14 Apr 2008
In a front-page story, the Wall Street Journal (4/14, A1, Davis, Belkin) reports that "[f]inance ministers gathered this weekend to grapple with the global financial crisis" and worsening food shortages. "Rioting in response to soaring food prices recently has broken out in Egypt, Cameroon, Ivory Coast, Senegal, and Ethiopia," as well as in Asian nations, including Pakistan and Thailand. "Many policy makers at the weekend meetings of the International Monetary Fund and World Bank agreed that the problem is severe," and "singled out U.S. policies pushing corn-based ethanol and other biofuels as deepening the woes." India's finance minister, Palaniappan Chidambaram, said, "When millions of people are going hungry, it's a crime against humanity that food should be diverted to biofuels."
I haven't read the article yet - just the synopsis above. Here are some preliminary thoughts...
There's a lot going on here that it's difficult to assimilate any of it. We (the United States) used to divert food to the waste bin. I wonder if we still do. When we did, the problem was food distribution policies. Even taking the food that we paid farmers to destroy and giving it to poor countries would undermine the food-producing economy there. The United States alone used to produce enough food to feed the entire world, yet hunger persisted. I wonder if that is still the case.
Why would food diverted to ethanol production hurt other countries? If it hurts other countries, they must be importing food, and so some of that cost has to be born by inflation generally and the spike in oil prices specifically. Except I'm not sure oil prices in other countries have gone up like they have in the US.
Food shortages would also lead countries to try and make food production more local - to control their own destiny. This would be a trend counter to a general globalization trend worldwide. More and more globalization results in the emphasis of the local/specific/unique. Identities aren't necessarily lost in globalization - they can be enhanced. And with the millennium generation full of self-confidence and more aware of their surroundings, globalization may actually continue to lead to compartmentalization. In the US there is for sure a trend toward making food production more local (or, at least, maintain the local production that currently exists).
Now that I've read the full article...
Ah, I'm glad the article does clarify that the demand (competition) for food is leading to protectionist policies to deter food from being exported and promote the importation of food. And the article provides a good clarification that the reason US-produced corn ethanol is bad for the marketplace is because Brazil can produce it much more efficiently from sugar.
Good article, Wall Street Journal!