Agreement Reached at Food Summit: Blame Somebody Else!

The Global Food Security Summit in Rome and has ended and the good people meeting there have issued a joint declaration, agreeing to blame somebody else for higher food prices:

ROME (AP) — World leaders at a U.N. summit embraced an ambitious strategy to combat a food crisis that is causing violent riots and threatening to push up to a billion people across the globe into hunger.

Delegates from 181 countries pledged Thursday to reduce trade barriers and boost agricultural production to combat rising food prices, but some nations and groups maintained more concrete measures will be needed.


Some countries felt the Rome summit had not gone far enough.

Argentina said it was unhappy the declaration did not blame subsidies — generously granted to farmers in the U.S., the European Union and other Western food-producers — for a major role in driving up prices.

Monica Robelo Raffone, head of Nicaragua’s delegation, said the conference had failed to offer solutions or identify the reasons for the price increases.

“It doesn’t mention the real causes behind the crisis: the high oil prices, the market speculation, the subsidies … it’s a step back,” she said.

U.S. Agriculture Secretary Ed Schafer welcomed the declaration’s tone on biofuels, saying the United States remains “firmly committed to the sustainable production and use of biofuels, both domestically and globally.”

The biofuel issue was a volatile one at the summit. The summit struck a balance on the fuels, which are made from crops such as sugar cane and corn, saying that “in-depth studies” are necessary to ensure that the environmentally friendly energy source does not take food off the table.

Others were also unsatisfied with the outcome:

Swiss non-governmental organisations on Friday sharply criticised the result of the three-day meeting.

“The motto of the FAO, ‘Fiat panis’ – let there be bread – given the meagre outcome of the conference, is a mockery of the millions of hungry people,” said Rosmarie Bär of Alliance Sud, the Swiss Alliance of Development Organisations.

“The reasons and relationships that have lead to this crisis are known and recognised by governments,” the Alliance Sud said in a statement. “But that alone does not help the hungry.”

Africans are blaming Americans and Europeans for their agricultural subsidies and biofuels production. Europeans are blaming the Americans. I’m not sure whom the Americans are blaming. Probably everybody.

You might want to take a look at one of the working papers produced by the conference. Considering the conference’s title, “High-Level Conference on World Food Security: The Challenges of Climate Change and Bioenergy”. The paper is remarkable in that it fails to make a convincing case that either climate change or bioenergy are the most important causes of the rising cost of food. Rather, the most significant causes of rising food prices are rising oil prices and lousy government policies. If you’re armed with a little background knowledge here are some of the things that jump out at you from the paper.

1. European biofuels production is a significantly greater factor than U. S. biofuels production in increasing food prices.

European subsidies on biofuels production amounts to between half again and three times per liter what they are in the U. S. As I’ve noted previously European agricultural subsidies, generally, are more significant generally, particularly in Africa and Asia, than U. S. subsidies are.

2. Ethanol subsidies have a negligible impact on rising grain prices.

3. U. S. ethanol subsidies have almost no impact on rising food prices.

We use yellow corn to produce ethanol. Humans consume (mostly) white corn. Yellow corn is used, however, for animal feed and whatever impact

4. Subsidies on biodiesel have a substantial impact on rising food oil prices.

5. Rising oil prices are obviously the most signficant factor in rising grain prices.

This will be truer in places where the government subsidizes gas prices directly, e.g. China, India, Nigeria (and much of Africa), than it will be in other places since gas subsidies subsidize relatively less efficient means of agricultural production.

Why, other than rising oil prices and the continued subsidization of oil consumption, are food prices rising? Well, the conference was right in at least one factor: tariffs and export bans are causing food prices to rise. But that’s not the only factor. For example, here’s a chart of corn production in Zimbabwe:

Corn yields in Zimbabwe (FAO)

or, said another way, Robert Mugabe’s land redistribution policy, frequently to cronies of his who know nothing about farming, has resulted in sharply lower corn production in Zimbabwe. The chilling effect that has had coupled with sanctions that have been placed on Zimbabwe have resulted in reduced investment in agriculture in Zimbabwe. Result: lower production.

Zimbabwe is, or at least used to be, a major exporter of corn so reduced production in Zimbabwe means higher costs everywhere in southern Africa.

There’s another particular in which I’m in agreement with the conclusions the conference reached: if higher yields are to be realized in Africa and Latin America increased investment in agriculture will be required. Basically, there are two ways to accomplish that, a “hard power” method and a “soft power” method.

The hard power method of increasing agricultural investment is to do so by fiat. That means spending development dollars (which are ultimately tax dollars) on various schemes for improving agricultural practices. The object of the game for recipients of such aid is to get as much aid as possible by changing as little as possible. That’s what I take away from pleas of this sort:

The world’s farmers were bypassed at this week’s Rome UN food summit, reflecting a crucial gap in addressing the crisis at its most basic level, the leader of a global farmers’ group said.

“It’s a reflection of how disconnected and dis-linked our multilateral agencies are, from the situation on the ground,” Ajay Vashee, the freshly-elected head of the International Federation of Agricultural Producers (IFAP) told AFP at the close of the 38th World Farmers’ Congress in Warsaw, Poland.

“The people who have the ability to actually do something about this crisis were precluded,” Vashee said, adding it was a recipe for “confusion and chaos.”

Uniting 600 million independent family farmers in 115 organisations from 80 countries around the globe, IFAP is the world’s largest farmers’ organisation.

Increased efficiency in food production means producing more food with fewer people. That’s been the pattern in Europe, the United States, Japan, and China and I have no reason to believe that Africa, Latin America, or the rest of Asia will be a great deal different. In fact the path to wealth for most of the wealthiest countries has been to transfer relatively inefficient agricultural labor to relatively more efficient industrial production. That has frequently come with enormous social disruption.

The software power method is for the countries that want increased agricultural investment to make the business, financial, and economic climates more attractive for foreign (or domestic) investment. In many cases they’ve done just the opposite, introducing barriers to foreign ownership of agricultural land or taking assets out of the country. IMO much of the reason that countries have avoided this soft power approach is that they’re concerned about social disruption.

Unfortunately, one way or another social disruption they will as the rest of the countries of the world make the transition that we did nearly a century ago. In the 1900 federal census 90% of American men listed their occupations as “farmer”. Nowadays fewer than 10% do. Much of the rest of the world will make that transition, too.

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