TWN
Info Service on Sustainable Agriculture
6 March 2023
Third World Network
Dear Friends and Colleagues
Breaking
the Cycle of Unsustainable Food Systems, Hunger, and Debt
The
food price crisis is entering a dangerous new phase – a debt crisis
that is plunging millions more into hunger. Although food prices
have receded from 2022’s record highs, public finances in low-income
countries are being buffeted by sky-high import costs for food, fertilizers,
and energy, and rapidly-rising interest rates. 60% of low-income countries
and 30% of middle-income countries are now considered at high risk
of, or already in, debt distress; while some 21 countries are nearing
catastrophic levels of both debt distress and food insecurity.
A
Special
Report by IPES-Food, released today as global leaders meet to
address challenges faced by the world’s Least Developed Countries
(‘LDC5’, 5-9 March), warns that our unsustainable and inequitable
global food systems are a major driver of the debt crisis. Import
dependencies, extractive financial flows, boom-bust commodity cycles,
and climate-vulnerable food systems are combining to destabilize the
finances of the world’s poorest countries. In turn, unsustainable
debt leaves countries critically exposed to shocks and undermines
their ability to invest in climate-resilient food production and food
security.
Breaking
the cycle of unsustainable food systems, hunger, and debt is vital
to avert catastrophic impacts for the world’s poorest countries. The
expert panel calls for urgent action to:
- Provide
debt relief and development finance on a scale for COVID-19
recovery, climate action, resilient food systems, and the Sustainable
Development Goals.
- Repair
historical food system injustices and return resources to the
Global South.
- Democratize
financial and food systems governance to put the interests of
the world’s poorest countries and marginalized populations first.
Read
the Special
Report
Read the 1-page
summary
With
best wishes,
Third World Network
———————————————————————————————————-
International
Panel of Experts on Sustainable Food Systems (IPES-Food)
PRESS
RELEASE
Monday 6 March 2023
GLOBAL
HUNGER SET TO SPIRAL AS DEBT CRISIS BITES – EXPERTS
Food
crisis enters dangerous new phase as developing country debt skyrockets
and countries struggle to feed their populations. Experts call for
urgent action on debt relief and food system transformation.
***
Read
the IPES-Food special report, ‘Breaking the cycle of unsustainable
food systems, hunger, and debt’ at: http://www.ipes-food.org/pages/debtfoodcrisis
Expert
authors available for interview:
- Jennifer
Clapp, IPES-Food expert, economist, and vice chair of the High Level
Panel of Experts on Food Security and Nutrition [Canada – EN]
- Million
Belay, IPES-Food expert, Co-ordinator of the Alliance for Food Sovereignty
in Africa [Ethiopia – EN, AMH – in Doha]
- Lim
Li Ching, co-chair of IPES-Food, Senior Researcher at Third World
Network [Malaysia/UK – EN, MAY]
***
6
MARCH, BRUSSELS/DOHA – Leading food systems experts are today
warning the food price crisis is entering a dangerous new phase, as
the world teeters on the brink of a debt crisis that could plunge
millions more into hunger. The IPES-Food
special report comes as global leaders meet
in Qatar (‘LDC5’ 5-9 March) to address challenges faced by the
world’s Least Developed Countries – with ‘debt
sustainability and debt cancellation’ finally on the agenda. The
report will be presented at the conference.
A
year after Russia’s invasion of Ukraine, record-high food prices have
receded, but growing numbers of countries are facing rising hunger
and soaring debt repayments, reveals the report. 60% of low-income
countries are now considered at high risk of, or already in, debt
distress, while some 21 countries are nearing catastrophic levels
of both debt distress and food insecurity. Zambia, Sri Lanka, and
Suriname already defaulted on their debts; Ghana and Pakistan are
currently in urgent talks to avoid default.
Policymakers
are ignoring the critical role of unsustainable, import-heavy food
systems in driving rising debt and hunger, say the experts. Skyrocketing
costs for imports of food, fertilizer, and energy are straining the
public finances of many low-income (and also some middle-income) countries.
Rising interest rates and plunging currencies are sending debt bills
higher, constraining the ability of governments to ensure the food
security of their citizens. Those same countries are locked into exporting
cash crops (such as cocoa, coffee, and cotton) to pay off dollar-denominated
debts and import basic necessities – at the expense of feeding local
populations.
Moreover,
record
high debt burdens are preventing urgently-needed investments in
sustainable, climate-resilient food production and food security,
creating a vicious cycle, says the report. Debt repayments dwarf spending
on climate resilience and social protection in the world’s poorest
countries.
Failure
to break this vicious cycle of unsustainable debt and unsustainable
food systems will mean the reversal of decades of progress in addressing
poverty and hunger, and abject failure to meet the Sustainable Development
Goals, say the experts. They call for urgent action to:
- Provide
debt relief and development finance on a scale sufficient to meet
the needs of COVID-19 recovery, climate-resilient food systems,
and the Sustainable Development Goals;
- Repair
historical injustices that have left countries funneling wealth
to the global North – through windfall taxes on food profiteers
and steps to achieve tax justice, and repay ‘ecological’ and historical
debts;
- Democratize
financial and food systems governance: reform decision-making over
food systems and in the World Bank and IMF to put the interests
of the world’s poorest countries and marginalized populations first.
Jennifer
Clapp, IPES-Food expert and economist, said:
“Last year’s record high food prices may have receded, but the
food crisis is still biting and it’s entering a dangerous new phase
– of skyrocketing debt distress and spiraling hunger in dozens of
low and middle-income countries. Rising debt bills are becoming unaffordable
for many governments, just as they struggle to pay for food and fertilizer
imports – and they’re running out of road. Decades of progress
in reducing hunger risks being undone.”
Million
Belay, IPES-Food expert, said:
“Many African countries’ economies and food systems are on the
brink of meltdown. Africa is stuck in a bind. We’re selling coffee
and cotton to the rich to pay off debts, while we import increasingly
unaffordable staple foods from outside, climate change batters our
harvests, and interest payments spiral out of control. The economic
system prioritizes servicing debt over feeding people, while our governments
are starved of cash to build the sustainable food systems we need
to feed ourselves.”
Lim
Li Ching, co-chair of IPES-Food, said:
“Yes, the debts of poorer nations should be canceled to allow them
to feed their people – but this is not enough. To get off the
debt treadmill, it’s vital to break the vicious cycle of unsustainable
food systems, hunger, and debt – by also investing in building resilient
food and farming, repairing the historical injustices that have left
poor countries funneling resources to the rich, and reforming international
decision-making on food and debt to put poor countries first.”
***
NOTES
The
IPES-Food report four ways in which food systems are deepening today’s
debt crisis:
- Import
dependencies and dollar dependencies generate high debts and prevent
countries investing in diversifying their food systems and economies.
Countries are increasingly locked into generating dollars, often
through cash crops, to pay off debts and import basic necessities.
- Extractive
financial flows: Over decades, governments have cut social spending
and outsourced food system investment to corporate actors and creditors
– resulting in uneven development, persistent hunger, and the depletion
of state capacity – and ultimately funneling resources out of the
Global South.
- Boom-bust
cycles: When food prices rise, powerful and highly concentrated
agribusinesses benefit while farmers get squeezed. But when prices
crash, many farms and food businesses fail, leading to further corporate
consolidation, undermining investment in resilience.
- Climate
breakdown is fast becoming the biggest driver of economic collapse
and debt distress in the Global South, decimating harvests and destroying
livelihoods in countries least responsible for the crisis. With
climate finance failing to materialize, it is becoming harder for
low-income countries to repay debts and invest in climate-resilient
food systems.
KEY
DATA
- 21
countries are nearing catastrophic levels of both debt distress
and food insecurity – including Afghanistan, Cameroon, Ethiopia,
Haiti, Lebanon, Somalia, Sri Lanka, Sudan, and Zimbabwe.
- By
November 2022, some 349
million people were facing acute food insecurity, with 49
million on the brink of famine, 45
countries in need of external food assistance, and some 828
million facing persistent hunger.
- Global
public debt is at its highest
levels in almost sixty years. About 60% of low-income countries,
and 30% of middle-income countries, are now considered at high risk
of (or already in) debt distress.
- The
world’s poorest countries saw the costs of servicing their debt
increase
by 35% in 2022. US federal
reserve rates have risen from 0.08% to 4.33% in a year. Over
a third of developing countries have seen their currencies depreciate
by more than 10% against the dollar.
- As
food prices spiked, countries
in Sub-Saharan Africa spent an additional $4.8 billion on food imports
in 2022 while receiving less food overall. The world’s 77 ‘net food-importing
developing countries’ faced a crippling $21.7 billion in additional
costs.
- In
2022, poorer countries paid 47%
of external debt payments to private lenders, 12% to China,
14% to other governments, and the remaining 27% to multilateral
institutions like the IMF.
- In
2021, developing countries paid $356
billion in interest payments alone, far outstripping the $185
billion received in development aid.
- High
levels of debt are crowding
out critical investments in meeting the Sustainable Development
Goals (SDGs): with debt servicing costs estimated to exceed climate
spending in 94% of countries, health and social protection in 80%,
and education in 60%. 62 developing countries spent more
on debt payments than on healthcare during the first year of
the COVID-19 pandemic.
- African
countries are expected to need to spend $1
trillion just to adapt to climate change.
***
Contact:
Robbie Blake | Communications manager, IPES-Food | robbie.blake@ipes-food.org
| +32 491 290096 [EN, FR]
***
IPES-Food
(The International
Panel of Experts on Sustainable Food Systems) is an independent,
expert panel shaping debates on how to transition to sustainable food
