A Worsening Food Crisis
THE WORLD'S most dangerous conflicts stem from religion and ideology -- tragic proof that man does not live by bread alone. But when bread is hard to get, that, too, causes unrest. And lately, it has been very expensive indeed: The World Bank estimates that global food prices have risen 83 percent in the last three years. Hence, food riots in Haiti, Egypt and Ethiopia and the use of troops in Pakistan and Thailand to protect crops and storage centers. Many countries are banning or limiting food exports. World Bank President Robert B. Zoellick says that 33 countries are at risk of food-related upheaval. Famine may revisit North Korea, parts of Africa or, disastrously for U.S. foreign policy, Afghanistan.
To many, the villain is biofuels. U.S. and European ethanol programs, intended as an antidote to climate change and an alternative to OPEC oil, stand accused of snatching food from the world's hungry. According to India's finance minister, ethanol is "a crime against humanity." And it is part of the problem. The more corn becomes ethanol, the less will be available as food for people and livestock. In the U.S. farm belt, heavy ethanol subsidies, such as a tax break of 51 cents a gallon, encourage the shift. These subsidies were already questionable, in economic terms, before the commodity crunch. That they might contribute to hardship for the world's poor is another argument for reducing them.
But ethanol's impact should not be overstated. The International Food Policy Research Institute, which is critical of ethanol, pins about 25 to 33 percent of the recent price rise on biofuels; the U.N. Food and Agriculture Organization guesses about 10 to 15 percent. Most of the crisis is rooted in three other factors: drought in grain-exporting Australia; the surging price of crude oil, which raises food prices through the costs of shipping and petrochemical fertilizer; and booming demand for food in China, India and other newly prosperous areas of the developing world. These areas consume not only more staples such as rice and wheat but also more meat from animals fed on grain. This trend is here to stay -- and, unlike Australian drought or oil inflation, no one should want it to go away. Lifting hundreds of millions of Asians out of poverty is a historic achievement.
To cope with the current situation, the United States must contribute its share to help the U.N. World Food Program fill a $500 million gap in its budget. Congress should change U.S. law to let U.S. aid buy food in developing countries themselves, which could boost local producers. Looking further ahead, the U.S. and multilateral institutions must also support greater investment in farming in the developing world, including funding for research into improved crop yields, which has been in steady decline over the last 25 years.
Today's crisis could be tomorrow's opportunity. If the era of cheap food is over, higher prices might stimulate local agricultural production in Africa and other places that now depend on imports. This will be likelier if the United States and Europe finally dismantle the wasteful crop subsidies and trade barriers that fatten their farmers' bank accounts -- but distort international markets at the expense of the poor.