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Back to the land: growing the solution to the rising food prices

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The panel discussed steps to help boost agricultural production.

Louise Fresco, Member of the Supervisory Board, Rabobank discusses sustainable agriculture issues at the panel Back to the land: growing the solution to rising food prices.

"Are we in the eve of mass famines now that food prices are growing? Is world peace in danger? The answer is no," writes Louise O.Fresco, a member of the Supervisory Board of Rabobank Nederland, one of the world's largest food and agricultural banks. Ms Fresco was today addressing a room full of participants at the EBRD’s Annual meeting panel on agribusiness.

“Food is not oil because it is produced by a billion farmers, most of whom are independent entrepreneurs. There is not a single technical reason why we could not feed a future world of nine billion people,” explained Ms Fresco. “However private and public sector need to act on agriculture to yield results in the years to come.”

Soaring food prices are on the top of the agenda for policymakers worldwide. Nearly all major food crop commodities are affected and in some countries high food prices have prompted people to take to the streets.

In response to the food prices most governments have moved to restrict price increases and shelter consumers by introducing a combination of policy measures such as price controls, quotas, tariffs, subsidies, and interventions using state grain reserves.

“In the current world, agricultural production cannot keep up with demand,” explained Miodrag Kostic, the President of MK Group, a leader in agribusiness in Serbia and Ukraine. Mr Kostic added that investing in agriculture is key in fighting food inflation. With a long experience in the area of primary production and export of agriculture cultures, Mr Kostic argues that agriculture can become a diamond mine for countries like Ukraine.

Agriculture suffers greatly because of underinvestment. The Food and Agriculture (FAO) Organization of the United Nations estimates that over 23 million hectares of arable land were withdrawn from production in recent years in Kazakhstan, Russia and Ukraine. At least 13 million hectares could be returned to production, with no major environmental cost

“It is unlikely that food prices will go back to 1990 levels but the crisis is presenting an opportunity for farmers. It is crucial that governments and the private sector work together throughout the whole production chain to boost agricultural production,” said Charles Riemendschneider, Director of the Investment Centre Division at FAO.

According to Ms Fresco, “Policy dialogue is important. Public and private sector have to agree on national long-term policies for agriculture and be clear on their responsibilities”.

As a reminder to investors in the panel, Mr Fresco stressed that governments can play a major role in ensuring that rural areas are kept habitable . ” For agriculture to bloom, it is imperative that the rural areas attract skilled agricultural engineers and trained farmers. We must invest in people and motivate young people to get an education in agriculture,” she concluded.

The EBRD, the single biggest investor in the agribusiness sector in the region is a keen promoter of the dialogue between private sector and governments in its countries of operations. On 20 May, one day after the Bank’s Annual Meeting in Kiev concludes, the EBRD will hold a conference of senior regional agriculture officials and leading private sector agribusiness executives. The conference is a dialogue about creating better links between the agribusiness industry and farmers and harnessing private sector investments to improve the infrastructure for farming.

By Marjola Xhunga
Photos: EBRD
18 May 2008