Commentary - Trust, not self-sufficiency, will help create a more food-secure world

By Mr. Emery Koenig

Emery Koenig is executive vice president and chief risk officer of Cargill.  He was elected to Cargill’s Board of Directors in 2010 and is a member of the Cargill Corporate Leadership Team, the core executive group in charge of Cargill’s overall strategy, growth and funding.  Koenig also serves as a platform leader for Cargill’s Agricultural Supply Chain platform as well as having responsibilities for Cargill’s corporate transportation, logistics and warehousing function.  Koenig currently serves as chairman of the board for Black River Asset Management, LLC and has been elected to the Board of Directors of The Mosaic Company.  In addition, he is a director of Cargill International, SA, a trustee for Minnesota Public Radio, a member of the Board of Directors of CARE and of the Catholic Community Foundation. Koenig holds a degree in business management from the University of North Dakota.

Today, Chinese consumers enjoy lower- priced food and greater variety than ever before. Chinese farmers are able to concentrate on the greatest economic opportunities as presented by market demand, improving their incomes and raising their standards of living.

This reality is the result of trust. China has trusted the global supply of oilseeds to meet its demand for soybeans, so it can focus its own agricultural resources on those crops that are best suited to local agronomic conditions and local consumer demands. 

This kind of trust is paramount to creating a more food-secure world; one in which everyone has access to sufficient amounts of safe, affordable and nutritious food. To achieve global food security, governments must trust the markets, and businesses must earn that trust.

Trusting the markets isn’t always easy, especially today. Agriculture around the world is in a virtually constant state of disequilibrium, meaning that small changes in the quantity of production have very dramatic impacts on price. In times like this, people panic.

Far too often we are seeing national governments overreact to the extent that they are making pledges about and taking measures toward food self-sufficiency. There seems to be a growing, misguided belief that self-sufficiency will somehow lead to food security. The result is actually the opposite.

Short-term fixes like artificially suppressing prices, hoarding supplies or banning imports or exports put pressure on prices and exacerbate access issues. We have seen this clearly in the Indonesian beef market, where steps taken to block live cattle and boxed beef imports in an effort to spur local production have resulted in dramatically higher prices for Indonesian consumers and lower supplies on grocery store shelves. The country has drifted further away from food security under the banner of self-sufficiency.

Self-sufficiency is not the answer. The world will always raise the most food the most economically and in the most environmentally responsible way when farmers plant the right crops for their local climate and soils using the right technology, then trade with others for the benefit of all.  If every country set a goal of food self-sufficiency, the world would have much less food. 

There are better options. By encouraging free trade in a fair, rules-based, rigorously enforced system, governments can help ensure that food surpluses reach areas of deficit. Additionally, because the global food supply has much less price variation year-over-year than the local supply, free trade has a stabilization effect on food prices. On the other hand, by closing borders and attempting to endure weather disruptions and price volatility alone, nations end up forcing higher food prices on all of their citizens.

This is the true threat to food security. There is no doubt we have the land and technology to produce enough food to feed the estimated nine billion people on the planet by 2050. The question is; will we have the policies and infrastructure in place to ensure the poorest members of society will be able to continue to access that food?

As a global company, naturally Cargill has a stake in advocating for open markets and free trade. But while these things are good for Cargill, they are also in the best interest of the billions of people all over the world who receive the benefits of world trade flows, which include better access to safe, affordable and nutritious food.

The burden is not all on the government. The private sector can be a strong partner to strengthen and improve agricultural and food systems at the local, regional and global levels. Cargill has successfully worked with governments and communities around the world to provide training and support to farmers, establishing fair, transparent pricing policies and increasing their access to markets. In doing so, we are helping them increase their productivity and raise their standards of living.

From Sumatra, Indonesia, where we work with more than 8,800 certified-sustainable smallholder palm oil producers to market, process and take the world their crops; to Cote d’Ivoire, where more than 60,000 smallholders are benefiting from our sustainable cocoa program and as a result consumers all over the world can feel better about the chocolate they eat; these success stories wouldn’t be possible without a market for these commodities and partners with which to trade. By encouraging free markets and open trade, governments promote private sector investments such as these.  

There will always be a need for governments to provide their citizens with a safety net in the event of emergencies. But beyond that, it all boils down to trust- trusting the markets, and each other. Free trade and open markets aren’t the only keys, but they are a critical ingredient to creating a more food-secure world.

Comments

[Amy Peters]

"By encouraging free trade in a fair, rules-based, rigorously enforced system, governments can help ensure that food surpluses reach areas of deficit.
Oh yeah, that has really worked. That is why we have famine in Africa, India, N.Korea, and food riots in Europe.

[Michael Friedman]

It is in Cargill's unequivocal interest to promote this particular position, so with all due respect, this opinion should hardly be given much weight. I might suggest to readers that they look to sources from unbiased parties in order to make informed decisions as to what is the best vehicle for overcoming the utter shame of more than 1 billion under-nourished people a year. As starters, it might make sense to consider sources such as the Food and Agricultural Organization, which has far less of a vested self-interest in seeing the free flow of their own commodities. And oh, oddly enough, the FAO seems to very much identify the need for self-sufficiency as a means for food security given that the grow-the-food-elsewhere-and-ship-it-in-for-the-profit-of-the-non-domestic-grower-model seems to be a billion belly a year bust. Everyone can make their own decision as to whether it is better to trust self-interested mega-corporations whose actions are ultimately dictated by a drive for profit or, on the other hand, agencies and institutions who ultimately would simply like to see less kids going to bed hungry.

[Emery Koenig]

The pursuit of food self-sufficiency at national or regional levels undermines the increases in output a growing global population will require, inefficiently uses scarce natural resources and can cause significant environmental harm. At Cargill, we are working in collaboration with others to improve agricultural productivity and, importantly, bring best practices and technologies to those areas of the world, such as Africa, that currently are not fulfilling their agricultural potential.

Only about 15 percent of all the food produced in the world crosses international borders. That 15 percent is not causing food insecurity, it’s helping to relieve it. In fact, to improve global food and nutrition security, that percentage must increase. Global population growth is skewing towards areas that are not blessed with the natural resources required to produce food. Growing the right crops where the soils and climate are best suited and allowing open trade will provide the food that is needed, while minimizing the overall environmental impacts by reducing the resources and inputs required.