Oxfam responds on food prices

Rob Bailey, a senior Oxfam policy adviser on food issues, responds to my summary of Johan F.M. Swinnen’s paper. 

Oxfam International and other organisations stand accused of focusing too heavily on the losers from food price movements, giving the impression that whatever food prices do, poverty gets worse. However this is more than an academic gripe about NGOs being unnuanced and simplistic. It is claimed that the myopic focus on losers results in myopic policymaking. I don’t accept for one moment that this is the case by the way, but let’s start with the question of nuance.

Charge number one: Oxfam, and other international organisations, failed to make sufficient mention of the benefits to consumers of low food prices during the pre-2007/08 era. Here’s a report from 2005 recognising that consumers do benefit from artificially lower prices (whilst poor producers lose out). The paper argues that a more efficient, transparent and far less messy way to provide support to consumers would be through social protection. This would also have the added benefit of not destroying poor farmers’ livelihoods.

Charge number two: Oxfam, and other international organisations, failed to discuss the benefits to producers of higher prices during the crisis of 2007/08. Not guilty. An Oxfam report from 2008 showed that some countries benefited from the price spike, but a greater number lost out. It found the winners had invested heavily in agriculture and social protection. Among the losers, both rural and urban populations suffered.

Why did rural populations lose out in so many countries?

First, most of the rural poor were net consumers. Decades of rich country dumping and underinvestment in developing country agriculture probably helps explain this.

Second, many were unable to respond to price rises, due to poor access to credit, inputs, extension services and land – again a legacy of underinvestment.

Third, the struggle to respond was compounded by the nature of the price rise. This was not a nice, steady reversal of the previous two decades of stagnation. It was an economic shock: prices doubled over two years.

So Oxfam definitely nuances its reports, just not its headlines. And this is the real complaint. But seriously, what is expected of a campaigning organisation? Oxfam’s role is to raise urgent issues up the agendas of policymakers, politicians and publics precisely to help the losers – whether they are losers from conflicts and disasters, drug pricing policies, or in this case food price movements. I’m afraid this usually means a myopic focus on losers in messaging, albeit perhaps to the detriment of our academic credibility. But it does not follow that the result is bad policy-making.

Why? Because whether Oxfam was drawing attention to the corrosive impact of dumping on food producers in 2005, or the calamitous effects of spiralling food prices on food consumers in 2008, its policy prescriptions remained the same:

• increase investment in developing country agriculture;
• dismantle trade distorting subsidies in the North;
• increase social protection to protect poor food consumers.

I welcome the accusation that Oxfam focuses only on losers in its messaging, irrespective of whether prices rise or fall. That’s our job. But I do not accept the implication that Oxfam policy (and by a flattering extension, public policymaking) yo-yos around as food prices rise and fall. It simply does not stand up.

Comments

[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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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:
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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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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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