There’s still plenty of angry commentary about last week’s global food summit from African op-ed writers:
The hottest debate surrounded the negative impact of bio-fuels of food crisis, its proponents, its producers, forging an otherwise unlikely partnership between the United States and Brazil, while its vehement opponents consisting largely of the third world countries who had a bone to pick with the big countries on many issues including unfair trade terms and agricultural subsidized by the western countries.
In a way, it was clear that in the final document the fierce debate around a policy statement on bio-fuels and trade which are solely responsible for watering down the importance of the summit were a clear indication of the side that walked away victorious. The summit declaration was coy on the subject of bio-fuels.
“We are convinced that in-depth studies are necessary to ensure that production and use of bio-fuels is sustainable.”
Ed Schafer, the American agriculture secretary said that increasing the production of corn ethanol is “the right policy direction”, no wonder Corn prices rose on the world markets throughout the last hours of the summit.
The upside could be the generous way in which countries pledged almost 3 US$ billion of emergency aid to provide food for populations that could not feed themselves, which in itself is a stop gap, a role the western world revels in, well knowing that it is no long time solution to the poverty in the third world.
Actually, I don’t know a single American who “revels” in donating aid to other countries. I think the general view on this side of the Atlantic is that little of our aid goes to helping needy people while the bulk goes to bolster elites who wile away their time making nasty remarks about us.
Is the purpose of the emergency assistance to solve poverty in the third world or, like good first aid, to staunch the bleeding before applying measures with a longer-term effect?
What sort of measures would provide a solution to poverty in the third world? I’m all for eliminating subsidies on biofuels here and in the EU but mostly because I think it’s bad policy. I think the evidence that subsidies on using corn in ethanol production produces hunger in Africa, Asia, and Latin America is actually pretty slim.
I think that the preponderance of the evidence at this point suggests that food prices (particularly the prices of rice and wheat) are rising because oil prices are rising and that oil prices are rising because production is flat while consumption continues to increase.
We’re actually consuming less oil in this country than we did a year ago and I expect our consumption to drop farther still. The best thing we can do in that regard is let is happen. The very worst thing we could do is the gas tax holiday that Sen. McCain is backing.
We could also produce more oil here. If we were to produce a significant amount of additional oil here from off-shore drilling, drilling in ANWR, or other measures, it would have the effect of lowering world oil prices which would, in turn, reduce food prices.
Meanwhile, both China and India are consuming more oil than they did a year ago. Both countries subsidize the price of oil, selling it to their people at prices below world prices, insulating them from price signals.
I’m for eliminating agricultural subsidies here and in the EU, generally, both because I think it’s bad policy and because I think it contributes to poverty in the third world but, as I’ve posted a number of times here, EU agricultural subsidies are relatively more important than ours in terms of their effects on Africa and Asia. I doubt that would do a great deal to improve things.
What would really help is greatly increased foreign investment and, money flowing as it does, the most important thing that impoverished countries can do is to create a business climate that encourages investment. That includes the tax environment, ability to transfer assets into and out of the countries, foreign ownership of assets including agricultural land, and greater transparency. That would discommode the very elites who are complaining that we aren’t doing enough. Must’nt have that.