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April 21, 2008

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gaddeswarup

There is also a letter to Mr. Zoellick at IRRI wesite:
http://solutions.irri.org/
It is more about prposed funding cuts by USAID for agricultural research.

terence

That still seems like a raw deal for developing country farmers. Wouldn't it be better to, rather than provide food aid, simply give money to developing countries to subsidise lower food prices (domestically produced food in particular where appropriate). That way: lower prices for consumers in developing countries and some income protection for developing country farmers.

Anh Tran

Policy suggestions for global trade deals are easy said than done. I don't think we will have any significant improvement in this regard unless there is a serious global crisis that force the elite policymakers in both the developed and developing countries into accepting deals that are beneficial to the global poor. Right now, the influence of special interest is just too strong everywhere.

I want to say one more thing related to economics in general. Economists can come up with all the welfare-enhancing and welfare-reducing analyses they want, their suggestions are meaningless in the realistic policy making arena. Economic analysis is futile without having a realistic way of dealing with politics. Can economists come up with something that can change the mind of policy makers in their favor?

hari

Dani -

It won't fly! The constraints to Doha Round are getting messy right now...food crisis ... and may not be feasible.

Just to advise, I noticed (yesterday) Indian Gov banned all exports of non-basmati rice, pulses, wheat and edible oil. While it ordered state trading corp to lift tariffs on imported edible oil.

The senior official dealing with Doha went on record that India had reservations on the current proposal (that's on the table).

Remy

I am now taking a course in int'l economic law and participating in trade negoations simulations... From my personal quasi-experience: WTO is very bad at making concrete decisions...

*****************

Remy Piwowarski
Economics International
House of Young Econ Wolves
http://economicsinternational.blogspot.com/

Fabio

I wonder why you see Mr. Zoellick rather as a problem than as a solution, pointing out that the desires for lower food prices and completion of the Doha round are contradictory. Arguably, they are not.

Courtesy of ICTSD:

"There is a reason for the apparent contradiction, explained Per Pinstrup-Andersen, a professor of food, nutrition, and public policy at Cornell University and the University of Copenhagen. Years of low farm prices caused by reasons external to poor farmers in developing countries - notably, rich country farm subsidies - meant there was no incentive for developing country governments or the private sector to invest in agricultural production, and to build roads and the other rural infrastructure necessary to support it. Low productivity and low farm prices meant that farmers often looked for other sources of income, and became net buyers of food. Now, with prices rising, "they get caught in the middle."

"We need to get rid of the trade-distorting subsidies in OECD [industrialised] countries," the World Food Prize laureate said, adding that the time was ripe for doing so since farmers did not need them now, and production levels were currently being determined by the high market prices. Reducing import restrictions in the EU and other developed nations would also help create clear incentives for developing country agriculture.

Since the 1980s, government spending on agricultural research in developing countries has declined. Instead of research, the bulk of public farm spending has often been used to purchase social peace or electoral support by ensuring low prices for food or agricultural inputs like seeds and fertiliser. The Economist last week cited World Bank data suggesting that over the two decades since 1980, developing country crop yields grew by steadily declining rates.

Continued high prices could help many developing country farmers who are net buyers of food to become net sellers, Pinstrup-Andersen said. They could ultimately even drive up wages for landless labour, and boost demand for rural goods and services that would generate employment. To help this happen, however, there would need to be greater investment in farmers' associations and rural infrastructure, and better price transmission mechanisms to ensure farmers actually feel the higher prices in their own pockets.

"One of my concerns is that governments are going to introduce the wrong policies" in response to high prices, he said. Price controls and export taxes, he warned, could discourage the necessary additional investment in agricultural production."

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Finally, to address the concerns of the poorest food-importing countries that have been worst hit by food shortages requires immediate action. In addition to traditional emergency food aid, all food exporting countries -- the U.S., Brazil and other big beneficiaries of the current price hikes -- could commit a small proportion of their exports as food aid (or provide the cash equivalent), with this proportion increasing in line with any increase in world prices. Than

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