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Rapidly rising food prices around the world are capturing front page headlines daily. Last week, World Bank president Robert Zoellick and a number of finance ministers made public statements about the need for “urgent action” to address rising prices. Food riots have been reported in more than a dozen countries including Haiti, Egypt, Ivory Coast, Ethiopia, Uzbekistan, the Philippines, Thailand, Indonesia and even Italy. Foreign Policy‘s blog Passport has a regular “Food Riot Watch” section.In the last few days both Kazakhstan and Indonesia have banned the export of staple grains (wheat and rice, respectively) to hold down domestic prices.

The precipitous rise in prices has been attributed to a variety of factors, most frequently including a poor wheat harvest in Australia, the rise of a middle class in Asia that consumes both more food and especially more meat, and the growing popularity of biofuels. While these first two reasons certainly are a factor, the third is a red herring. There are plenty of valid reasons for criticizing biofuels (e.g. corn-based ethanol requires more energy to produce than it contains, biofuel production uses vast quantities of fresh water, and the clearing of land for biofuel crops results in far more carbon emissions than using biofuels saves) but food prices are not yet one of them. The vast majority of biofuel production comes from corn, sugarcane and palm oil—only one of which is a food crop. The countries that are experiencing the most unrest are those where the primary staples are wheat and rice, both of which hit record high prices this week while neither is used for biofuel production. The real underlying issue, which is getting virtually no attention, are the entrenched agricultural policies in the United States and Europe which have encouraged domestic overproduction for decades—thereby depressing prices, destroying livelihoods and discouraging investment in the agricultural sector elsewhere in the world.

Which leads to the question of what “urgent actions” can be taken right now to alleviate the problems of that go along with an 83% rise in global food prices over the last three years. the United States has announced it will provide an additional $200 million in food aid, but as we’ve written about before, American food aid can have disastrous effects. The World Bank has issued a working paper with some limited policy suggestions: targeted cash payments to the poor for food purchases, reducing taxes and tariffs on food imports, food-for-work programs, etc. Of course, these policies are already in place in most of the hardest hit countries.

The lack of immediate answers is due to the nature of agriculture. Production of food lags months if not years behind market signals—farmers are already reacting by producing more food as prices rise, but we won’t see the impact of that until next year at least. The problems in the agricultural sector have been decades in the making and will take several years to fix. The biggest danger is that in the rush to short-term fixes, we’ll simply create more distortions that don’t deal with the real issues and make future food crises even worse. Inaction is certainly neither advisable nor viable. Over the next few weeks, we’ll be taking a closer look at the policy options, trade-offs and opportunities for dealing with the current crisis.


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