Western Producer reporter Barry Wilson was in Rome as world leaders gathered to find solutions to a growing food problem.
ROME – An Australian government analyst blames today’s world food crisis on the protectionism and multibillion-dollar farm subsidies of 20 years ago.
Andy Stoeckel of Australia’s Rural Industries Research and Development Corp. recently wrote an analysis explaining the causes of the record rise in food prices in 2008.
Like many analysts, Stoeckel pointed to a lack of investment in agriculture and research during the past two decades for the inability of food production to keep up with growing demand.
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“In part, this reflects the lagged effect of the period of low real prices experienced during the 1980s and 1990s, which was primarily associated with rich countries’ agricultural support policies and restrictions on agricultural trade imposed by both rich and poor countries,” he wrote.
“These policies depress traded prices, restrict agricultural trading opportunities and therefore diminish food exporters’ incentives to invest and undertake R & D.”
Stoeckel argued that while the Organization for Economic Co-operation and Development says farm support through direct government payment and regulation that distorts domestic food prices has declined from 39 percent in 1986 to 27 percent in 2006, it remains high.
“This means that in 2006, OECD farmers derived over one-quarter of their receipts from consumers and taxpayers, measured at the farmgate.”
He noted that Canada’s producer subsidy estimate fell from close to 40 percent to slightly more than 20 percent during those 20 years.
However, many Canadian farm leaders reject how the OECD measures subsidies because much of Canada’s total is based on the assumption that fixed supply managed prices at levels higher than the world average amounts to a consumer subsidy.
Despite the support decline and years of international trade talks, Stoeckel said the trend to distort markets remains strong.
“Government policies that restrict production, including restrictions on genetically modified crops in some countries and trade in food, show no signs of being dismantled,” he wrote.
“In fact, the food price crisis has created political pressures for policy to move in the opposite direction, which have resulted in many countries raising barriers to trade in food.”
Still, the Australian analysis also made the point that while there has been a sharp spike in food prices during the past year, prices for many commodities remain well below historic highs.
“Overall, the current level of real food prices is low and still well below the levels recorded during the early 1970s spike,” Stoeckel wrote.
“Real prices are, however, approaching quarter century highs for rice, beef and the grain crops.”
