Paul Vallely: If we prevent Africa feeding itself, no wonder there's a food shortage

Have you noticed that the price of bread has gone up in your weekly supermarket? No, to be honest, neither have I. It's always a good interviewer's trick to ask a politician the price of a pint of milk or a loaf of bread, but the truth is most of us often don't register. We are too rich – and, before you protest your poverty, think of yourself in the context of the half of the world's population who live off a measly dollar a day. And a billion people live on half that.

The poorer you are, the greater percentage of your income you spend on food. The world's poorest people use more than 80 per cent of their daily wage just putting food in their children's mouths. That is why the current spike in global food prices is not being felt most acutely here but in countries all along the equator, where as many as 100 million people are being pushed deeper into poverty. Many are today eating only half what they were a year ago.

Global food prices have been rising for three years, but over the past three months they have soared. In the past month alone, the price of rice in Asia has doubled. It's the same with wheat and maize. Even Afghan poppy growers are switching from opium to wheat because it offers a bigger profit.

Many of the conventional explanations – rising world population, climate change, China eating more meat – don't add up. Those factors, have all been around for some time. So why the panic now?

The trigger came when markets realised that last year's drought in Australia, the worst for a century, had halved its wheat harvest. The markets then magnified that blip into a crisis. Speculative activity – betting, to you and me – begins in the futures market. Then food traders begin to stockpile, which drives up the price for when they later decide to sell. Governments panic; big producers such as Thailand, India, Vietnam and nearly 40 others slap on export restrictions, to conserve their stocks. This drives up the price even further. Hedge funds come in looking for new markets. A handful of people make huge profits in the frenzy. The giant animal feed company Cargill last week announced an 86 per cent surge in profit this quarter.

But all these are the symptoms not the cause. What underlies the crisis are two problems, one short-term and one more deep-seated. The former is George Bush's lunatic love affair with American biofuels. Desperate to reduce the US "addiction to oil", which makes it beholden to all kinds of nasty folk in the Middle East, he has been subsidising US farmers to produce biofuel from maize. Around a third of the recent price hikes can be traced directly to Washington's subsidies for biofuels. The US is now using nearly a third of its entire crop to fuel its cars. As a result, the price of corn has trebled in the past two years.

The trouble is that the amount of fertiliser required to do this means that it takes more than a gallon of oil – imported from Saudi Arabia and other nasties – to produce one gallon of ethanol. This is bad biofuel. Good biofuel comes from sugar grown in Brazil – in the southern pastures, not in cleared Amazon rainforest. Its energy is drawn from tropical sunshine, not chemical nitrogen fertilisers, and it uses the whole plant – not just the corn cob – to produce fuel.

What the US and Europe need to do is abandon their crazy home-grown schemes and buy Brazil's Sustainable Sunshine Ethanol. Instead, at present, they slap a 20-30 per cent tax on it to make it expensive alongside the home-grown maize biofuel that is hugely subsidised, economically unsustainable, and useless in terms of stopping global warming. Gordon Brown needs to press Europe into an early review of policy on this.

But the really deep cause is the policies that, over three decades, have devastated smallholder agriculture in places such as Africa. In the 1970s, Africa's leaders were gung-ho for industrialising agriculture. In the 1980s and 1990s, the huge grain, butter and meat mountains produced under the vast subsidies of the Common Agricultural Policy were being dumped on poor nations; local farmers, unable to compete with imported food (being sold at half what it cost to produce it) went bust. Africa got hooked on the subsidised imports.

All this systematically destroyed the market for small-scale agriculture in Africa and parts of Asia. The production of local foods was slashed as cheap foreign food arrived. Public spending on farming in developing countries fell by half between 1980 and 2004.

The way out of the global food crisis is to reverse these two fatal policies. The United States and Europe must chuck out bad biofuel for good. And small-holder agriculture in places such as Africa must be rebuilt. The former can be done quickly. The latter will take five to 10 years minimum.

Brown knows what that means. In the short-term, that requires emergency food aid. In the medium-term, it requires real change in the Doha trade talks, on which there were faint signs of progress on this in Geneva last week, but which must end before 1 June because of the US elections.

In the longer-term, it means building up world food reserves like we have world currency reserves, which can be released to protect the poor and hinder speculators. Above all, it requires help for to the 450 million framers in developing countries who farm just a few acres. That would allow three-quarters of the people who live on one dollar a day to begin to grow their own food.

The G8 meeting in Japan in July would be a good place to organise this. It will be far easier, better for the environment, and cheaper to double crop yields among the Third World poor than among the fat cats of Western agribusiness.

The Green Revolution, which saved India from starvation in the 1960s, and did the same for Vietnam in the 1970s, was not only about new seed varieties. It was about irrigation, cheap credit to farmers, grain storage facilities, new technologies such as metal ploughs and pumps for irrigation, and wide access to agricultural advice services. It was about better rural roads – up to 50 per cent of the harvest is lost in Africa because farmers cannot transport their crops to market. It was about small-scale water harvesting: Australia can store five months' worth of its water needs; Ethiopia has a week's worth. It was about income support to the poorest farmers.

All this is not rocket science. There is enough grain in the world to provide every single person with the required 2,500 calories a day, and for each to have 1,000 left over – before we even count the meat, nuts, beans or vegetables. Nature produces enough for our need, if not our greed.

All that is required to solve the global food crisis is for us rich people, for once, to put the needs of the poor at the top of the agenda. And learn what is the real cost of a loaf of bread.