8 Ways to Fix the Global Food Crisis

Farming in the Sauri Millennium village in Kisumu, Kenya. Rural financing programs have allowed small farmers to support themselves.

Corn used for ethanol.

Traditional plant breeding has been eclipsed by the hype surrounding gm crops. But even traditional breeders say there is much they can do to improve yields. This includes so-called transgenic methods, which tackle fungus and insects, and marker-assisted breeding, in which genes associated with desirable traits are tagged to speed up the breeding process.

In sub-Saharan Africa, the International Maize and Wheat Improvement Center has been working with local scientists to develop drought-resistant strains of corn, including open-pollinated varieties that can be replanted from saved seeds. More than 50 of these strains and hybrids have been created, with yields 20 to 50 percent higher than regular strains in a drought.

Curb the Speculators

Tom Buis, president of the national farmers union, calls it "the factor no one wants to talk about." The weak dollar has led to high commodity prices as pension, hedge, and index funds have bought oil, gold, and agricultural futures as a hedge against inflation. Although the U.S. farm industry relies on the commodity markets to manage its own risks, now it argues that change is needed—even curbing some of the same measures used to attract money to the market just a few years ago. "I think we have to make sure that policy is in place to prevent speculators from dominating the market," says Buis, who fears a bubble is building that could hurt farmers in the end.

Among the suggested solutions: freeze the number of contracts speculators can hold, or place higher price limits on markets. The Commodity Futures Trading Commission, which regulates grain markets, remains wary. CFTC Commissioner Bart Chilton says that while the increase in cash flowing into the sector has changed the way grain markets operate, there is no direct link between speculators and the jump in prices. "No single speculative group is responsible for affecting prices. There's no smoking gun out there," he says. "It does appear to be a reflection of real market fundamentals."

Darin Newsom, of commodities researcher DTN, says one possible solution for farmers who are concerned about a commodities bubble is to move their traditional risk-hedging activities into other types of swap contracts in which the impact of speculators is less apparent, essentially shifting to a different corner of the market until existing futures trading cools off.

Good weather, bumper harvests, a change in ethanol policy—any of these could take the heat off the market. Of course, another step that could do the trick would be unpopular on Wall Street: the Federal Reserve tightening U.S. monetary policy through higher interest rates.

Break Down Trade Barriers

Politics often kicks into high gear in times of crisis. That's what happened when India, Egypt, and dozens of other countries dropped their tariffs and taxes on imported foodstuffs to get cheap food as fast as possible. Doing so, they accomplished in just the past few months what over six years of trade negotiations, called the Doha Round, could not. "Imports have been liberalized in a way that not even the wildest trade enthusiasts would have imagined," says Arvind Subramanian, senior fellow at the Peterson Institute for International Economics.

But another major goal of Doha remains elusive—reducing the massive subsidies for domestic agriculture in the United States and Europe. Third World farmers can't compete with the artificially low prices of the subsidized crops from wealthy countries. It's a burden that, according to the World Bank's development report, amounts to $17 billion a year, or five times the level of foreign development aid going to those countries. "The U.S. and E.U. have been unfair competitors in agricultural markets," says Gawain Kripke, policy director at Oxfam America.

Another issue: Numerous countries, from Argentina to Russia, have erected export barriers to try to shore up domestic food supply. India, for example, in March slapped minimum price levels on exports of nonbasmati rice, ramping up rice prices in neighboring Bangladesh. One ray of hope: Ukraine lifted its export ban on grain at the end of last month. That may become a trend, predicts Dani Rodrik of Harvard University's Kennedy School of Government. "I think exporters will manage to bring those down."