Thoughts on the Price of Food

I've been following the UN food summit going on now in Rome pretty closely, and to say the least I'm disappointed. Brazil is currently stalling the process because of a row over biofuels, which is really just inane and political. UN Secretary General Ban Ki-Moon has rightfully called on developed nations to minimize export restrictions and import tariffs, but that's ignoring a huge injustice in international agriculture - non-tariff barriers, such as subsidies, that developed countries use to keep domestic agricultural lobbies happy... and in doing so, contribute to widespread hunger and poverty throughout the developing world.

The UK's The Guardian wrote a brilliant and concise editorial about this in 2003 to launch their kickAAS campaign against subsidies. An excerpt:

Giving subsidies to farmers was a brilliant idea that transformed the food shortages after the second world war into a surplus. But it has grown into an institutionalised nightmare preventing developing countries from fulfilling their potential in one of the few areas where they enjoy a natural advantage - agriculture. Europe and the US are the main culprits. It is economic and social madness for Europe to be growing, for instance, subsidised sugar beet when its average cost of production is more than double that of efficient exporters such as Brazil and Zambia. It is only possible thanks to ludicrous subsidies, including protective tariffs of up to 140%. As Kevin Watkins of Oxfam says: "The $1.6bn a year the EU gives to the sugar barons of East Anglia and the Paris Basin generates surpluses that deprive countries such as Thailand and Malawi of markets. Mozambique loses almost as much as a result of EU sugar policy as it gets in European aid."

Subsidies allow wasteful and inefficient agricultural practices to continue in countries whose comparative advantages have long since move to other industries. By continuing to produce agricultural products, developed nations have eliminated the ability for strong agricultural markets abroad.

However, given the current climate crisis our planet is facing, one could argue that the transport needed to import food will add to current high levels of carbon emissions and push food prices even higher. This is a foolish assumption. Subsidized agriculture forces developing to import food. It is estimated that more than $1 trillion will be spent on food imports this year, which economically vulnerable countries bearing the bulk of the cost. It's disgraceful that the food our subsidies have forced then to import costs us more to produce than it would to allow these countries to start their own food industries, where lower cost of production would lower food prices, benefiting us all. And eventually, we could move back to a regionally-based agricultural sectors, allowing domestic markets to continue to thrive while limiting transport and carbon emissions.

The only losers from a loss of subsidies would be the agricultural industry of the developed world. But given that, for example, the US government gave over $8 billion in subsidies in 2004 alone, there's plenty of room to give the economic losers in this situation unemployment benefits or funding for re-education. OR, they could always let them all grow (sugar-based) ethanol, thus curbing both global hunger AND climate change. Shabang.