The global food system is broken. Largely dominated by multinational corporations, it enables and encourages unsustainable and unhealthy production and consumption patterns and generates enormous waste across all stages of production and distribution.
The system also produces massive greenhouse-gas emissions, thereby inflicting substantial ecological damage and depriving small-scale farmers of secure and viable livelihoods. Perhaps worst of all, food access remains profoundly unequal, causing extreme hunger to increase.
Addressing this multifaceted dysfunction represents a huge and complex undertaking. Any potential solution will likely involve difficult trade-offs, given the apparent tension between responding to short-term price increases and implementing long-term strategies for more sustainable production and equitable distribution.
The global fertiliser shortage is a case in point. Prices soared in 2021, owing to the rising cost of natural gas, an essential input for nitrogen-based fertilisers and continued to skyrocket last year after the war in Ukraine triggered sanctions on Russia, a major fertiliser exporter. But it has become increasingly clear that companies exploited this crisis to raise prices by more than the increase in costs. A recent study by Grain and the Institute for Agriculture and Trade Policy finds that the profits of the world's nine largest fertiliser firms increased from about US$14 billion (485 billion baht) in 2020 to $28 billion in 2021 -- and then soared to $49 billion last year.
It is important to note that the rise in fertiliser prices was not due to higher sales volumes. Rather, the price increases reflected "greedflation": firms leveraged supply shocks to increase their profit margins dramatically -- from roughly 20% of sales in 2020 to 36% last year.
While prices have declined somewhat since the start of the year, they remain high for most small farmers. Farmers in low-income countries currently must pay nearly three times what they paid just a couple of years ago to fertilise their crops. As farmers sink deeper into debt, many are forced to reduce their fertiliser usage, which affects yields and threatens domestic food security. Persistently high fertiliser prices, the UN warned late last year, threaten to turn the current "crisis of affordability" into a "crisis of availability".
To prevent further disruptions to food supply chains, India, Kenya, and the Philippines have increased farmer subsidies, whereas the EU has adopted measures to encourage domestic fertiliser production. But the use of chemical fertilisers is itself associated with ecological problems, posing risks to sustainable agriculture.
Given these risks, governments must avoid knee-jerk responses that will likely undermine ecological sustainability in the long run. Instead, policymakers must subsidise alternative technologies based on practices like crop rotation, natural fertilisers and pesticides, which could help reduce reliance on chemical fertilisers while maintaining high yields. This approach would not only reduce costs but also mitigate the environmental damage caused by nitrogen fertilisers. Moreover, these technologies already exist. Although viable, they are the Cinderellas of agricultural policy, waiting for their immense potential to be recognised.
To be sure, this transition should not be pursued too rapidly. When Sri Lanka abruptly banned imports of chemical fertilisers in 2021, the result was a dramatic reduction in domestic food production and acute food shortages. But a growing body of evidence suggests that carefully implemented agroecological approaches could significantly boost productivity and soil quality and could be scaled up as needed.
Unfortunately, most private investment and foreign aid continues to bet on increased use of chemical fertilisers rather than channelling more resources toward agroecological farming. For example, Agra, founded in 2006, advocates an industrial model of agriculture that involves extensive use of high-yielding seed varieties in conjunction with reliance on chemical fertilisers and pesticides.
Studies have found that Agra is far from meeting its goals of doubling yields and incomes for millions of smallholder African farmers.
To tackle the environmental challenges facing our world and mitigate the worst effects of climate change, we must reorient the global food system toward a more sustainable and equitable path. This requires transforming many areas of food production, particularly the highly oligopolistic markets for agricultural inputs and crops. By reducing our reliance on chemical fertilisers, we could turn the current food crisis into a genuine opportunity. ©2023 Project Syndicate
Jayati Ghosh, Professor of Economics at the University of Massachusetts Amherst, is a former member of the UN Secretary-General's High-Level Advisory Board on Effective Multilateralism.
