Rich world creates the food crisis

This piece by Adam Lerrick, who's visiting at AEI, expresses about as concisely as I've seen how the rich world's governmenta essentially created the food crisis. In brief:

"Politicians legislate price supports to enrich farm voters. Lobbies extort tariffs to block cheap food imports and subsidies to underwrite food exports at prices that destroy competitors in poor countries. Conservationists have agitated to set aside productive land a pay farmers not to grow. And now green energy advocates push ethanol quotas and tax credits that divert food into fuel."

The farcical G-8 summit

Consider the collection of inflated egos assembled on Hokkaido Island in Japan for the fabled G-8 summit. They'll babble about global warming and Mugabe, about which they plan to do nothing -- setting a goal for 2050 indeed! -- and do nothing about something they could alleviate not by taking action but by ceasing to do damaging things, the global food crisis. Here's an indignant Register editorial. Better that people should starve than that a farm lobby or ethanol bandit should be offended. Speaking of which, here's a Reason blog item on the opening banquet -- eight courses featuring 19 dishes when starvation is at least peripherally on the agenda.

Food entrepreneurs to the fore

Here's a phenomenon I haven't seen any other comment about, though of course I don't see everything. The NYT had an article last week about how various investment groups, in light of the world food crisis, are going beyond trading in commodities and investing directly in farmland in Africa, Brazil and elsewhere, and other things important to the farm business, like grain elevators, cargo ships and the like. The Times found a couple of people to fret about how it might upset the culture of agriculture, but on balance, as the Register noted in an editorial today, this strikes me as a generally good thing. It seems to be a case of entrepreneurs and investors doing the classic entrepreneurial thing: find a need and fill it. And the result after a few years is almost certain to be more available food and probably a more stable supply, at lower prices

UN shows a little sense

Here's a link to the Register's editorial on this week's meeting of the UN Food and Agricultural Organization in Rome this week, calling attention to what has become a pretty bona fide food crisis in many parts of the world. The UN has mentioned developed countries' biofuel programs (read: ethanol) as contributing to rising prices and serious shortages. It has also criticized export controls in countries, noting correctly that they are a disincentive to increased production. Maybe it's only when it really is a matter of life or death that the UN can find something sensible to say. But it did so this time.

World food crisis is real, energy policy a big reason

Last weekend the industrial countries' finance ministers met with the IMF and the World Bank, mostly about the world food crisis, which Bob Zoellick at the World Bank is convinced is more serious than whatever financial crises the international system is facing. He's right about that to a great extent, but since government policies are the primary causes about which anything constructive can be done, the assembled ministers didn't come up with constructive policies, simply a call for food aid from developed countries.

There are three main causes. As this Register editorial explains in part, there's been a drought in Australia, which has affected both wheat and rice supplies. China and India have been growing and building wealth, and their people are demanding and able to pay for more food, especially protein. And the U.S. and Western Europe, in a misguided effort to go "green," are subsidizing ethanol and biofuels, which raises corn prices and has all kinds of ancillary effects, including lower production of soybeans, more expensive meat, etc. In addition, most less-developed countries have price controls on basic foodstuffs, a sop to their urban populations but a huge disincentive for farmers to produce more.

The Western countries can't do anything about the drought or Chinese and Indian growth. They could encourage less-developed countries to end price controls, but it would likely fall on deaf ears. The most constructive thing they could do would be to end ethanol and biofuel subsidies (they aren't really all that green anyway when you consider all the costs) so farmers will start producing more for food than for fuel. But they don't seem to have the cojones, and all kinds of special interests profit from the subsidies, including Iowa farmer, Archer-Daniels-Midland and oil companies.

Food aid can be a stopgap, but it also is a disincentive for farmers in the ided countries to produce more, so it stifles real solutions in the longer run.