Address Malnutrition with Food Insecurity

Jomo Kwame Sundaram

KUALA LUMPUR, Malaysia, Aug 04 (IPS)  - The 2020 State of Food Security and Nutrition in the World, issued by the Food and Agriculture Organization and its United Nations partners in mid-July, reports that chronic hunger continued to increase to 690 million worldwide in 2019, 60 million more than in 2014. Some two billion people worldwide were already experiencing some food insecurity during 2019, a number likely to spike upward due to Covid-19. Although headline hunger numbers have been significantly revised down retrospectively with better official data, the uptrend remains alarming. The 2020 UN report continues to expand its coverage of malnutrition, going beyond the old narrow focus on dietary energy or caloric undernourishment. With its cost estimates for healthy diets much higher than for energy-based diets, as many as three billion people in the world cannot afford nutritious diets. Another false start in Africa Even progress in addressing dietary energy undernourishment in the world has been uneven, with Africa projected to overtake South Asia in a decade as the region with the most hungry people, rising to 433 million in 2030 from a quarter billion. The report False Promises argues that despite improved understanding of malnutrition, a narrow focus on increasing caloric supply, at the expense of both crop and dietary diversity, is being promoted by the Alliance for a Green Revolution in Africa (AGRA). AGRA promised to double productivity and incomes for 30 million small-scale farming households while halving food insecurity by 2020 in the 11 remaining focus countries using high-yielding commercial seeds, fertilizers and pesticides. Launched by the Bill and Melinda Gates Foundation in 2006, AGRA has spent almost US$1 billion promoting such practices. The report shows problematic outcomes, with AGRA "failing on its own terms". Who gains from subsidies? As most farmers cannot afford AGRA's expensive recommended commercial seeds and fertilizers, African governments subsidise them at the cost of about US$1 billion annually. Subsidies for commercial seeds and fertilizers have mainly promoted ‘starchy' crops, such as maize and rice, resulting in much more land planted with such subsidized crops, often replacing more climate-resilient, nutritious crops such as sweet potato and millet. However, the promised productivity surge has not happened, only rising modestly, with net incomes barely increasing, if at all, despite the subsidies. Meanwhile, the number of hungry people in AGRA focus countries has increased by 30% since 2006! Maize production rose 87%, mainly due to more land being planted with it, while millet fell 24%, with yields falling 21% in AGRA countries. Staple root crops, including sweet potato and cassava, saw a 7% yield decline under AGRA. As it reaches its own 2020 deadline, neither AGRA nor the Gates Foundation has published any overall evaluation of its impacts on the yields, incomes, food security and nutritional status of the smallholder households reached. Food systems for healthy diets Most African farmers are believed to be poor, growing crops for both subsistence and sale. But diverse, healthy diets for them are now less affordable as nutritious, climate-resilient, ‘traditional' crops have been displaced by AGRA-promoted crops such as maize and rice.     Such Green Revolution programmes have thus undermined sustainable crop diversity supportive of dietary diversity. These generally include more plant-based diets, considered better for both human health and the environment. Sustainable farming should instead promote nutritious, affordable diets for all, especially the world's half billion small-scale farmers who, along with their families, comprise many of the world's hungry. By contrast, nearly 300 large ‘ecological agriculture' projects in more than fifty poor countries apparently averaged a 79% productivity increase, with declining costs and increasing incomes, more impressive than AGRA, and with superior nutrition outcomes. Rwanda's AGRA record Rwanda's purported success as an AGRA focus country elevated Rwandan Agriculture Minister Agnes Kalibata to AGRA's leadership in September 2014. In late 2019, she was named to lead preparations for the UN Secretary-General's World Food Systems Summit in 2021. Rwanda's maize production grew four-fold, with a 66% yield rise due to fertilizers and high-yielding seeds, with the rest presumably due to 146% more land under the crop. Rice output nearly doubled under AGRA, as planted rice land rose 147% as yields fell 19%. But this boom has come at the expense of more nutritious and diverse small-scale agriculture, with the AGRA package imposed with a heavy hand, and the government reportedly banning cultivation of some other staple crops in some areas. Sorghum, cassava, sweet potato, and other roots and tubers were more important food crops than maize before AGRA, providing dietary diversity and benefits to the soil. Land under cassava fell 16%, while that under sorghum declined 17%. One step forward, two steps back Dr Kalibata claims to have raised per capita calorie production from 1,700 to 2,700 daily. But Tim Wise's Staple Yield Index suggests a more modest overall net yield increase of 24% after 12 years of AGRA-influenced policy. Although maize output rose four-fold as rice harvested doubled, chronic hunger increased by over 40% between 2006 and 2019 as the number of undernourished rose by 1.3 million to 4.4 million according to the UN report. Meanwhile, Rwandan poverty, which had fallen by half a million in the dozen years before AGRA, rose by half a million under AGRA. The Rwandan government campaign was resisted by many farmers, eventually forcing it to relax some crop restrictions, to allow more diversity, as President Paul Kagame sought re-election in 2017. Nonetheless, maize and other favoured crops remain heavily subsidized and supported. The AGRA model imposed on previously relatively diverse Rwanda farming almost certainly undermined its more nutritious and sustainable traditional agricultural cropping patterns, which are not easily measured using money-metric indices. Replacing hunger with malnutrition A popular and persistent misconception is that it is necessary to first overcome dietary energy undernourishment before addressing malnutrition. Dr Kalibata has argued that "poor, hungry countries can't think about diet diversity, it's a luxury". While traditional and subsistence food production and consumption undoubtedly had problems, food access and dietary diversity were generally better. ‘Hidden hunger' is best addressed by dietary diversity, supported by crop diversity in farming, rather than the Green Revolution's exclusive focus on raising caloric intake. Thus, seemingly paradoxically, ‘dirt-poor' subsistence farmers' children may have better diets than those of richer mono-cropping farmers. Monoculture's damaging impacts on biodiversity, natural resources and ecosystems are also well-known. With growing recognition of the many problems of health, human development and wellbeing due to malnutrition, including maternal, infant and child malnutrition, it would be a major step back to singularly focus on dietary energy intake. Food systems against malnutrition At the mid-point of the UN Decade of Action on Nutrition since 2016, it is crucial that the 2021 UN Food Systems Summit ensures that food systems do not leave anyone behind in the ongoing struggle against malnutrition. This could happen if micronutrient deficiencies and other health problems are ignored in singular pursuit of increasing caloric output, which may not even reduce hunger, as in Rwanda. Clearly, progress will not be achieved by either a nostalgic return to tradition or subsistence in very changed circumstances, or blind faith in corporate profit-driven technological change, insensitive to the needs of resource and ecological sustainability, social justice, farmer welfare, food safety, human nutrition and health. Progressively transform food systems The July UN report, subtitled Transforming Food Systems for Affordable Healthy Diets, suggests how food systems need to be changed to enable affordable, nutritious diets for the billions who cannot afford them, thus building on the 2014 second International Conference on Nutrition. The report recognises the fundamental importance of both the ‘hidden hunger' of micronutrient deficiencies and diet-related non-communicable diseases (NCDs). Most fruits, vegetables and other nutrient dense foods are now beyond the reach of low-income households. The challenge is compounded by poor food consumption habits and bad dietary behaviour due to other influences such as advertising, markets, convenience and changing lifestyles. Policies to reduce costs and improve access to healthy diets for all clearly need urgent attention. As developing countries reconsider food supply chains after recent disruptions due to unexpected Covid-19 contagion, containment and relief measures, the vulnerable must be prioritized, with up to 130 million more projected to go hungry due to lost incomes.

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Only Governments Can Prevent Covid-19 Recessions Becoming Depressions

By Jomo Kwame Sundaram KUALA LUMPUR, Jul 30 2020 (IPS) - Covid-19 threatens economic life the world over. The most urgent and important need is for governments, businesses and families to survive. Governments must revive economies and livelihoods to prevent Covid-19 recessions from becoming protracted depressions.

The Covid-19 crisis is clearly a ‘black swan event’, threatening both public health and livelihoods. Both the pandemic and containment efforts are not due to business operations and decisions, but nonetheless have compelling consequences for them.

Covid-19 contagion contractionary, costly

In East Asia and a few other societies, successful early precautionary and preventive measures, as well as testing, tracking and treatment of the infected, plus sufficient physical distancing, isolation and quarantine measures have been enough to contain the contagion so far. 

When such measures were not taken, inadequate or failed, ‘stay in shelter’ lockdowns became necessary as contagion spread. Nationwide lockdowns have been imposed in many countries. Such preventive and other precautionary measures have reduced economic activity and demand in many sectors. 

But trying to maintain aggregate demand as if there is no pandemic does not make sense. No matter what governments do, some output losses are unavoidable. So, the main challenge in addressing Covid-19 recessions is to avoid protracted recessions or depressions. 

Due to the continued need for physical distancing and other precautionary measures, likely to remain for some time to come, vaccine or no vaccine, some business disruptions may be more lasting than others, i.e., more likely to be medium, if not long-term. 

No ‘one size fits all’

Economies are neither monolithic nor homogenous, and no single inflexible policy can possibly be suitable for all. As recessions are uneven in impact, different sectors, industries, services and businesses are affected differently. Covid-19 recessions are also unlike other past recessions. 

Many businesses may not be able to survive major stoppages and demand shortfalls, however temporary. Such businesses could go bankrupt, severely affecting workers’ families, related businesses and those directly and indirectly employed. 

Much has to be learnt quickly from other experiences, and from learning by doing. Some businesses and sectors may not be able to survive, and options should include business redeployment, infrastructure and facility repurposing as well as staff retraining. 

Strict verification and correction can take place later, even after the lockdown is over. Conditions should be strict enough to deter abuse, but not participation. For example, government grants or subsidies, later found to be ‘excessive’, can be converted into low interest loans that governments recover later, rather than treated as criminal fraud.

Business disruptions threaten livelihoods

Business disruption has broader implications, threatening the entire economy with long-term costs. If relations — including trust among entrepreneurs, workers and customers — are disrupted, they will need to be rebuilt, requiring time and expense. 

Conventional economics ignores ‘transactions costs’ incurred in recruiting workers, seeking and keeping clients and customers, obtaining credit and investing capital, building trust, and other relations, and thus is a poor guide to policy.  The adverse effects of livelihood disruption should be minimised. Income maintenance policies need to help fired workers and others whose livelihoods have been greatly diminished. Hence, extraordinary and novel social protection measures are needed.

Helping businesses survive enforced idleness or hibernation due to such measures, and protecting livelihoods are both needed. Businesses, especially smaller ones with fewer reserves, will need help to keep their workers and to avoid liquidating their businesses. 

Simple payment systems help. Idle workers should immediately receive special social protection, while staying formally employed. Such measures will minimise rehiring costs when they return to work, but should not excessively burden their employers with debt.

Only governments can help

Governments may not be able to stop, let alone reverse or fully compensate for the effects of public health measures. But they can certainly help alleviate economic hardship due to the epidemic, and minimise lasting damage to the economy. 

Crucially, timely government interventions can prevent unavoidable, potentially brief recessions from becoming longer lasting stagnations or depressions. Without appropriate government measures, output losses due to work disruption will cause large business losses leading to mass layoffs. 

Even when no longer operating, rent, lease, infrastructure, utility and other such payments vital for business maintenance and employees’ welfare, such as health protection for employees, need to be made or absorbed. Some, mainly developed countries have acted promptly and appropriately to minimise layoffs, business destruction and worker welfare.

Governments can also act more boldly to subordinate unproductive rentier claims, based on asset ownerhip or property rights, to much more essential operating costs — not unlike how US bankruptcy law enables businesses to continue operating to work themselves out of their predicaments.

Current support often inappropriate

Many governments have provided liquidity — e.g., usually by offering low-interest or interest-free loans — to help businesses and workers survive the crisis. But such measures only ‘smoothen’ debt burdens over longer periods, ‘postponing the pain’, without reimbursing or compensating victims for their income losses.

Temporary and partial compensation for income losses enables businesses to quickly resume operations after lockdowns end, rather than having to also contend with additional debt burdens. Many businesses need help to survive, and aid can be provided conditionally, e.g., on avoiding or minimising employee retrenchments.

Postponing tax payments also helps, but tend to benefit the better-off, liable for more tax, rather than those most adversely affected or needy. 

Direct payments undoubtedly help. But without some ‘easy’ targeting, especially for businesses, often, too little is available for those in greatest need, while benefiting some who are not. 

Although policymakers typically insist on means-testing for anti-poverty programmes, they rarely demand targeting for businesses, reducing the efficacy of government relief. 

An already existing, developed social protection system makes it easier to ‘compensate’ idle workers, but is rarely available in developing and transition economies. 

Lowly-paid and casual workers and many self-employed typically have debt, more than savings. Not able to survive temporary losses, they are more likely to be displaced by lockdowns, and less likely to work from home. Government ‘unemployment benefits’ can easily be made progressive, with a higher fraction of previous earnings for the poorest. 

Government ‘payer of last resort’

In March, French economists Emmanuel Saez and Gabriel Zucman, both at Berkeley, proposed that governments help ease pain and disruption with payer-of-last-resort programmes, with adversely affected businesses reporting unavoidable monthly overhead and maintenance costs to qualify for government aid. 

A government ‘payer-of-last-resort’ during lockdowns can thus help ‘suspended’ or ‘hibernating’ businesses to continue paying unavoidable maintenance bills to avoid insolvency on condition of keeping their involuntarily idle workers, instead of firing them. 

Such a payer-of-last-resort programme would reduce hardship for workers and businesses. It could enable businesses to temporarily suspend or scale down operations, to limit haemorrhage and avoid insolvency, and to pick up quickly as conditions improve. 

It would maintain ‘cash flow’ for families and businesses, minimising Covid-19 shocks’ adverse secondary impacts on demand (e.g., due to fired workers spending less on consumption), while enabling more rapid recovery as demand resumes. 

Payer-of-last-resort programmes can be affordable if well complemented by effective contagion containment measures, enabling early resumption of business operations. While unavoidably high for lockdowns, government spending, typically financed by sovereign debt, can remain manageable. 

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Fight Pandemic, Not Windmills of the Mind

By Anis Chowdhury and Jomo Kwame Sundaram

SYDNEY and KUALA LUMPUR, Jul 28 2020 (IPS) 

With uneven progress in containing contagion, worsened by the breakdown in multilateral cooperation due to mounting US-China tensions, recovery from the Covid-19 recessions of the first half of 2020 is now expected to be more gradual than previously forecast.

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Pandemic response measure

In the face of the Covid-19 pandemic, many governments, especially of Organization for Economic Cooperation and Development (OECD) economies, have introduced massive fiscal and monetary packages for contagion containment, relief and recovery.

Such efforts represent a U-turn after long eschewing countercyclical fiscal policy, mostly for ideological reasons, such as dogmatic commitment to ‘budgetary balance’ and ‘fiscal consolidation’, besides giving central banks more economic policy discretion since the 2008-2009 global financial crisis (GFC).

The International Monetary Fund (IMF) estimated new government measures through mid-June 2020 at almost US$11 trillion. The Fund projected new borrowing by all governments to rise from 3.7% of global output in 2019 to 9.9% in 2020.

Projecting gradual recovery from the second half of 2020, the Fund expects average fiscal deficits to rise by 14% as global public debt reaches an all-time high, exceeding 101% of gross domestic product (GDP) in 2020-2021.

After much wrangling, EU leaders compromised on a new US$2.1 trillion (€1.8 trillion) package on 21 July. The European Commission has also activated the general escape clause in EU fiscal rules, allowing deficits to exceed 3% of GDP.

Complementary monetary initiatives include relaxing recommended Basel 3 capital buffers, lowering mandatory reserve ratios and easing terms for additional temporary credit facilities for banks and businesses.

Thus, central banks have committed an estimated US$17 trillion to extend ‘unconventional’ measures to buy corporate bonds, besides government bonds and government-sponsored mortgage-backed securities introduced during the GFC.

Windmills of financial minds

Macroeconomic economic policy makers must resist quixotic impulses to fight against financial ‘windmills of the mind’, instead fulfilling their responsibility to pursue consistently counter-cyclical macroeconomic policies.

Financial market analysts exaggerate real concerns, even using discredited research. Citing old research, even doubted by The Economist, a Forbes columnist insisted that “the surge in government debt” would cause “economic growth to decline”, claiming that government debt beyond 85% of GDP would slow growth.

Global public debt came to 83% of world output in 2019, up from 60% in 2008, before the GFC. This sharp rise happened despite austerity measures since 2010 when many G20 and OECD countries adopted fiscal consolidation.

That turn to austerity followed advice from the IMF, OECD and European Central Bank, who invoked influential, but misleading academic research. But fiscal consolidation “after the Great Recession was a catastrophic mistake”, concluded a Forbes columnist. It failed to deliver robust recovery, let alone sustained growth.

Subsequent IMF research found fiscal consolidation raised short-term unemployment, with even harder impacts in the long-term, hurting wage-earners much more than profit- and rent-earners. IMF chief economist Olivier Blanchard and his colleagues found Fund advice for early fiscal retrenchment inappropriate.

Windmills can block recovery

Reversing emergency expansionary measures too soon risks aborting recovery and may even trigger new recessions. Even an assets fund manager has acknowledged, “Like a course of antibiotics, an economic relief package is most efficacious when administered to completion”.

When President Franklin Delano Roosevelt tried to balance the budget in 1937 after securing re-election, the ensuing downturn ended the recovery, only revived after deficit spending resumed in 1939. Also, countries that abandoned fiscal expansion for consolidation from 2009 had worse recovery records than others.

Deficits and debt have, in fact, not been reliable indicators of long-term growth prospects. Obsessed with debt and deficits, while ignoring spending composition and efficiency, ‘deficit hawks’ tend to downplay the potential growth impacts of expansionary fiscal policy.

Nevertheless, the Fund continued to warn in January 2019 that high and rising public debt constituted “a potential fault line”. Pre-pandemic economic stagnation, tax cuts and poor commodity prices induced larger fiscal deficits, requiring more government debt, now compounded by Covid-19 containment, relief and recovery efforts.

Clearly, government macroeconomic policies should not be guided by financial market whims. Leaving policy making to such influential market signals can push an economy in recession into a lasting depression. The recent IMF leadership transition appears to have led to greater pragmatism just in time.

Investing for the future

The Fund’s April 2020 Fiscal Monitor urged governments to take advantage of historically low borrowing costs to invest for the future—in health systems, infrastructure, low-carbon technologies, education and research—while boosting productivity growth. After all, a year ago, advanced economies were spending only 1.77% of their combined GDP on debt interest—the lowest since 1975.

Unusually, it also advised governments to enhance automatic stabilizers, including a tax and benefit system to stabilize incomes and consumption, involving progressive taxation and social security payments or unemployment assistance.

Undoubtedly, politicians are often tempted, by lower debt costs, to borrow to spend more on “populist” programmes while cutting taxes. Such irresponsible fiscal policies need to be corrected.

Clearly, governments need to look at how money, borrowed or otherwise, is spent. If, for example, borrowed money goes into investments enhancing productivity, public assets can contribute not only to growth, but also to revenue.

Covid-19 recessions are quite different from recent ones following financial crises. Yet, all recessions threaten to become depressions if not quickly and appropriately addressed.

We are in for a long hard struggle, on both public health and economic fronts. Policies must not only be appropriate for the problems at hand, but should also create conditions for a better future, rather than simply trying to return to the status quo ante Covid.

As visionary leaders did during and after the Second World War, we need appropriate plans, not only to revive economies and livelihoods, but also to build a more dynamic, sustainable and equitable economy.

Also available online here: https://www.ipsnews.net/2020/07/fight-pandemic-not-windmills-mind/