Don’t tamper with food trade
Irish farmers fear a World Trade Organisation deal would cost them at least €2 billion, with the loss of the suckler cow herd.
However, tampering with the food trade is a matter not of euros or dollars, but life or death, for millions around the world.
The United Nations’ world food programme urgently needs $500m extra per year to deal with runaway costs, global food prices having risen by more than 75% since 2000, jumping more than 20% in 2007 alone. Otherwise, food aid may have to be rationed.
Countries like Swaziland face famine, even though it exports cassava to feed the rich world’s hunger for biofuel.
Nevertheless, so-called financial experts around the world are welcoming soaring food prices because they expect it will make it easier to reach agreement on the Doha Round of WTO talks which started in 2001.
Starving millions matter little in their eagerness for a deal requiring rich countries to open up their food markets to poorer ones by cutting agricultural tariffs and subsidies in exchange for developing countries cutting their industrial tariffs and opening up their markets in services, particularly financial services.
Doha barely touches on the new trade issues which have arisen since 2001 around environmental sustainability, climate change and carbon trading.
It’s supposed to give greater benefits to developing countries, but it’s hard to see how liberalising trade and giving greater market access and business opportunities will help the weakest countries.
Peter Mandelson, the EU trade minister, is one of those welcoming expensive food, because he sees much less need for the protectionist food import barriers which he is trying to dismantle — the first step needed towards a trade agreement.
Hopefully other leaders will see the bigger political picture and leave the already precarious global food balance undisturbed. They will be aware that it is the soaring wheat and tea prices, as much as the precarious security situation, that threatens to end President Musharraf’s eight-year rule in global hotspot Pakistan.
They will also be aware that the authorities in Beijing have placed restrictions on meat prices, the first time they have suspended their faith in the market forces that have made China an economic giant.
It will be clear to them that the biofuel boom, climate change and environmental degradation in several key regions, will delay recovery from the current gobal food scarcity.
They will be worried about the reaction of the urban poor in developing countries, typically a politically volatile group, to food scarcity.
In the US or the EU, where only 10% of our expenditure is on food, it’s all very well to talk about turning the global food trade upside down. But it is 30% in China and more than 60% in sub-Saharan Africa, and many people will die if the new system doesn’t work.
Even in the developed western countries, rising bills at the supermarket checkout mean the kind of ‘high visibility inflation’ which makes people feel poorer and increases their inflationary expectations and pay demands.
Few can predict how a global trade agreement would affect these trends. But it is clear that it would immediately cut production in the EU, the second biggest exporter of foodstuffs globally, sending more than €60 billion worth worldwide in 2002. Global food reliance would shift to countries like Brazil and Indonesia, now accused by many of sacrificing food and biodiversity to bio-ethanol and bio-diesel production.
Others could be equally unreliable. China’s food producing regions have been hit in the north by drought and in the south by the worst snow in 50 years. India may import two million tonnes of grain after dry weather cut the harvest. Mozambique, Zambia and Malawi have had devastating floods. Tensions in Kenya have crippled output of tea and cash crops. Zimbabwe, historically one of Africa’s best food producers, has been crippled by President Robert Mugabe.
Meanwhile, the US would probably continue towards President George Bush’s target to nearly double biofuel production by 2030, even though American wheat stocks are projected to fall to their lowest levels in 60 years by May.
Still, Bush is said to want farm subsidy reform as a legacy and the Democratic majority in Congress probably depends more on urban and suburban votes than rural support.
But the odds must be high against an agreement. Officials and diplomats will have to approve a final draft by April at the latest and the US Congress can only vote yes or no to a trade deal, and cannot amend it. If Congress says no, the new US administration will likely wipe the slate clean.
Surely commonsense will prevail. As Teagasc economist Liam Dunne recently pointed out , it would make a lot more sense for the World Trade Organisation to organise a minimum reserve grain buffer to reduce market volatility, rather than try to re-invent the global food trade.
