… What is causing food prices to soar and what can be done about it? – Published on The Economist, Feb 24, 2011.
AROUND the world, the food system is in crisis. Prices have rocketed; they are now higher in real terms than at any time since 1984. They could rise further still if drought lays waste to China’s wheat harvest, as is feared. Food has played some role (how large is hard to tell) in the uprisings in the Middle East. High prices are adding millions to the number who go to bed hungry each night. This is the second price spike in less than four years. Companies are sounding the alarm and the G20 grouping of the world’s largest economies has put “food security” top of its 2011 to-do list … //
… Let them eat research:
It can be done. Targeting help to the poorest is part of the solution. Conditional cash-transfer programmes, such as Mexico’s Oportunidades and Brazil’s Bolsa Família (in which the mother gets a small stipend on condition her children attend school and get a health check-up), can work well: 70% of the Bolsa payments go on food.
As for boosting farm output, it will come as no surprise that this newspaper believes that a big part of the answer is removing trade barriers and cutting subsidies. Lowering tariff walls round rich countries would increase poor farmers’ exports. An agreement to limit trade bans might make exporters think twice before disrupting world markets. Countries should scrap targets for biofuels which favour an expensive, environmentally damaging business that needlessly distorts food markets. America’s ethanol subsidy is a particularly egregious offender. Even opening up retailing to foreigners can help: companies such as Wal-Mart are good at getting food onto supermarket shelves rather than leaving it to rot in the fields.
Although governments can help a lot by getting out of the way in what has been a woefully distorted market, in one respect they need to do more, by reversing the decline in public spending on agricultural research. Unlike other farm subsidies, basic research works. The Green Revolution began with public research. So did Brazil’s recent farming successes. Western countries have not learned the lesson. They have complacently cut back on the work done in universities and international institutions. It was a huge mistake. Basic farm research helps the whole world—and is a bargain. One billion dollars would provide many billions of benefits in terms of people fed and food riots forestalled.
Rich countries should therefore properly finance the “CG system”, a network of government-backed institutes, carrying out research into rice, wheat, maize and livestock. And the emerging giants should chip in, too. China, India, Brazil and Russia complain that they do not get the respect they deserve. Here is a chance for them to earn it by helping underwrite a global public good. They should contribute to the CG system (as Mexico, to its credit, is doing) and make their national research available more widely. Few things matter to human happiness more than the yields of staple crops. (full text).