The world food crisis, coming our way soon

The first, and most important of these two warnings is that the world is facing a food crisis. This is not because there will be an actual shortage of food. Despite all the problems that are arising with regard to food production as a result of war in Ukraine it is highly likely, in the World Bank’s opinion, that there will be sufficient food in the world for everyone to eat all they need. The problem is that they estimate that the cost of this food might increase by more than a third, putting it beyond people’s reach.

The World Bank's warning is stark. They say that unless coordinated action is taken to make sure that all of those who face poverty as a result of this price increase get the help that they need then there is a real risk of rising poverty, hunger and despair. Elsewhere, the World Bank's partner organisation, the International Monetary Fund has suggested that this might, inevitably, lead to social disruption.

What the World Bank also made clear is that whilst this problem exists everywhere (and it will in Scotland) the problem will be worst in those six out of ten countries in the world that are facing growing problems in settling their international debt obligations. Those debts have gown because of the combined impact of Covid, the fuel price crisis and now this food price crisis.

The countries in question are very largely in the developed world. Almost without exception they owe their debts in a foreign currency. The most common of these is the US dollar. This means that for these countries the rising interest rates now being pushed through in the USA to supposedly tackle its domestic inflation problem create a fourth crisis, which is a rising cost of debt crisis.

David Malpass, who is the chief executive of the World Bank, has been candid in suggesting that these countries cannot be blamed for failing to anticipate three crises falling upon them within a very short period of time, with a fourth arising as a result. I think that he is right. He is also right to suggest that this means that many of these countries are unable, by themselves, to tackle the food crisis that those living there will now face. What that, however, means is that their crisis is also going to be our crisis.

Firstly, that is because it is to countries like the UK that some of this debt is owed. Our banks might suffer bad debts as a result meaning that they might need government support as a consequence. If the government helps those banks and insists on balancing its books, this means cuts in other spending in the UK.

Second, if the warning on the likely increases in food prices is right then it is very obvious that the UK and Scottish governments are going to need to react to provide essential support to millions who are going to need it if an increase in food poverty in the UK is to be avoided. As yet there appears to be no awareness of this, which is deeply troubling.

Third, the UK will need to offer increased aid as a result of this. That will be a very real challenge to those who think that the government should balance its books. They are going to be faced with a straightforward dilemma between doing so and watching hundreds of millions around the world face hunger and even starvation. They will have to answer the question as to whether their futile book-keeping exercise on debt that never need be repaid is worthwhile in the face of such a crisis? This will be a big test of conscience for many of them, and I am not confident that they will rise to the occasion and do the right thing for the world’s poorest people.

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Fourth, this is a challenge to the Bank of England, which cannot pretend that the interest rate increases it is now pushing through are without consequence as a result of damming evidence of this sort.

In other words, the economics of bankers and austerity is about to meet the economics of the real world where people can starve for the reason of a simple lack of money and not because food is unavailable. Who will win, the bankers demanding support for their bad debts or the people needing to be fed? Time will tell.

But there is one other, final, lesson for Scotland in all this. What this shows is the danger of having debts owed in a foreign currency, which is why an independent Scotland needs its own currency from day one. It can never face the risk that the countries the World Bank is worried about face of not being able to pay their debts when they need to feed their people. I wish the SNP would take note of that.