Posted by: Shaun | April 14, 2008

Hungry, hungry humans

Most Americans are fortunate to have economic woes that are limited to plummeting mutual funds or, at worst, a mortgage default.  In many other parts of the world, the big concern is scraping together enough money to buy a few kilos of rice as food prices continue rising; up 83% now over the last three years. Prices are approaching crisis levels and the potential now exists for increasing amounts famine and deepening poverty worldwide as a result.  World Bank chief Robert Zoellick made headlines this week by admonishing the developed world to tackle the growing food crisis by contributing another $500 million to food relief efforts.  Thus far, only about half that amount of money has been pledged and it is worth remembering the a “pledge” is no guarantee that aid money will actually be delivered.

The Economist points out that the problem being faced is fundamentally one of distribution, since there is more than enough food to go around if we could get it to all the places it is needed.  Moreover, hunger per se is not the greatest development challenge to be faced down, but rather malnutrition, which is much harder to combat because doing so often requires a raft of reforms in basic institutions for health, education, and sanitation.  Just doling out grain isn’t enough.  Either way, change will depend in part on the willingness of wealthy countries to address the development challenges on the ground and change market distorting agricultural policies.

In the United States Congress is jumping into action to tackle the challenge.  Of course, by “jumping into action” I mean making policy with no regard for the global picture and by “tackle the challenge” I mean lavishing billions of dollars on agribusiness.  In Washington, it happens to be that magical time when a new farm bill is being put together to provide all manner of subsidies and benefits to the mythical American small farmer.  According to reports on the as yet incomplete legislation, those benefits could run to $600 billion over ten years.  Why does the agriculture industry need aid if commodity prices are sky high, you may ask?  Quite simply, they don’t.  But the massive “farm lobby” will see to it that federal largess keeps flowing to its constituents and keeps distorting the global marketplace, making it harder for farmers in poor countries to compete and work their way out of indigence.

Perhaps the most appalling aspect of U.S. agricultural policy, and one highlighted by Zoellick, is role of biofuels in raising food prices.  The farm bill includes a number subsidies to promote the use of ethanol as an “eco-friendly” fuel alternative.  U.S. ethanol comes mostly from corn; corn which would otherwise be eaten and which is now much more expensive because of the new demand alternatives to gasoline.  How much corn?  Well, the choice is assuaging your conscience for that Hummer by filling the tank with ethanol…once…or feeding one person for a year.  With apologies to Iowa, I think we may need to start looking elsewhere for alternative fuels.

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