The United States and Brazil have a chance to create a partnership to confront a new global challenge: the rising price of food in the face of new demands for food stocks.
Around the world, food prices have increased so consistently, rapidly and dramatically over the past year that we have become almost resigned to their bite on our pocketbook. Coming on top of fuel inflation, forking over more money to eat (pun intended) has become a regrettable, but seemingly unchangeable, reality.
Yet the most alarming recent headlines are about those who do not have the money to buy food – no matter what the price. Global food relief agencies, starting with the United Nations World Food Program, find their budgets so stretched that they are cutting back assistance to the hungry. Josette Sheeran, head of UNWFP, has warned that food reserves are at their lowest level in 30 years.
Of course, it is no surprise that food and fuel prices are both climbing: they are competing for the same resources. In 2008, one fifth of the U.S. corn crop will be used for ethanol production, and record high corn prices are causing farmers to opt for corn over other crops. And while sugar-sourced ethanol from Brazil is much more efficiently produced, there is growing criticism (roundly rejected by the country’s cane industry) that sugar production is a danger to Brazil’s environment, particularly in the Amazon.
The situation is likely to become more complicated. Mandatory targets for the use of biofuels, such as those contemplated in the European Commission’s Directive on the Promotion of Renewable Energy Sources, could put even greater pressure on food production. For example, today three million hectares of arable land in the EU is devoted to biofuels production. To meet the 2020 target that 10 percent of transport fuels come from biofuels would require an additional 22 million hectares.
There is another element in the debate, of course: climate change. Policy and opinion makers – and the public – around the world are attracted to biofuels as a solution not just for raising costs and diminishing availability of hydrocarbons, but for growing concerns about the environment as well. According to a recent McKinsey survey of consumers in eight countries, including Brazil and the U.S., 55 percent rate the environment as the issue that will attract the most attention from politicians and the public during the next five years.
And, of course, there is also the world economy to consider. That consumers are more concerned about the environment is good news – it means businesses will see responding to that concern as a competitive requirement. Since competition is a great spur to creativity, the offer of new products produced in ways that consider environmental impact is likely to grow.
But raised against business interest in leveraging environmental concerns for competitive advantage are those who believe their livelihoods are at stake. They contend that environmental controls result in offshoring and outsourcing, job loss, and a decline in living standards. These arguments, especially from so-called “heavy industries,” are not new, but they continue to have resonance with the public and support from politicians.
These sound like Hobson’s choices. Feed the hungry or protect the environment? Keep food prices low, or control costs at the pump? Choose clear air or economic growth? Fortunately, the choices aren’t that stark.
Two concepts can usefully be brought to bear.
SUSTAINABILITY AND ‘HOLISM’
The first, one that has become more and more a part of the popular lexicon, is “sustainability.” In 1987 the World Environment and Development Commission defined “sustainability” as the following: it means meeting the needs of the present without compromising the ability of future generations to meet their own needs.
While that’s a great definition for development reports, I like to think that what sustainability means in the vernacular is to keep on keepin’ on. It means we have to protect our people, our planet, and our economies so that our children and our grandchildren can do the same.
There is really no choice: we have to do it all. Doing it all means applying the second concept: “holism.”
The idea behind this word is straightforward: it means interdependence, that each part of a system or a society depends on the others.
In this case, taking the holistic, systemic approach again means there is no choice. We have to protect the environment, or we won’t have productive land to feed a growing population. We need safe, reliable sources of fuel, or we can’t grow our economies. If the world economy isn’t strong, we won’t have the resources to protect the environment or feed our people.
URGENT NEED FOR CHANGE
This can be a vicious cycle, or a virtuous circle. The United States and Brazil can make a difference as to which it becomes.
There are obvious reasons why Brazil and the U.S. might have special abilities and responsibilities. Both countries are agricultural powerhouses, of course. We are the largest producers of ethanol in the world. We each have unique examples of biodiversity. We each have demonstrated concerns about world hunger.
But the strongest, potentially most effective, partnership Brazil and the U.S. can bring to this issue is in the area of research. Research on second generation biofuels that do not depend on food stocks. Research on alternative energy sources beyond any form of agriculture. Research on increased crop yields. Research on weather forecasting to prepare for natural disasters.
Research – and then of course, development, making those new ideas applicable to the world’s holistic priorities.
All of these areas – and many more – have at one time or another formed part of the U.S.-Brazil bilateral agenda. What has been missing is a sense of urgency. We cannot wait to discover how to feed our people and grow our economies while simultaneously protecting the planet that allows us to do so.
These are no longer problems of the future. The future is now. If the United States and Brazil can bring immediate, meaningful partnership to bear on these problems, that future will also be bright.
Donna Hrina is Director of Corporate & Government Affairs, Kraft Foods and former Ambassador of the United States to Brazil. For more information on Brazil business visit www.brazilcham.com.