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I think few of us involved in the 2008 farm bill process would have thought the new farm bill could be even worse, but the agricultural committees seem to have found a way to hijack the supercommittee process to their own ends.
The latest edition of the World Bank’s Food Price Watch arrived in my inbox the other day and it was a helpful reminder that, while the world’s attention is focused on the Horn of Africa, there are still millions of people in other parts of the world who are at risk of going hungry or sinking back in to poverty because of high food prices.
My Foreign Policy column this week suggests that in the Twenty-First Century, famines can only occur with the active engagement of local leadership – taking away food from producers and/or denying access to agencies delivering emergency relief. In Somalia, the leadership that is denying access is al-Shabab – the group in control of the areas of the country where famine has already begun.
I wrote here three years ago, during the last food price crisis, that corn-based ethanol subsidies were economically inefficient, environmentally unfriendly, and inequitable. So I listened with great interest yesterday to an NPR story on the likelihood that the ethanol subsidy will be eliminated as part of a budget deal.
With many farm commodity prices at near-record highs, agricultural subsidies are emerging as a key target in the budget debate. Direct payments of roughly $5 billion per year are coming in for particular scrutiny because they are distributed without regard to market prices. Agriculture industry groups, however, complain that targeting farm subsidies is unfair:
Last week, the G-20 agriculture ministers meeting in Paris issued a communiqué calling for the World Food Programme to develop hedging strategies to purchase food. In a little-noticed section towards the end of a 24-page document, the ministers stated:
We invite the multilateral, regional and national development banks or agencies to further explore, in connection with the private sector as appropriate:
Development of hedging strategies that could help international humanitarian agencies, in particular WFP, to optimize food procurements and maximize the purchasing power of financial resources, building upon forward purchase… (Annex 5)
The Partnership to Cut Hunger and Poverty in Africa held an event on Capitol Hill on Friday to launch an excellent report by Stephanie Mercier, a former Senate Ag Committee staffer. I had the pleasure of serving as a discussant. Though the report title focuses on food aid and the next farm bill, the report also covers the evolution of U.S. food aid and the modest but important improvements that were made in the 2008 farm bill.
The UN’s Food and Agricultural Organization (FAO) recently reported that the December 2010 Food Price Index surpassed the peak reached in June 2008. A closer examination of the data, however, provides some modest hope that the worst effects of the 2007-08 price spikes can be avoided, with luck and better policies.
First, it is important to note that only two of the five components of the Food Price Index were above 2008 levels—meat (slightly above) and sugar (more than twice as high). Second, as shown in the chart below, staple grain prices, which are key to preventing hunger among the poor, are increasing sharply, while rice and, to a lesser degree, wheat remain well below their 2008 peaks. Maize is the exception, thanks in part to U.S. policies supporting corn-based ethanol that bring to mind the zombies populating popular culture—they just won’t die!