Keeping people poor and malnourished…!
View(s):However, does any responsible government want to keep the country’s people poor and malnourished? Even though governments may not do it intentionally, the policies and actions of the governments could result in it effectively.
Food security
The poor needs food as one of their very basic needs in order to survive and stay healthy until they are able to get out of poverty. If you have noticed, there are two issues here: The first is that the poor should have access to good food, which is the immediate need of a country. And the second is that they should be able to get out of poverty, which is the long-term goal of a country.
Sri Lanka is self-sufficient in rice except when harvests are affected by floods, rain or other natural disasters.
Today we deal with the first issue – the poor’s access to better food. The Universal Declaration of Human Rights, adopted by the United Nations in 1948, states that everyone has the right to a standard of living adequate for the health and well-being of themselves and their family, including food. This implies that access to nutritious and sufficient food is a basic human right.
The recognition of access to nutritious and sufficient food as a fundamental right has directly influenced the notion of food security – a highly misunderstood concept even at policy-making level. Food security involves availability of food, affordability of food, quality of food (which includes its nutritious value and safety) and, stability of all three areas over time.
While ‘ending poverty’ is the first out of the 17 Sustainable Development Goals (SDGs) as declared by the United Nations in 2015, the second is ‘eliminating hunger and improving food security’.
Capitalists and Marxists
Then, what keeps denying food to the poor in a country? One of the primary ways of denying food to the poor was the government policies to control imports and food prices! The practice of import controls and food prices is quite common among many countries and it has historical roots too.
It was in 1815 that England passed Corn Laws to control imports and administer prices of staple cereal grains such as wheat, oat, barley and maize. The Corn Laws restricted the import of cheap grains, making food too expensive to import it from abroad, even when local food supplies were short.
Corn Laws were passed to protect the profits of the land owners even though the laws resulting in higher prices made the lives harder for the poor. Neither capitalists nor Marxists approved the Corn Laws, apparently for different reasons.
The capitalists who stand for free trade and market competition argued that such policies restrict competition and raise the local prices of grains for the consumers. Also such laws can hinder the industrialisation by raising labour costs and raw material prices and lowering labour productivity.
The Marxists who looked at the Corn Laws from a “class struggle” point of view opposed them due to their benefits to the landlord class at the expense of the working class. However, eventually both the capitalists and the Marxists agreed on one thing: import controls and higher food prices hurt the poor.
Modern Corn Laws
Although England repealed the Corn Laws after 30 years of their implementation, corn laws did not disappear. Wherever they are applied today, they continue to hurt the people more in poor countries than in rich countries. Accordingly, import controls and higher prices are instrumental in keeping the poor hungry and malnourished.
Import restrictions, higher taxes and price controls affecting food and violate all principles of ‘food security’. Import controls limit the ‘availability of food’ creating domestic supply shortages. Higher taxes and supply shortages raise the domestic prices affecting ‘affordability’ of food, particularly for the poor.
The government then has to impose price controls which wipe out ‘quality and safety standards’ of food on the one hand and create black markets behind the regulatory barriers on the other hand. Accordingly, people lose better and nutritious food which would disappear from the market.
This is how the poor countries lose ‘food security’ as availability, affordability and quality all have been affected by import controls and price controls. And food security is not necessarily about food cultivation. Even without food cultivation a country can improve its food security.
In the 1970s
In order to address the market irregularities and black-market practices emerging out of import controls and price controls, the government should then do something else – establish various government agencies and appoint public sector officials, spending from taxpayers’ money.
This was what happened in the 1970s when Sri Lanka had stringent import controls and widespread price controls creating domestic supply shortages, black-market practices and related corruptions. The staple food grain of the Sri Lankans, rice was also under import controls, price controls and a ration system.
As the supply shortages were becoming severe and price controls becoming acute, the government had to assign various related tasks to numerous government agencies. Rice transportation was limited to two measures, while restaurants were also banned from serving rice meals for two days of the week. Undoubtedly, the poor were the most affected by the stringent import controls and price controls.
Wrong end of the stick
Our discussion so far raised more questions than answers. We can keep some of them for the coming weeks. One of the important questions that we must take today is this: How does the government ensure the availability of better food in the market at affordable prices?
The answer is simple because it requires removing import controls and licence system, confining government intervention to only quality controls. The question of price controls does not arise because there is competition in the market. Competition is the best instrument to guarantee cost-reflective prices that would not allow any business to exploit the consumers.
I know that my answer leads to a second question which is more critical than the above: Then, domestic producers get affected by the cheap imports. In fact, in this case we are holding the wrong end of the stick!
If the domestic farmers cannot face the market competition, the problem is not the competition but the problems of the domestic agriculture sector itself. As we have discussed many times previously, it is primarily an issue of the scale of economies: “Too many people produce too little output on too small farm plots”. It is a problem that we did not attempt to or allow any government to answer this structural problem over many years in the past. Rather, we promoted the opposite, by not allowing our people to move into more productive areas. Accordingly, too many people gathered in the agriculture sector making it more and more unproductive and more vulnerable to competition.
Poor and vulnerable
Unlike in the feudal system, modern agriculture does not require too many people. In countries where too many people engage in agriculture such as in Sri Lanka, everyone produces too little for the market. The farmers continue to remain poor and vulnerable to exploitation. They are not capable of adopting modern technological standards, and are dependent too much on government support and the mercy of the buyers.
And we continue with the vicious cycle of keeping the farmers and the consumers both poor and malnourished. The countries that have made a breakthrough in this vicious cycle, continued to absorb excess labour from the traditional agriculture sector to eliminate poverty and promote prosperity.
(The writer is Emeritus Professor of Economics at the University of Colombo and can be reached at sirimal@econ.cmb.ac.lk and follow on Twitter @SirimalAshoka).
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