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Sebastian Mallaby

Irrational policies worsen food crisis

We are now several months into the global food crisis, which is a much bigger deal than the subprime meltdown for most people in the world. Food prices have almost doubled in three years, threatening to push 100-million people into absolute poverty, undoing much of the development progress of the past few years. The new hunger has triggered riots from Haiti to Egypt to Ethiopia, threatening political stability; it has conjured up a raft of protectionist policies, threatening globalization. And yet the response to this crisis from governments the world over has been lackadaisical or worse.

Start with the lunatic story of rice stockpiles in Japan. A new paper from the Center for Global Development describes how Japan's government imports rice in order to comply with its global trade commitments but withholds most of that rice from consumers lest they decide they prefer it to the local sort. Japanese traditionalists view the consumption of sticky, short-grained rice as a patriotic duty. So rather than letting Mrs. Watanabe corrupt her children's dietary habits, Japan stores much of its imported rice until it has become unfit for human consumption, whereupon it is sold to feed livestock.

From the perspective of Japan, stockpiling rice is a costly exercise in chauvinism, but Japan can afford that. From the world's perspective, the stockpiling is more serious. More than 3-billion people depend on rice as their daily staple, and half of them are very poor. Japan could save many of them from hunger if it released its stocks.

The scandal is not just Japanese, however. In order for Japan to sell its rice outside its borders, it needs permission from the countries that supplied it — the United States, Thailand and Vietnam. A bit of U.S. leadership could deliver that permission easily, but the Bush administration is apparently worried about a backlash from American rice growers who see no downside in high prices, thank you very much. Not for the first time in Washington do the fat welfare queens of the farm lobby trample on the poorest people in the world.

Speaking of welfare queens, Congress passed a farm bill last week with thunderous bipartisan support. The bill includes reasonable subsidies for low-income Americans hit by high food prices, but it also sprays money at farmers who already earn more than the average taxpayer and contains shockingly little for the world's poor. Congress is considering a separate bill that would boost international food aid more substantially. But that measure has been met with shameful indifference by lawmakers and consequently has stalled.

Congress won't even act on a common-sense proposal from the Bush administration that food aid be reformed. If the United States bought some of the food that it donates from other countries, it could get aid to the needy faster and more cheaply. But that would upset American farmers and shipping interests, as a new Council on Foreign Relations paper emphasizes. The president's proposal has few takers on the Hill.

The Europeans, for their part, have their own way of entrenching hunger. Just as Japan is wedded to its rice culture, Europe is irrationally hostile to genetically modified food. Study after study has found no danger in seeds that have been manipulated to grow better, withstand insects or survive in arid soil. But the Europeans still feel squeamish, and their hang-up deters Africans from taking advantage of crop science lest their exports be barred from European markets. Again, a peccadillo that to Europeans is affordable starves people in the poor world.

Finally, poor countries themselves have made things worse. Panicked at the prospect of food riots, countries with crop surpluses have forbidden exports in an attempt to bottle up supply and keep prices down. More than 40 countries have imposed some kind of export restraint, with the result that countries suffering food deficits have seen prices hit the roof. This nationalized hoarding is frustrating international relief efforts. The World Food Program has sought to buy food from countries with surpluses, such as Pakistan, to ship to desperate neighbors such as Afghanistan. But Pakistan drags its feet about selling.

Part of the solution to the food crisis, as the Oxford economist Paul Collier has written, is to promote large-scale commercial agriculture in the poor world. But for that to happen, investors have to know that there will be a market for their exports. They won't risk their money if Congress is going to subsidize their American competitors. They won't risk their money if European prejudice is going to prevent them from using the best seeds that scientists offer. And they won't risk their money if the governments of developing countries short-circuit their profits with crazy export bans.

In short, the governments of the world are conspiring to undermine farming in developing countries. Do they MEAN to inflict hunger on tens of millions of people?

SebastianMallaby is a fellow for International Economics with the Council on Foreign Relations.

Irrational policies worsen food crisis 05/20/08 [Last modified: Thursday, May 22, 2008 1:46pm]

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