Get help from the best in academic writing.

Arguments for and against privatisation in developing countries

What is the rationale behind privatization? Critically examine the arguments for and against privatisation in developing countries.
Introduction Privatization has its roots in the 1980’s, especially in European market where the governments were facing budgetary constraints, therefore they introduced privatization by selling Socially Owned Enterprises or Public Assets to the private sector. (Cook, Uchida October 2001).
When we discuss about the rationale behind privatization one arguments states that: ‘Privatization fosters competition and thereby results in efficiency and effectiveness within sectors. Competition is very important to obtain more efficient and effective public services. Imperfect competition, for example, a monopolistic arrangement results in poor quality services’ (Aktan, 1987). The transfer from publically owned to privately owned it does have some positive effects when it’s about decision making, enforcing controls, better working performance, meeting company targets and management. Public sector tends to complete a certain task, whereas private sector aims to achieve certain objectives by putting more efforts into it. (Source
Privatization when looked at a broader aspect should not be seen as an initial transaction, where the government tries to reduce budget deficits, but rather should include key stakeholders and many experts of different fields to assess whether this transaction could also affect positively employment increase, social wealth fare, GDP and so on. The success is only achieved by incorporating government policy reforms, enforcing rule of law, reducing corruption on central and local level, reducing barriers for potential investors, lowering taxes and trade policies. (United Nations. New York 1999).
In the global aspect privatization had some ups and downs and in the mid 1990’s proceeds of privatization were around $30 billion per annum. (Figure 1)
Figure 1. Privatization proceedings from year 1990 – 2003
In 1997 privatization proceedings reached revenues up to $70 billion with the increased activity of transaction mainly from three countries in Latin America like Argentina, Brazil and Mexico. This increase of shares came mainly from privatization proceedings from Oil and Gas that these countries started to perform better in the international market by expanding their business. However, things got worst with the East Asian crisis, and in 1998 stock market in Argentina crashed and with Russian debt crises and Brazilian crises it spread out to other countries by reducing annual revenues and decreasing market share price.
Figure 2. Top Ten Countries that generated higher income
From 1990 – 1999 more than 20% of privatization revenues came from Brazil followed by Argentina around 14%, Mexico 10%, China around 7% and so on. Most of the revenues came from Foreign Direct Investments that these countries generated and privatization sales in Telecommunications, Banking, Oil and Gas. However, in the second decade it was China that was leading the way, by surpassing Brazil and other countries with more than 20% this time. Policy changes, reforms and better strategy created by Chinese attracted more Foreign Direct Investments comparing to other mentioned countries, therefore more privatization transactions occurred in China, followed by Brazil and Poland in 2000 to 2003. (Kikeri and Kolo, November 2005).
This section presents an analysis paper, where I used two case studies to compare and contrast rational behind privatization, arguments for and against privatization in Kosovo and Albania.
Privatization in Kosovo With the presence of international community in Kosovo after the war it was evident that it is heavily important to restructure central and local institutions in order for the economy and state to function properly. During these times Kosovo was a state of import consumption where from 2000 to 2002 import consumption surpassed from €1.8 to €2.2 billion, whereas exports only €108 mil. This created a huge deficit in the economy and something needed to be changed in order to soft the crises. International community proposed that besides providing grants and donations they need to privatize Kosovo public assets in a very short time. (KIPRED, 2005)
The process of privatizing Socially Owned Enterprises or Public Assets started after 2001 in Kosovo after the war. In the beginning it was very challenging and very debated whether privatization of certain assets should occur during that time, some of them were argued whether should privatize later by assessing the market and for some was highly questionable whether to privatize or not at all. Some of the question that were raised: What do we gain with privatization? What will happen with current employees? How is this going to affect unemployment rate? On the other hand: what if we don’t privatize? What will be the negative effects? According to (Shehu, 2009) many SOE’s that were privatized immediately after the war are in the brick of bankrupt due to heavily affected by financial crises and these companies didn’t meet required expectations that agreed upon in the beginning of their start-up and now they are obliged to meet deadlines or face reverse procedures of privatization from the beginning. One of the companies that is at high risk is Lamkos Kosovo, a wood company with international investments from Bulgaria which was operating with full capacity for four years before it started to collapse due to losing market share in international market and heavily decreased revenues.
Knudsen (2010) argues that since United Nations came in Kosovo after the war their strategy was to mainly privatize Kosovo public assets without or very little participation of the national government or the key stakeholders. Pillar IV, which was mainly in charge of proceedings didn’t make any research about the consequences of privatizing some very sensible Socially Owned Enterprises. As a result many people lost their jobs, companies were transforming from production to services, which affected exports income, and even failing to sustain within the first several years. This caused downwards in the economy, increased unemployment rate and trade deficits.
Privatization in Kosovo had a difficult history. Since 2002 around 500 socially owned enterprises were privatized, 69% of them are active, while 1/3 of them are completely non-operational. This caused the unemployment rate to increase more than 10%. However, privatization had some really good years in 2005, 2006 and in 2007. Many SOE’s that were transferred to private companies managed to increase their market share and revenues in domestic and international market. (Ahmeti, 2008).
Some of these companies are: Ferronikeli – is the one of the largest privatized companies with more than 1000 employees, more than €60 million in investments. They generate more than 50% of the total exports in international countries like: Germany, Italy, China, Korea and so on.
Stone Castle – is a vineyard that employees more than 260 workers. It is one of the largest winery companies in the region with more than 10 million litres produced. Besides supplying the domestic market their main policy is to export internationally in countries like: United Kingdom, Germany, Italy, Spain and Belgium.
Trofta – is the largest fishery company in Kosovo and probably one of the largest in the Balkans after privatization. This company became so successful on its service and tasteful fish that it attracts people from many European countries. Its main strategy is to export live fish to many European countries. (Source: Privatization Agency in Kosovo)
All these private companies contributed in employing many people as promised prior to privatization agreement, reducing poverty rate, expanding their business to regional countries, and even purchasing shares from other smaller international companies.
Until today Kosovo’s income from sale of SOE’s generated is €380mil. However, the usage or investment of this money has never been done due to lack of government and institutional projects. (Ahmeti, 2008)
While some proceeds went smooth and generated revenues for some cases the lack of successful privatization process is associated by neglecting and not attracting Foreign Direct Investment. These are: Ski Resort Brezovica and Trepca Mining. These two so called ‘Golden Natural Resources’ were not in the agenda of government to privatize because of financial crises occurred in 2008. The government has postponed the decision on privatizing these SOE’s so perhaps after the crises it will make for revenues from higher bidders. (Koha Ditore, 2010).
However, (Shehu, 2009) argues that the interest of foreign investors is always there if there are suitable political and business policies. No matter if they are regional or global multinational companies there is always a potential investor even in these crises times. The government needs to attract them with the best policies. If there is transparency and no corruption investors will always seek to invest, to have their companies present in even new countries.
Privatization in Albania Albania was an isolated and closed country for all internationals until 1992. There was no private ownership; everything belonged to the state. With the ruin of communism in this last part of the world economy and trade liberalization was in the agenda of the newly established government. By closing the doors to Russia and opening to Western Europe and United States, Albania’s bright future started to sparkle. Although the government was late to compete with other countries in the region they believed that with newly established policy reforms, tax reforms and privatization could achieve their goals in years to follow. From 1992 – 1999 more than 75% of the national wealth was privatized. Around 100% of proceeds in services and infrastructure road, while around 96% in agriculture. More than $450 million was Foreign Direct Investment during seven years and majority of these investments came from Italy and Greece neighbours.
Table 1. Foreign direct Investment in Albania
From the first table it’s evident that FDI amount was increasing in the years to come, however, because of the political crises that occurred Albania in 1997 it affected largely FDI investments and privatization to reduce and even investors to leave the country in the following years. (Business in Albania: Ministry of Economic Cooperation and Trade. 2000)
Aleksi, et al (2000) argues that privatization proceedings were very fast. Transferring the majority of state ownership to private companies in 1996 and by 1999 more than 90% in such a short period resulted with unavoidable problems in the process and almost all state economy was in the hands of privately owned companies. Lack of high tech equipment, quality human resources, capital investments and experience was a drawback for these companies to supply the domestic market and not to mention competing with international brands. Other issue that the government neglected is the sale of public SOE’s as a whole. Instead of dividing it in small parts and selling it to many individuals or companies it was sold as a whole. Therefore, the country hasn’t made any significant revenues to reduce budget deficits, reduce poverty, increase employment or even change a bit of the social life. In the end, there was more poverty and more unemployed people in the country than before the privatization started.
Some of the privatized proceedings that took place were:
Privatization of services where included: consulting, finance, attorneys, shopping markets etc.
Privatization of state ownership included companies like: AMC – a telecommunication company, Mining and Energy, Tirana Airport and so on.
Other privatization proceedings: Tirana Brewery, Cement Factories Kruja and Elbasan, Hotel Dajti, Tirana International Hotel etc.
This fast privatization strategy also created room for corruption. Therefore, corruption was motivated to occur in three ways: ‘firstly the decision makers created a privatization process in a way that benefited mostly those who had political connections, secondly the process lacked the needed amount of information and transparency and thirdly by deliberately obstructing and delaying the privatization of particular state owned enterprises’. Basically everyone involved in privatization process starting from the lowest government officials and up to the prime minister was fighting to get a piece of cake or even a big chunk of it. During this process even the media was compromised and biased to report privatization proceedings, corruption of the state officials involved even though it was stately owned at that time. (Nurellari, Albania)
According to World Bank Privatization Database from 2000 – 2007 in Albania privatization proceedings was doing alright. However, when we compare the data we can see that Albania had less revenues in privatization compared to Kosovo. This calculation is done when we convert USD to €, we can see that $481 is around €360, whereas Kosovo from 2002 onwards generated €380 million.
Amount in US$ (in millions)
National Commercial Bank
Albanian Mobile Communication
Vodafone Albania
Petrolimpex sh.a. Tirana
Savings Bank of Albania
Hotel Tirana
Italian Albanian Bank
Total amount in revenues 481 Source: World Bank Privatization Database
Conclusion Many companies that are active at the moment in Kosovo and Albania are operating basically as micro and small and medium size business. They have a limited or small number of employees with very few qualifications and they use very old working technology. The government needs to lower their taxes on these businesses so they could start growing or even lift taxes in the first years of establishment. Support could also be from national development bank to provide business loans with small interest rates, and also grace periods until they start generating revenues.
Attracting foreign direct investments in privatization proceedings could also be possible by enabling policies and laws that protect the investor no matter domestic or international. By having a proper working environment several component should be considered: monetary policies to lower interest rates, proper banking system, foreign investment strategies, rule of law, etc. If all these measures are taken the state’s economy will thrive and it will be ready to compete in the international market. (Aleksi 2000)

Factors Affecting Food Insecurity Today Economics Essay

1.0 Introduction The World Food Summit of 1996 defined food security as existing “when all people at all times have access to sufficient, safe, nutritious food to maintain a healthy and active life” (WHO, n.d). Commonly, the concept of food security is defined as including both physical and economic access to food that meets people’s dietary needs as well as their food preferences. In many countries, health problems related to dietary excess are an ever increasing threat, In fact, malnutrion and foodborne diarrhea are become double burden.
Food security is a complex sustainable development issue, linked to health through malnutrition, but also to sustainable economic development, environment, and trade. Issues such as whether households get enough food, how it is distributed within the household and whether that food fulfils the nutrition needs of all members of the household show that food security is clearly linked to health.
2.0 Factors affecting food insecurity today Several factors that can cause food insecurity in the world today, that includes :
Global Water Crisis – Water table reserves are falling in many countries (including Northern China, the US, and India) due to widespread overpumping and irrigation.
Climate Change – Rising global temperatures are beginning to have a ripple effect on crop yields, forest resources, water supplies and altering the balance of nature.
Land Degradation – Intensive farming leads to a vicious cycle of exhaustion of soil fertility and decline of agricultural yields.
Greedy Land Deals – Corporations and Governments buying rights to millions of acres of agricultural land in developing countries to secure their own long-term food supplies.
Low rates of agricultural production – In the last few decades, agricultural output in SSA has barely kept up with population increases, and Africa now imports 25% of its grain requirements. Inherent differences in agricultural systems (Table 1) prevented the large increases in food production (‘green revolution’) seen in Asia. These were due to wide introduction in the 1960-70s of high-yielding varieties of rice and wheat, expanded fertiliser use, and more irrigation.
Food security in Japan Food Security in Post-Quake Japan March 17, 2011 | Posted by Zachary Keck, Joseph S. Nye, Jr. Research Intern – 8:44am | 8 Comments
The world’s focus since last Friday has rightly been on the post-earthquake efforts in Japan. For the past few days, most attention has been directed to the troubling situation at Japan’s nuclear power stations. While we have been closely monitoring that situation, we have also been curious about the food situation which appears to be getting far less attention – at least here in the United States – but seems just as urgent.
Here is some useful information that I was able to dig up. First, the Japanese government has been closely monitoring the food situation. Much of the work in securing and distributing adequate food supplies is being coordinated by the Minister of Agriculture, Forestry and Fisheries (MAFF). MAFF set up the Earthquake Disaster Countermeasures Headquarters to deal with the crisis which has held nine meetings since the disaster, according to the briefing summaries of each meeting that were released on their website.
The most immediate problem facing the Japanese government, it seems, is not the supply of food, but rather distributing food to those in affected areas. To this end, the Japanese government has mobilized 100,000 Self Defense Forces to assist with the humanitarian relief effort. Additionally, the last meeting summary posted on the MAFF website said that “MAFF is considering some new methods to supply food for people in the disaster area.” Prime Minister Naoto Kan later clarified what this meant when he told reporters that he was considering having troops deliver food to coastal communities by air or sea, according to The Washington Post.
Still, it remains unclear how badly those in the affected areas were in need of food. In Sendai City, for example, The Washington Post quoted an American living there as saying that the shelters had “enough food and space.” At the same time, Voice of America quoted an official from the U.N. Office for the Coordination of Humanitarian Affairs saying that millions were still in need of clean water and food.
Over the long term though, a food shortage could become a serious threat to earthquake victims. Japan is a large food importer and thus comes to rely largely on outside markets to feed its population. Fortunately, the Japanese government is already taking proactive steps to help fight off a future food shortage problem. For example, Bloomberg reported that MAFF is trying to “buy 32,381 metric tons of milling wheat in a regular tender on March 17.” Before the crisis, Japan had 920,000 tons of rice stockpiled.
As a long time ally of Washington, the United States must take strong actions to ensure Japan has adequate food supplies. So far, the work of the U.S. military and aid agencies has been commendable. Already, the United States has delivered seventeen tons of food, water, blankets and other relief supplies, according to The Washington Post. As Japan continues to recover, the United States should offer sustained assistance to ensure that the country can meet its needs. Public attention will likely be diverted in the coming weeks, but the Obama administration should make sure its attention continues to focus on ensuring that Japan recovers strongly from this tragedy.
India’s Food Security Problem By William Thomson April 2, 2012
Malnutrition is nothing new for many Indians. According to the International Food Policy Research Institute’s 2011 Global Hunger Index, the upshot of this perennial problem is that about 60 million children in India are underweight and malnourished, while 21 percent of the population as a whole general is malnourished. Unfortunately, this problem is unlikely to change anytime soon, with the recent introduction of the National Food Security Bill threatening to continue market inefficiencies in food supply and extend the problem of malnutrition far into the future.
The developmental repercussions of this situation are dramatic, not only for individuals who suffer numerous health issues resulting from malnutrition, but also for the economy at large. Malnutrition results in a loss of productivity, indirect losses from impaired cognitive development, and losses from increased longterm healthcare costs.
According to a report by the World Bank, productivity losses in India due to stunted growth, iodine deficiencies, and iron deficiencies are equivalent to almost 3 percent of GDP. While during the colonial era famine was the primary result of “food insecurity,” malnutrition has replaced it as the chief concern of legislators and economists.
The last great famine in India occurred in 1943, and served as a case study for Amartya Sen, the Nobel Prize winning Indian economist, in his groundbreaking work Poverty and Famines, in which he showed that famine was rarely the result of a lack of food, but rather the result of intervening economic factors, such as unemployment, declining wages, and, as is often the case in India, poor food distribution systems. The current problem in India is of that nature: it’s not so much a lack of nutrient-rich food, but rather a weakness in the food supply chain.
On a more positive note, India is expected to remain self-sufficient in the production of food staples until at least 2025. However, inefficiencies in the downstream segments of the food supply chain are still rampant, and threaten to undermine self-sufficiency and perpetuate malnutrition. For example, inefficiency in the tomato business, according to the editor of the Wall Street Journal Asia, results in as much as 20 percent of tomatoes rotting in transit, while the price for consumers is marked up by as much as 60 percent.
High prices for the consumer, as well as limited quantity and quality, all resulting from supply chain inefficiency, are sustaining increased malnutrition amongst the poor population.
The current Congress Party-led government is attempting to rectify the problem of malnutrition with its National Food Security Bill, which was introduced late last year. Sadly, though, the bill does little to alleviate the root cause, instead addressing only the symptoms – and in the most expensive and inefficient manner possible. Rather than correct supply chain issues, which would increase availability of food while reducing costs, the government has chosen to subsidize grain purchases. In addition, the government is doing this at a time when it can ill afford the expense associated with underwriting grain purchases for almost two thirds of the country’s population.
Despite complaints from all political parties regarding the bill, the Congress Party pushed the legislation through, as much to prove legislative power as anything else after an embarrassing bout of policy paralysis during the uproar over amendments to rules regarding foreign direct investment (FDI) in the retail sector. Even more disappointing than the politicized nature of the National Food Security Bill is the fact that revisions to FDI rules are exactly the type of legislative changes necessary to start rapid improvement in the food supply chain, negating the need for the bill in the first place.
The result of allowing increased FDI would have been to move firms such as Wal-Mart and Carrefour into the Indian market. These Western big-box retailers would have brought with them expertise in supply chain management. The influx of desperately needed fresh thinking and innovation into the agricultural and food supply business would have expedited changes downstream, helping alleviate malnutrition. Rather than an increased government intervention into the food economy, an influx of FDI and foreign expertise in supply chain modernization would be a surer route to freedom from malnutrition.
It’s likely that continued government subsidies as contained in the food bill will only lead to further market distortions. Absent legislative progress and further market liberalization, market distortions, along with vested interests by middlemen in perpetuating the existing lengthy supply chains, will continue to plague the population of India for some time. The result of this sad situation will surely be a continuation of the ongoing malnutrition epidemic, which will continue to handicap an already slowing economy.
William Thomson is a research assistant at the U.S. Naval War College and an International Relations ALM candidate at Harvard University. His articles have appeared in Small Wars Journal and e-IR.
Food security in third world countries Nearly 2 billion people worldwide are, on a regular basis, unable to grow or get enough food to eat- and a staggering 75% of those most lacking food security live in the most rural areas in the least developed countries of the world. Whether due to conflict, drought, flooding or disease, food security and sustainable agriculture are unstable realities for most of the world’s poor. A number of facts help to make it very clear just how critical this issue is in our supposedly modern, technologically and culturally advanced society: up to 6 million children a year die of hunger and malnutrition-related diseases, and what’s more shocking is the majority of these illnesses are entirely treatable. These unnecessary victims of malnutrition contract pneumonia, measles, malaria, and other infectious but potentially non-fatal diseases- all because they are so weakened by the lack of a regular and nutritious diet that their bodies’ immune systems cannot fight off suffered illnesses. Moreover, the absence of cheap and accessible antibiotics and medicines to prevent and treat illness is readily felt in rural areas of third world countries, where infant mortality rates are highest.
The greatest challenge in the coming years for a developing country like Ghana will be to provide enough food for the rapidly increasing population. Available data suggest that more than 700 million people in the developing world lack the food necessary for an active and healthy life. The problem of food security is not caused by an insufficient supply of food as has been commonly believed, but by the lack of purchasing power on the part of nations and households. This report outlines the nature and extent of food security problems in developing countries, explores the policy options available to these countries in addressing these problems, and indicates what international institutions such as the World Bank can and should do to help countries solve their food security problems. It suggests policies to achieve the desired goal in cost-effective ways. It also identifies policies that waste economic resources and fail to reach the target groups. It is in that sense as much about what should not be done as about what should be done.
Important Role of Governments in Achieving Food Security Governments play an important role in helping achieve food security. Regrettably, some government policies interfere with markets, remove price signals to farmers and create standards that inhibit trade. Public sector support for farmers, investments in agriculture and infrastructure, and support of open trade all contribute to increased food security.
Enabling open markets To ensure food surpluses can reach areas of deficit, Cargill believes it is essential that governments support open trade. Trade helps create jobs, supports local economies and helps raise living standards. Export restrictions and trading bans isolate local markets and give farmers little incentive to expand production for the next season, limiting the potential supply response. In the 2008 food crisis, for example, more than 30 countries imposed export restrictions, which pushed prices up further. Trade plays a crucial role in ensuring food security by allowing agricultural commodities to move from places of surplus to places of deficit.
Governments can help by:
• Supporting trade through an open, durable and rules-based trading system
• Encouraging commodity exchanges
• Ensuring government support for producers is consistent with World Trade Organization (WTO) rules (i.e., not product-specific or trade distorting)
• Completing a WTO trade round as soon as possible with meaningful commitments
• Refraining from export and import bans
Supporting smallholder farmers Governments, civil society, academia and the private sector must all work together toward solutions to help smallholder farmers fulfill their expanding role in feeding the hungry and fighting malnutrition:
• Provide training and practical support – Smallholder farmers need training in agricultural best practices and access to inputs, credit, storage and technology to increase their productivity in a sustainable way, which raises their own living standards and produces surpluses to help nourish others.
Governments can help by:
– Ensuring that agricultural extension or private services are available to train farmers in bestagricultural practices and help provide access to inputs, credit to facilitate harvest loans andappropriate technologies at the time of planting
– Providing encouragement for training and education for women farmers in developingcountries
– Helping farmers invest cooperatively in collective crop storage and other infrastructure
– Ensuring authorization and implementation of technology where it can improve thesustainability of crop production
• Establish revenue certainty – Smallholder farmers often are forced to sell at harvest when they are cash flow destitute and have limited access to real credit. Selling at depressed prices creates a cycle of discouraging further production in future years. Farmers in developing countries need reliable markets to sell their crops each season and an adequate price to compensate them for their efforts and provide incentive to continue production the following year.
Governments can help by:
– Establishing and maintaining good agricultural policies that include revenue assurance programs such as guaranteed prices that may require supplemental payments in difficult years
– Working with the private sector to support producer associations or price pooling cooperatives, which give farmers improved access to markets and greater leverage in pricing their products
– Providing revenue safety nets themselves
– Encouraging the private sector to provide price assurances through their contracts with the farmers
• Manage risk – Farmers need access to crop insurance and other risk management tools so they can rebound from crop failures or other growing season fluctuations.
Governments can help by:
– Instituting regulatory frameworks that uphold market price discovery systems in a transparent way
– Providing regulatory frameworks that give farmers access to risk management tools, such as properly regulated futures markets
– Stimulating the provision of crop insurance either through government-funded programs or through incentives for the private sector to provide such programs
• Clarify rural property rights – Farmers must be able to own their land and pledge it as collateral if they are expected to reinvest and raise their productivity over time.
Governments can help by:
– Clarifying rural property rights or title to the land where this is currently unclear
– Providing a stable system of government and the rule of law
Investing in agriculture Greater investment in agriculture by the public and private sectors is necessary to increase global food production. After two decades of declining public sector investment in agriculture, particularly in developing countries, a boost in funding and attention in the following key areas is needed: transportation, distribution, storage and energy infrastructure; agricultural research and development; agricultural science, extension, education and the promotion of best practices; and governance around legal and business structures to encourage private sector investment.
Governments can help by:
• Committing to spend a greater proportion of their investment budgets on agricultural science, extension, education and the promotion of agricultural best practices
• Encouraging public and private investment in appropriate physical infrastructure, including transport and distribution networks, energy production and distribution, and storage infrastructure
• Increasing government commitment to agricultural research and development while supporting private sector investment in agricultural technology
• Establishing appropriate governance frameworks around property rights, the rule of law, business structures and taxation to encourage private sector investment in agriculture
Harmonizing food safety standards To move food efficiently, predictable, science-based global food safety standards are needed to manage risk, provide transparency and ensure accountability.
Governments can help by:
• Adopting international food safety standards
• Ensuring government regulatory frameworks require private operators to implement food safety standards, including HACCP (hazard analysis and critical control points) programs
• Supporting international standards for risk assessment and risk management of agricultural biotechnology to improve predictability and access to global food and feed supply chains
• Investing in appropriate port, distribution and transportation physical infrastructure
• Ensuring regulation of customs controls does not unnecessarily block the movement of goods
Reforming biofuels mandates Demand for biofuels has spurred investment in agriculture, but mandated use of biofuels creates inelastic demand and increased volatility in the food system. To help balance food, animal feed and biofuel uses of agricultural feedstocks,
Governments can help by:
• Taking steps to ensure biofuels are not prioritized as outlets for raw materials that also serve the food market, including ensuring biofuels policies include waivers or other trigger mechanisms to lift mandates in times of stress so that the market can direct short crops to those sectors where they are most needed
Reducing environmental impact As populations continue to grow, the need to produce more food will place increasing demands on the environment and intensify the challenge of protecting high conservation value forest areas and biodiversity. Agriculture will need to make better use of natural resources – especially water and land – through innovation and conservation.
Governments can help by:
• Clearly identifying the most environmentally sensitive areas as unavailable for agricultural development and devising systems to enforce compliance
• Ensuring government support to producers incentivizes them to use environmental best practices, such as drip irrigation and precision fertilization systems that minimize input use
• Encouraging research in systems that aid water and carbon measurement and pricing in areas where markets currently cannot price environmental goods, such as water for agriculture or in the food chain
Facilitating emergency food aid To ensure access to food in times of crisis, governments can help by:
• Providing mechanisms for temporary assistance to consumers who are otherwise unable to access food, ensuring that the demand side of the market continues to operate
• Providing mechanisms and programs to assist farmers during crop failures so they are able to plant crops for the next year, thereby ensuring that the supply side of the market continues to operate
• Providing funding (not only in-kind contributions) to the World Food Programme to enable it to purchase food as and where most appropriate to address dire emergencies
• Improving current stocks-to-use ratios of major crops by encouraging sustainable production and functioning markets with public and private stocks rather than focusing on holding public stocks
• Ensuring that any public stocks held by governments are clearly targeted only for emergency use with transparent rules for buying in and selling out in order to avoid disrupting the normal passage of accurate price signals to farmers
The private sector and all companies, be the national or multinational have specific and fairly clearly defined “duties and responsibilities” in society’s division of labour.
These are:
To provide goods and services that succeed in meeting effective customer demands and can be sold at prices that are competitive and in the best interest of the corporation. The goods and services that are sold provide society with different kinds of value added in the case of agricultural companies it is providing products and services which help farmers to sustain and improve yields as well as food quality. A company can do this through chemistry, biology, biotechnology, and genomics. Being a successful agricultural corporation therefore not only means being profitable, but also raising the income of farmers, avoiding shortages of agricultural goods – and at the same time reducing the pressure on the environment.
Companies and business, particularly those involved in food, agriculture and industry play an important role in the food security and have a growing interest in adding health value to products. They can :
support local food production
implement corporate responsibility programs that promote consumption of healthy foods
reformulate products to reduce salt and fat
fortify staple foods with essential vitamins and minerals
apply due responsibility for food safety and quality
work in collaboration with governments and consumers