relation to the adequacy of the food supply. In 1992 an international conference of experts convened by the World Bank, the UNDP and the FAO concluded that a solution to securing world food supplies while preserving the environment is virtually inconceivable without recombinant genetics and biotechnology (Kendall et al, 1997). Biotechnology has many potential applications, particularly in agriculture. Thus biotechnology could conceivably be of even greater importance for developing countries than for industrialised countries in terms of producing sufficient quantities of nutritionally adequate and safe food for their growing populations (Swaminathan, 1996).

As mentioned earlier, the developing world's agricultural strategy for the 21^st century will need to emphasise increasing yields through means that do not produce long-term ecological or social harm. In addition, agriculture has to be a key instrument for producing not only more food but also more income and jobs. The new techniques of genomic and molecular breeding are applied in the search for sustainable advances in crop and farm-animal productivity and quality. The new opportunities created by these advances must be assessed carefully for their benefits and risks.

Research carried out with the new genetic technologies during the last 15 years has shown that they can help improve crops in more precise ways than the traditional Mendelian methods. Designer crops based on novel genetic combinations created by moving genes across sexual barriers are now becoming available. Opportunities for breeding varieties for resistance/tolerance to various stresses, including drought and salinity, and for improved nutritional qualities could be particularly important for farming families struggling to improve yields and quality under unfavourable growing conditions.

Some of the potential benefits of the use of biotechnology in developing countries include:

crops especially adapted to diverse farming conditions and practices which offer greater nutritional value and substantially higher farm income

energy-producing crops which could save natural resources and so conserve the environment

the transfer of nitrogen fixation genes to non-leguminous plants such as wheat, rice and other cereals, reducing environmental pollution from inorganic fertilisers

increased productivity and production of drought crops in other parts of the world

the production of crops which are of higher nutritional value to humans or animals. This might include altering the folate, antioxidant or iron content of crops destined for human consumption, or improving the digestibility of animal forages, thereby increasing the productivity of high-quality animal protein for human consumption

animal biotechnology leading to improvements in growth and feed efficiency, animal health, reproductive efficiency, food product quality and the lactational production of novel or valuable proteins.

The biotechnological revolution is so intense, involving huge capital investments, that the land already assigned to the growing of novel crops in 1998 surpasses the land mass of the UK. During 1999, nearly 40 million hectares were under transgenic crops with most of the area being covered by soybean, maize, cotton and canola. Much of this area (74%) under genetically modified organisms (GMOs) is in the United States of America. The USA has not seen the same degree of consumer concern about GMOs that has been witnessed in, for example, India and many European countries. A group of experts constituted by the Royal Society in the United Kingdom has concluded that consumer confidence will ultimately decide whether or not GMOs will make a significant contribution to feeding the world's population (Royal Society, 1998).

The pace of change is intense, with a huge variety of industrial as well as food crops now grown, so the next decade will see a transformation in agriculture. The developing world will have to rely on major trusts, such as the Rockefeller Foundation, or on the Consultative Group on International Agricultural Research (CGIAR) for progress and advice. One exception is India, which has invested heavily in agriculture, and has one of the largest public-sector plant-breeding enterprises in the world. Western biotechnology companies will also be assessing how best to gain access to new commercial opportunities in the developing world. There is a need therefore for new public-private cooperation to ensure that biotechnology can be developed to be of direct benefit to the developing world, whilst incorporating the huge assets and knowledge of the Western biotechnology industry.

4.3.6 Safeguarding small-scale farmers

New technologies only suited for large-scale farming could result in a further impoverishment of small-scale farmers, "Gene protection technology" and the growing expansion of proprietary science means that small and resource-poor farming families who normally save seeds for future crops may feel the pressure to purchase new, improved seeds each year. This needs careful consideration and monitoring.

A major proportion of new technological developments are, in practice, covered by intellectual property rights. So proprietary science is unlikely to help resource-poor small farmers, in developing or developed countries. Biotechnology could also increase inequality in the distribution of income and wealth. For example, weeding by hand provides employment, and this would be reduced by the use of herbicide-resistant plants. The introduction of such technology should therefore be accompanied by social reforms, such as land reform and special support programmes for small farmers and those who may lose their livelihood as a result of biotechnology.

Genetically modified products could also reduce the developed countries' reliance on crops from developing countries - further widening the prosperity gap. Tropical agricultural exports could be replaced with genetically engineered products from elsewhere. Thus, genetically produced vanilla flavouring could displace the output of 70,000 small farmers in Madagascar. Genetically improved cocoa varieties could displace thousands of smallholder farmers in West Africa in favour of plantation farmers in Asia. High-fructose corn syrup produced using biotechnology from corn starch, is already being used as a cheaper replacement for cane sugar, a vital source of income for several developing countries. Vulnerable economies must therefore be encouraged to diversify their production structure. This will require more appropriate domestic policies and funds to support diversification. The impact of genetically modified plants on the environment also needs to be assessed. In developing countries there may be no legislation to monitor their effects. This could result in the use of developing countries as unmonitored laboratories.

The potential loss of natural diversity, resulting from undue reliance on a number of genetically-modified plants and the threat to food security, requires an international strategy to preserve plant genetic diversity as part of a new global food security system.

Exploitation of indigenous genetic resources without appropriate compensation is another area of potential concern. Multinational companies or external research groups may gain control of genes of plants native to the developing world free of charge and then use them to produce superior patented varieties which would then be sold back at high prices. Binding national and international regulations, therefore, need to be developed. One suggestion would be to channel compensation into development co-operation or the CGIAR system in order to create agricultural value in the region where the genes came from (Swaminathan, 1999).

The important political, ethical and trade questions raised by biotechnology, although not all unique to modern biotechnology, must be resolved at government and intergovernmental level by developing a global regulatory framework which takes account of financial resources. To clone a single gene costs approximately $1 million. In developed countries, sales are large, patents protected and risks low, but there is no profit to be made in developing countries. Therefore public-private co-operation may be needed in the developing world as well as technology transfer units in universities and elsewhere, to facilitate technology transfer.

4.3.7 Public health and environmental hazards

Recombinant DNA technologies resulting in genetically -modified organisms (GMOs) have aroused widespread public concern in several areas: direct effects of the transferred genes on the recipient organisms, new possibilities for unfavourable recombinations, effects on environment and biodiversity and the nutritive properties of the food produced by GMOs. One potential problem upon release of GMOs may be "onward gene transfer" with detrimental effects of the transferred gene or an associated marker gene (e.g. antibiotic resistance) passed from plants to the microflora of animals. Similarly, plant-to-plant transfer could result in transfer of herbicide resistance to 'wild' relatives, which would then become 'serious' weeds.

There are genuine public concerns about the potential adverse impact of GMOs on the environment, biodiversity and human health and there is a clear need to improve the assessment of potential environmental and health hazards. The legally binding Convention on Biological Diversity calls for an internationally agreed protocol on biosafety. Recent attempts to agree on such a biosafety protocol failed. However, in January 1999 Indian policymakers and scientists called for a national commission to be established to deal with bioethics, biosafety, biosurveillance, food safety, consumer choice in terms of labelling and new mechanisms for involving the public in a transparent way. The French Government has decided to adopt the following three principles with respect to GMOs: adoption of a precautionary principle, surveillance of the technology in the large scale, and increased openness with regard to consumers and the public. This led to the Montreal agreement on biosafety protocols in January 2000.