The Relationship Between Debt and Global Hunger: A Special IPES-Food Report

The International Panel of Experts on Sustainable Food Systems (IPES-Food) released a special report sounding the alarm on global food insecurity and debt crises. The report finds that 349 million people are facing acute starvation and many more will experience hunger with food prices remaining at historic highs and countries failing to meet debt repayments.

In “Breaking the Cycle of Unsustainable Food Systems, Hunger, and Debt,” IPES-Food reports that the COVID-19 pandemic and Russian invasion of Ukraine contributed to rising food prices in the last two years.

“Although there has been some easing of food prices in recent months, it is unpredictable what the fallout from the interplay with the debt crisis will be,” Jennifer Clapp, Canada Research Chair in Global Food Security and Sustainability at the University of Waterloo, Ontario and co-author of the report, tells Food Tank. “But we are seeing food price inflation remaining higher than overall inflation, and this is deeply troubling.”

And now authors state that low- and middle-income countries (LMICs) are threatened by a worsening debt crisis. IPES-Food finds 60 percent of low-income countries and 30 percent of middle-income countries are at high risk of defaulting on their debt. According to the report, Zambia, Sri Lanka, and Suriname defaulted already. Meanwhile, countries including Ghana and Pakistan are at risk of doing so.

The report highlights four critical ways that unsustainable food systems deepen the debt crisis for dozens of LMICs. These nations face import dependencies for food and fertilizers, which forces them to rely on cash crops to repay debts and prevents them from diversifying crops. Additionally, decades of divestment from social services and domestic agricultural production have further exacerbated the challenges. As food prices spike and crash, farmers find themselves unable to compete with large corporations. And the worsening climate crisis is increasing uncertainty, destroying harvests and deepening farmer debt.

Skyrocketing import costs on energy and fertilizer are also straining producers. Nations that already depend on foreign aid will continue to feel the effects of inflation beyond just food products, according to IPES-Food.

The report’s authors lay out three recommendations for policy solutions to address the dual crises of debt and food insecurity. International institutions must meet the moment by scaling up both debt relief and development investments for struggling nations, they argue. They also believe these institutions must implement policies that address decades, if not centuries, of wealth divestment from Global South nations. Policy recommendations include taxing agribusiness for price hikes and debt reparations based on ecological destruction.

The report also suggests reimagining the structure of existing, and forming new, independent financial institutions. Bold reform could expand the autonomy of less developed nations in negotiating debt arrangements.

Another solution includes the introduction of safeguards such as critical reviews of lending practices between Global North and South nations within existing institutions like the International Monetary Fund or World Bank.

“Any new initiative for climate financing or debt restructuring must not repeat the mistakes of the past, damaging conditionalities and colonial power relations,” Lim Li-Ching, IPES-Food Co-chair and Senior Researcher at Third World Network, tells Food Tank.

“And rather than using public money to guarantee private investments, we should rather find ways of repairing historical injustices and return resources to the Global South, while deterring climate destruction in the first place.”

The report suggests democratizing decision-making in global food systems and financial institutions, including the International Monetary Fund and the World Bank. Diversifying who gets a seat at the table is an important factor in solving this complex problem, the report argues.

“In fulfilling their domestic mandates, big central banks are inadvertently triggering debt distress for countries across the world when they raise interest rates because their actions are raising the costs of servicing debt worldwide,” Clapp tells Food Tank.

IPES-Food argues that independent financial institutions can help moderate the stresses of international crises, rather than perpetuating these dependent relationships between richer and poor countries.

Source- FoodTank