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November 18, 2010

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Don Stoll

Maybe we should read Swinnen's selective interpretation of Oxfam reports in the context of a rising tide of hostility against aid agencies. If the recent Human Rights Watch study of Ethiopia's misuse of aid provides the most damning evidence of failure by the development community, the hunger for such evidence became too omnivorous some time ago—certainly long before Prof. Swinnen's paper appeared last spring. The ongoing rush to harsh judgment on the aid community must not stampede us into fabricating—intentionally or not—incompetence and dishonesty where neither exists.

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Why did rural populations lose out in so many countries.

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Swinnen and Rodrik miss a few key issues in their posts on high food prices being bad for poverty. I outline some of them in more detail in a post on Triple Crisis Blog:
http://triplecrisis.com/are-high-agricultural-prices-good-or-bad-for-poverty/
Rob Bailey nails one of them in his third point: price volatility is not the same as high prices. Volatility is not good for anyone but the speculators and the traders, partly because it sends misleading price signals to producers and consumers alike. So there is no contradiction at all between Oxfam's point that persistent low prices were bad for the poor in many developing countries and so were the price spikes.
But the other point, which Bailey only alludes to, is that high prices provide a stimulus to an important sector of any economy that has a large portion of its people employed in agriculture. And low prices, even if they translate into cheaper food for the poor (and they often don't because of oligopoly in the food chain), doesn't have the same effect on core productive activity. So high prices create positive employment effects in addition to raising incomes from farming itself.

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Vincent

I have a probably naive question but I can't seem to get my head around it:
Oxfam states that many farmers are net consumers of food. How can that be? Where do they get the income to buy their food if its value is superior to the food/commodity they are selling? Could it be that many rural households also have a secondary activity that is not related to agriculture?
Thankyou in advance for your answer.

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