Responding to the global food crisis, World Bank president Robert Zoellick called for a “New Deal” in agriculture and food for developing countries. He harks back to President Franklin Roosevelt’s New Deal Program, whose gargantuan agriculture program helped US farmers during the Great Depression.

Zoellick hopes to resurrect global agriculture by enlisting the aid of rising economies like China and India through pleas for sovereign-wealth fund investments. Through the equity-investment platforms and benchmarks it will create, the World Bank hopes to attract sovereign wealth and inject it into Africa.

It is eyeing the $3-trillion sovereign-wealth fund currently available, arguing that even 1 percent of it—or $30 billion—would boost agricultural growth and development in the developing world.

Indeed, turning the spotlight to increasing agricultural production in developing countries is a belated but welcome turnaround in the World Bank’s development strategy.

In its recent 2008 report “Agriculture for Development,” the Bank has finally realized what the Cassandras of our generation have long been preaching to deaf ears—that strengthening agriculture is the most effective and cost-efficient means to alleviating poverty and promoting development, four times more compared with growth in other sectors.

The ideal scenario would be to raise agricultural production of small farmers in developing countries like the Philippines, as it not only contributes to food security and uplifts the livelihood of the rural poor, but is also the most efficient means in terms of returns on investment.

Because the law of diminishing returns has not yet come to play, it would be easier to increase the production of our farms from 3 metric tons (MT) per hectare to 6 MT, rather than boost the already productive lands of developed countries.

However, a gap exists between theory and praxis, and in world food production, the gap is quite wide. Whereas agricultural productivity in developing countries has been diminishing as agricultural lands are crowded out by urbanization, developed countries push forward with their productivity, with the European Union’s wheat yields up by 14 percent and the US by 4 percent. 

If this trend is not addressed, then the global food crisis we are now experiencing is but a whip of breeze of an even bigger storm to come—one where a small number of rich countries dominate the supply of food, with disastrous consequences of food dumping and more trade distortions detrimental to the developing world.

For developing countries to make the most of the New Deal, it must be fair and transparent. To be effective, the World Bank’s New Deal should not only provide vehicles of investment in agriculture for developing countries, it must, at the same time, secure fair trade, one that is sustainable and equitable to all parties involved. 

At the same time, an international standard in the management of sovereign-wealth funds should be established, to ensure that this wealth would be guided by well-defined policy and parameters rather than deployed for geopolitical or other noneconomic purposes.  

E-mail: edgardo_angara@hotmail.com. Web site: www.edangara.com.

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Sen. Edgardo J. Angara: The World Bank’s ‘New Deal’

Responding to the global food crisis, World Bank president Robert Zoellick called for a “New Deal” in agriculture and food for developing countries. He harks back to President Franklin Roosevelt’s New Deal Program, whose gargantuan agriculture program helped US farmers during the Great Depression.