Why It’s Time To Move Beyond Neoliberal Agricultural Policy

The price of commodifying of our food system.

Photo by lucas Favre on Unsplash.

Have you ever wondered how we got to this point? Where agrochemical companies could deliberately mislead governments and the public, all in the name of making money? Where farmers are being paid less for their products than what it costs them to produce? Where the world’s poorest struggle to produce enough food to feed their families, let alone make any semblance of what we would call a ‘living’ from the land? Where agriculture is seen as a hindrance, rather than a help, to solving environmental issues?

Where did we go wrong?

We sold out. That’s what happened.

Agriculture became about consumption, not creation. Food became strictly a commodity. Economic rationale reigned supreme — never mind environmental and social issues, the free market will sort it all out.

That couldn’t be further from the truth.

In 1981, the World Bank published the Berg Report, which recommended a shift in global policy towards neoliberal economics following the world debt crisis of the late ’70s. In response, West African governments undertook a retraction of government services while parastatal organisations became privatised and subsidies and tariffs removed. There was a renewed focus on exporting crops with a “comparative advantage”; local currencies were devalued. Concurrently, South Asia became a major exporter of rice thanks to the innovations of the Green Revolution and American farmers enjoyed increasingly subsidised production. Local producers simply couldn’t compete.

In the space of three decades, West Africa became increasingly reliant on imported rice as a food staple, with rice imports accounting for more than 40% of cereal demand in the region, some 20% of internationally traded rice. In coastal areas, per capita consumption of imported rice averaged 60kg, forming the cornerstone of the poorest households’ diet and accounting for up to 25% of household spending.

2008 saw rice prices skyrocket by as much as 203% on the global market, mainly driven by a decreased global supply due to poor rain in 2007, a depletion of global grain stocks and rising oil prices. Though the blow was softened somewhat in West Africa by locally produced food supply chains and currency exchange rates, price rises between 150–200% were still experienced in some areas — no insignificant amount for households already spending a quarter of their income on rice. The shortage also affected the prices of other food commodities and severe food security affected many households; in Monrovia, it had doubled from 2007 levels by June 2008.

Governments were forced to take action, cutting taxes on rice and subsiding the cost of imported rice to bring price relief, often at enormous cost — in Liberia, the bill came in around 10.4 million USD, or 1.2% of GDP. Programs incentivising local rice production were introduced to ensure future food security, and government began to take on more active roles in rice production and marketing.

Within three months of the high point of the crisis, price levels had dropped back down close to pre-crisis levels, though they rose again in 2009. By 2011–2012, they had surpassed 2008 prices but with the new approach to food production in West Africa, the blow was less keenly felt. Rice prices today are slightly higher than pre-2008, but the prediction is that this is to be a short-lived relief.

Neoliberalism cost West Africans their food sovereignty, their ability to provide for themselves. It took years for the true cost of pursuing this policy to manifest but the lesson was learnt — there may be a financial cost associated with pursuing government policy in the food sector but the resilience that self-sufficiency brings in the face of a crisis more than pays off.

On the flip side of the coin, neoliberalism also poses significant problems for countries with food production geared towards export. In Australia, the export market claims more than half of production across a range of sectors since the industry produces more than the local population can consume. With a relatively small domestic market, and a growing global market, Australian agriculture has become vulnerable to changes in demand and pricing in overseas economies, making Australian farmers “price takers” rather than “price makers”.

At the same time, the industry is becoming increasingly deregulated, relying on market forces and indirect government incentives to produce an efficient farming sector. This approach, coupled with relatively little subsidy, means that there is little to buffer the industry from international price fluctuations. As such, Australian farmers often find themselves subject to wide variations in price, driven by global supply and demand, which increases risk and uncertainty across the industry. The evidence suggests that Australian agriculture has become more efficient and significantly more productive over the last fifty years to buffer against global market forces as an increasingly “productivist” approach has become widely accepted. In many cases, however, increased productivity has not meant increased profitability, only greater entrapment in a debt cycle. It has also come at the expense of socially and environmentally desirable outcomes, which are seen as less important in the face of looming debt and the constant struggle to pay bills.

Agricultural extension services have also been increasingly privatised in Australia, attributable to the declining relative importance of agriculture to Australia’s overall economy. This has several repercussions.

Firstly, given that the private sector approach is heavily focused on productivity, investment into research and development is too, which serves to accentuate the sector’s single-minded approach. Research and development into social and environmental concerns falls by the wayside since they are not directly linked with economic gains.

Secondly, there are multiple extension services providers, even within sectors, resulting in fragmented knowledge and confusion for both the producer and the consumer. For instance, producers in the meat industry would have to go through several different certifications in order to provide a quality guarantee across all aspects of production, costing time and money. Some of the standards do not meet consumer expectations, nor do consumers always understand what all of the various certifications mean.

Thirdly, my own thesis research in 2012 revealed that the industry itself has become somewhat fragmented across the supply chain. Though there is talk about working towards sustainable production practices in the future, there is little understanding of the characteristics of a sustainable agricultural system. Nor is there a definition of sustainable agriculture that is understood and accepted industry-wide.

And what is the result of all this?

A highly volatile industry, uncertainty and fear created by the constantly fluctuating prices based on what the market dictates rather than the cost of production, an increasing debt cycle, declining rural communities, loss of knowledge and food culture, increased farm sizes (mostly monocultures) that are even more geared towards production, degradation of the natural resource base, and an environment that is creating yet more uncertainty and fear through drought, flood and fire. And the Australian government still drags its feet at the thought of getting involved — it might compromise the workings of the “free” market economy if they did…

As in West Africa, neoliberalism has come with a very high price. The mechanisms may be different, but the result is the same — producers and consumers left at the mercy of the unsympathetic hands of the free market.