Otherwise, it is difficult to explain the sudden explosion in food prices. Major farm-exporting countries "" Brazil, Argentina, Australia, Canada, Thailand, and Vietnam, among others "" have not witnessed major droughts in the recent past. However, it is a fact that there are some significant shifts in the transfer of certain staples like corn towards the production of so-called green fuels. But there are no sharp declines in other major staples. |
The Wall Street Journal said in an editorial. "the bulk of the increases" in wheat, rice, soyabeans, sugar, and corn in the past year "can be attributed to the West's push to turn these crops into fossil-fuel replacements like ethanol." And the major chunk of subsidies which are going into ethanol products are in the US, followed by the EU.
"It is no coincidence that the US and EU, which are leading the biofuel charge, have powerful lobbies that see this latest eco-craze as a new way to milk taxpayers," the WSJ warned.
A crisis tends to produce dramatic shifts of positions and stands. Otherwise, it is difficult to explain why the WSJ adopted a stand similar to what the United Nations Special Rapporteur on the right to food, Jean Ziegler, had been advocating over the last three years. This Geneva-based left intellectual, who had ruptured relations with some powerful governments because of his uncompromising positions, said time and time again that biofuels, are causing a monumental disaster. He was dismissed as a maverick but today, there is growing recognition that biofuels are at the root cause of the current food calamity.
More importantly, Ziegler is also proving correct on another associated issue that is causing the surge in food prices. "It is the speculation and short-term finance which are playing havoc with food prices," he told this correspondent, pointing that the growing concentration of the entire global food trade in the hands of five or six corporations is responsible for the high prices. Here again, some big traders representing the US-based commodity companies confirmed last week that "speculation" and the entry of hedge funds and banks are at work in the flare-up of prices.
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Of course, developmental and trade pundits, Arvind Subramanian and Nancy Birsall, reckon that this is not the time to create much fuss on farm subsidies in rich countries. In a "New Deal on Hunger," they proposed that the "major developing country producers set aside for now their reasonable objections to traditional rich country agricultural protection "" the bone of contention in the Doha trade round "" at least in the case of food staples (if not cotton and cocoa)." They reckon that "rich countries would ideally reduce this protection on their own (as their taxpayers might well like in the case of domestic production subsidies)." A meaningful deal on hunger can be reached only if countries stop making demands to reduce the "agricultural protection [in rich countries]".
Such an assessment, however, shifts the focus away from the real culprits that are responsible for the misery of the poorest of the poor in other countries. Even without this crisis, the chances of bringing down contentious farm subsidies in the Doha Round are anything but substantial. As compared to the glib promises made at the time of launching the Doha Round, the final cuts and disciplines for farm subsidies in the Doha package would leave the two biggest subsidisers "" the EU and the US "" with a lot of loopholes to continue with several trade-distorting programs.
Indeed, the big players in the global farm subsidy drama, which effectively contributes to a turnover of $365 billion (as per the O EC D estimates), can manage to continue with their growing Green Box farm programmes which are no longer least trade-distorting as they were supposed to be once upon a time. Besides, there is no guarantee that the prices will come down if countries stop clamouring for the elimination of subsidies. It can surely help the big subsidisers to continue with their programme at the cost of discouraging farming in many poor countries where it is the main economic activity.