The Rising Price of Corn, Food Aid, and Corruption

September 12th, 2012

flickr / Charles Haynes

Every time I ride my bike by a corn field in Oregon—full and tall—I feel a little bit thankful. I am thankful for our mild summer heat, this year and others. Thankful forOregon’s efforts to create a more sustainable food system. And particularly thankful that I live in country where record high temperatures don’t affect my ability to feed myself.

It’s not true everywhere. Record heat across the U.S. Midwest has battered corn crops, making it likely this year’s harvest will be one of the lowest in years—and sent prices soaring. As a result, consumers in the United States will have to pay more for everything from soft drinks to biofuels to beef. But the cost to U.S. citizens will be slight—a bump in food prices of no more than 3 to 4 percent. It is the world’s developing countries that will truly suffer.

As agricultural economist Michael Roberts explains, “About 2 billion people still live on $2 a day or less. Often, they must spend half or more of their income on food, the bulk coming from staple grains like corn, wheat and rice. For these people, a huge rise in grain prices is more than noticeable — it can literally break their budget.”

Corn is an exceptional food. It is one of the world’s most efficient plants when it comes to manufacturing organic matter from the same quantities of sunlight, water, and basic elements. It remarkably versatile—the same plant can provide a ready-to-eat vegetable, storable grain, source of fiber and animal feed, a heating fuel, and an intoxicant.

Corn has one other special property, which is a human construct as much as a biological one. It was commoditized. This happened in 1856 when the Chicago Board of Trade instituted a grading system, guaranteeing that any kernel of Number 2 corn is as good as any other.

As Michael Pollan points out in his excellent book Omnivore’s Dilemma, “the invention of commodity grain severed any link between the producer of a foodstuff and its ultimate consumer. A commodity is like a filter, stripping qualities and histories from the harvest of a particular farm and famer.”

The United Statesis the world’s largest food assistance donor; in 2009 it accounted for more than half of global food aid, most of which goes to young children and women in developing countries. Food fromU.S. food assistance is made up primarily of fortified foods, including corn soya blend (CSB) and other fortified blended flours (FBF). These policies can be enormously helpful in reaching populations, particularly in famine or crisis.

But food aid cannot and will not solve the developing world’s hunger problem. For one, it’s not a long-term solution—and it may even hinder countries’ ability to support themselves. In Ethiopia, for example, some have likened food aid to drug dependence, pointing out that as the population has grown, agricultural production has declined and, for many, food aid has become a permanent fixture in survival.

For another, it is too easily corruptible and may even encourage corruption. In Somalia, almost half of the entire supply of food aid is diverted to corrupt contractors, radical Islamist militants and even United Nations staff members. The United States sent food shipments in 1999 to Russia to help the government pay off arrears on wages and pensions. But rentseeking and illegal diversions of food aid were so widespread that proceeds totaled only $3.4 million—far short of the anticipated sum of $500 million. In 2011, Transparency International found that rampant corruption in food aid worsened the suffering of Kenyans hit by a massive drought in that year.

On one hand, the commoditization of corn and other crops makes it easier to transmit food aid. But on the other it is that very commoditization that makes it more corruptible. It’s much more difficult to steal when food is unique and perishable. Ironically it’s a bit of a vicious cycle—biological gains in efficiency lead to commoditization of cheap corn, cheap corn gets sent to developing countries where food is scarce, those citizens become more reliant on the cheap corn while venal officials make a profit, and corruption erodes development, worsening the economic conditions fundamental to the food crisis.

This is not a problem limited to this year or this season. Climate change projections from 12 leading modeling centers around show signals of climate change emerging, including extreme droughts, will worsen within the next 10 years. These are expected to worsen crop and food conditions in developing countries worldwide.

The world must prepare now to confront these challenges. Aid alone will not solve or control the problem. To effectively deal with these worsening conditions, we must help developing countries improve the sustainability and viability of their food systems and confront endemic corruption.

We must innovate for empowerment.  Empowerment for farmers will mean better access to markets and capital, information, technology, inputs, crop portfolios, irrigation, and infrastructure. Empowerment will mean that locals, instead of massive exporters an ocean way, will be able to turn previously-unfarmed land into productive land. Empowerment will decrease developing country citizens’ reliance on food aid and reduce the corruption in that aid. Empowerment will mean technological and information solutions that are inimical to corruption. Empowerment will mean change.

Image: AttributionShare Alike Some rights reserved by Charles Haynes

Written by Ann Hollingshead

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