Food shortages curb global appetite for free trade

  • 19/06/2008

  • Age (Australia)

Free-trade policies long advanced by World Bank President Robert Zoellick and US President George W. Bush are losing favour as countries in Africa, Asia and Latin America find they can't buy enough food to feed their people. Global food prices have spiked 60% since the beginning of 2007, sparking riots in more than 30 countries that depend on imported food, including Cameroon and Egypt. The surge in prices threatens to push the number of malnourished people in the world from 860 million to almost 1 billion, according to the World Food Programme in Rome. Leaders of developing nations including the Philippines, Gambia and El Salvador now say the only way to nourish their people is to grow more food themselves rather than rely on cheap imports. The backlash may sink global trade talks, reduce the almost $US1 trillion ($A1 trillion) in annual food trade and lead to the return of high agricultural tariffs and subsidies around the world. ''Trade as the route to food security - that idea is on the ropes,'' said Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics in Washington. ''If the guy who is selling it doesn't want to sell it overseas, then the guy at the other end is terribly exposed.'' In dozens of interviews and speeches at the United Nations Food and Agriculture Organization's Rome conference on the food crisis this month, officials from developing countries, farmers and leaders of non-governmental organizations said food self- sufficiency is the new goal for many poor nations. Grain exporters such as Argentina and Vietnam have restricted shipments, driving global prices higher and leaving nations that depend on imports searching for adequate supplies. Worldwide search ''The idea of trade liberalization was that you could count on global markets, but they're not proving reliable,'' said David Orden, a fellow at the International Food Policy Research Institute in Washington. The Philippines has embarked on a worldwide search for additional food supplies to build stockpiles and ensure it can feed its people amid record prices. The surging costs of rice, other grains and fuels have stoked inflation and triggered concern of civil unrest, according to the International Monetary Fund. Philippines President Gloria Macapagal-Arroyo said her country will try to become self-sufficient in food by 2010. ''For a long time, it made sense to buy food from the international market,'' said Arthur Yap, the Philippines Agriculture Minister, in an interview June 4 in Rome. ''The situation has changed.'' The rift between developing countries and wealthy nations on food trade was apparent at the Rome conference. The US, the European Union and the World Bank all pushed for a new global trade agreement to cut subsidies and import duties in countries such as India and South Africa. Latest talks The latest round of World Trade Organization negotiations was launched in 2001 in Doha, Qatar. The goal was to cut subsidies in rich nations and tariffs in poor nations, allowing the most efficient producers -- be they in Iowa or Cordoba, Argentina -- to sell to the world. Supporters say the economic rationale still holds. ''The reason why getting a Doha Round done is important is it'll end up reducing the cost of food, importing food,'' Bush said at the White House on May 1. The US and Europe continue to subsidize production of grains and other commodities, enabling their farmers to undercut the prices of competitors in developing countries. Zoellick, Bush's former top trade adviser, said this month in Rome that one key to long-term food security is ''closing the Doha WTO deal, phasing out huge distortions from subsidies and tariffs.'' Export limits Most alarming to policy makers in food-importing nations are the export constraints imposed in Indonesia, Argentina, India and others. Thailand, the world's largest rice exporter, said in February that it would restrict shipments abroad to ensure stable prices at home. The country later reversed the decision. ''There is no security if your food basket is coming from another country,'' said Bakary Trawally, permanent secretary of Gambia's Department of State for Agriculture, in an interview in Rome. ''If they close it off, like Thailand did, you would be in trouble.'' Trawally and officials from other developing countries say they will use more subsidies to boost domestic production. ''A few years ago it was thought it was better to buy food in other countries, but that whole policy failed,'' said Raul Robles, Agriculture Minister of Guatemala, in an interview. Now Guatemala has reversed course and is supporting farmers ''with land, seeds and technical help,'' he said. Defending free trade The trend has disheartened free-traders such as Orden and US Agriculture Secretary Ed Schafer. ''We need to open up markets so you can have the free flow of food where you need it,'' Schafer said in an interview last week. The current crisis has shown the limits of free trade to provide food, some analysts say. ''Agriculture markets are notoriously volatile, and all countries really do have to make sure that they have at a minimum systems that don't let their people go hungry,'' said Sandra Polaski, a former Clinton administration trade official and fellow at the Carnegie Endowment in Washington. Bloomberg News