Four-tier world a reflection of global grain industry

by Morton Sosland
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Coincident with the June meeting of the leaders of the G-8 nations, James Wolfensohn, former president of the World Bank, published a paper decrying a "four-speed" world that is not only splintering the consensus on the promise of globalization but threatens to expand economic and political instability. While Wolfensohn mainly is seeking to spur support for the role the World Bank could play in easing this situation, it also is apparent that the forces of concern to him merit the attention of an industry like grain and grain processing. No industry is more central to the well-being of all 6 billion people currently occupying this planet, as well as the need to feed the 3 billion that will be added in the next half century.

Indeed, it is readily apparent that the four speeds of the four different country groups Wolfensohn designates may be applied specifically to grain-based foods in the same way he defines differences in living standards and overall well-being. His first tier is made up of the rich nations, primarily the United States, Europe and Japan, which in the past 50 years have accounted for 80% of global income and only 20% of population. Within the grain economy, these nations still rank as major producers and consumers, even as others strive to improve their lot.

His second tier comprises the emerging nations, which he said number about 30 poor and middle income countries, particularly India and China. Wolfensohn says these nations have learned how to leverage the global economy, and there is no stronger sign of that newfound power than the way their participation in world trade in grain has repercussions across the world. With annual economic growth of 7%, these countries have become dynamic participants in grain processing, underscoring their potential for global leadership.

Third-tier countries number 50, reaching from South America to the Middle East. These countries have experienced both growth and decline. They are not large enough to be major players, even though as a group they account for one-fifth of the world’s population. Included in this group are nations with the highest per capita grain foods consumption. Many do not produce local crops of size, but have responded to consumption needs by expanding flour milling and food processing. Their major role in grain contrasts with relative weakness as economic powers.

Wolfensohn’s fourth tier, with 1 billion people, is made up of the poorest nations, mainly in Sub-Saharan Africa. He points out, as grain industry executives know well, that these desperately poor nations are most vulnerable to the adverse effects of globalization like rising energy prices. Yet, these are the places where population growth will be greatest, and it is these nations that must be helped to emerge from stagnation and decline. His path to helping these countries, other than strengthening the World Bank, is by matching with reality the rhetoric of stepped-up help for Africa.

In moving to reduce the differences between these four tiers, which would have tremendous implications for the global grain industry, Wolfensohn suggests "a new compact in which our interdependence is recognized." It is his contention that the world’s sights must be lifted, that the developed nations must embrace change and reform, and that this requires a complete revision of how aid is viewed. Tapping into similar visions has provided much of the impetus for growth of grain and grain processing. Taking these additional steps may well set the pace for an even greater role for this industry in a future where tiering is reduced or ended.