Many Factors Pushing Food Crisis

Sunday, May 25th, 2008

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.

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US farm bill to ignore global food crisis

Saturday, May 17th, 2008

The US Congress has passed a $290 billion farm bill, which will increase subsidies to US farmers and cut international aid programs.

George Bush has threatened to veto the bill, however, but there is still a good chance it will be passed into law. Interestingly, the presidential candidates response to the bill were contrasting with John McCain critical, Hilary Clinton supportive and Barack Obama labelling it as “far from perfect”.

“It does not target help for the farmers who really need it, and it increases the size and cost of government while jeopardizing the future of legitimate farm programs by damaging the credibility of farm bills in general,” Agriculture Secretary Ed Schafer stated. “At a time of record setting income for farmers, it sends the wrong message to the rest of the country who are not experiencing the boom of the agriculture sector. This bill is loaded with taxpayer funded pet projects at a time when Americans are struggling to buy groceries and afford gas to get to work.”

“Eight months behind schedule, Congress will send a bill to the President that is trade distorting and fails to provide meaningful reform to the adjusted gross income limit, beneficial interest or the international food aid program,” he added.

Raymond Offenheiser, President of Oxfam America, was also strong in his criticism of the bill. “Faced with a mounting food crisis at home and abroad, Congress had the opportunity through the Farm Bill to shift funds from wasteful agricultural subsidies for large scale farms to food aid to meet the needs of the poor,” Mr Offenheiser said. “But instead, Congressional leaders settled on a bill that will continue to be costly to taxpayers, undermine our rural economy, damage our trade relationships, and hurt the world’s poorest farmers.”

The slight decrease in tax credits to ethanol producers (by 5c per gallon) and increased conservation funding were welcomed, although many believe the cuts in tax credits do not go far enough.

With global food prices skyrocketing this year and global fears of a potential food shortage growing, the bill sends a disappointing message from the US to the rest of the world.

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What’s costlier for the country, imported or American sugar?

Sunday, February 3rd, 2008

Their revulsion comes by way of the twin umbrellas protecting the $21 billion U.S. sweetener industry: an 18-cents per pound price support and government-managed domestic and import quotas. Separately they cause apoplexy; collectively, angina.

But American sugar growers and processors — overwhelmingly the same people — have beaten these slings and arrows into candy and cookies since 1981, when that year’s farm bill reinstituted a sugar support program. All farm bills thereafter, including both the House and Senate’s 2007 models, have retained it.

In this farm bill fight, however, the haters have two new ideas on which to whip up anti-sugar hysteria.

First, both the Senate and House farm bills bless the federal purchase, then resale to American ethanol producers, of once-NAFTA limited, now free flowing Mexican sugar into the United States.

None of the sugar-to-ethanol proponents know the cost of this new add-on, but best guesses are millions. All agree, though, the cost will be less than the taxpayer tab if Mexican imports drive domestic prices lower and cause U.S. producers to forfeit homegrown sugar to the government under the guaranteed 18-to-19-cents per pound USDA loan program.

Second, in early January and without any government involvement, Mexican and American sugar players agreed to regulate the sweetener trade between the two nations to avoid “market chaos” they predict will result from the now-open trade door between them.

At its core, the deal seeks to limit the impact of Mexican sugar on the USDA-managed American market while looking to jumpstart a Mexican ethanol industry to keep excess production south of the border.

Both ideas have reenergized sugar’s loud critics. Some farm groups even are talking against sugar’s “managed” trade proposal, worried it will deflate corn-based, U.S. fructose exports to Mexico. (These groups seem to have forgotten that without sugar’s government umbrellas, there wouldn’t be a fructose industry.)

As the reactionaries bray, however, serious people are seriously considering both ideas for the simple reason that the unrestrained trade now permitted under NAFTA — and soon through NAFTA’s baby, CAFTA — will wreak havoc (”a train wreck,” says the American Sugar Alliance) in both markets.

The main benefactors of this carnage won’t be U.S. consumers who, sugar haters falsely claim, now pay three times the world price for sweetener. No, the big winners will be the usual suspects — big sugar users who want the one penny they now spend on sugar to make a candy bar to drop to one-half penny.

In the meantime, the 146,000 sugar-related jobs in 19 states — the real reason for sugar’s almost bulletproof political support — will come under siege by global sugar subsidizers like Thailand, Brazil and other South American nations.

Is that a good enough reason to consider sugar’s two new ideas — at least until a more uniform, multilateral trade agreement, like Doha, is completed?

If not, let’s sweeten the pot.

Today’s sugar support program carries zero cost to U.S. taxpayers. In deflated dollars, today’s U.S. retail sugar price is one-half 1980’s. In 2008, you’ll spend more for 10 gallons of gas than for sugar. Also, America already is the world’s second largest sugar importer and ethanol, ag’s new darling, will cost taxpayers billions more in subsidies this year than sugar ever has or will.

So, as the free traders scream, American farmers, ranchers and consumers need to ask themselves: What’s costlier, a managed, continental sugar market or the loss of 150,000 jobs and a $21 billion industry?

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