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Politics are the cause of food shortages

EU Referendum: A political crisis
However, a fascinating article in The Sunday Times (business section) today points to the real cause – which is none of the above – and also underlines a salient but uncomfortable fact – "global food crisis" there may be, but there is actually no global food shortage.

The story in The Sunday Times is about rice...Behind this is a tale which verges on the surreal, going back to the early eighties (and perhaps before) when the United States was getting extremely concerned at its balance of trade deficit with Japan. By the late eighties, this had become politically highly contentious and had focused around reciprocal deals on the sale of US rice to Japan, as a way of compensating for the inflow of manufactured Japanese goods.

To cut a very long story short, in 1995, Japan eventually caved in to huge pressure and, under the aegis of the WTO "Uruguay Round", agreed to accept from the US some 770,000 tons of rice a year,...However, there was a slight problem. Japan was is self-sufficient in rice and there was no domestic market for US imports which, in any case were a different variety and regarded as inferior by Japanese consumers. Despite continued efforts of US growers to make their product more acceptable, only small quantities of the imported rice was used – and then only for manufacturing – or allowed to rot. The one thing Japan was not allowed to do was re-export the product.

As a result, Japan has built up a huge surplus of unused American rice, currently estimated at 1.5 million tons.....

The point that emerges from this is the cause of what turns out to be a "perceived" shortage is in fact an artificially induced phenomenon, arising entirely out of subsidy and trade distortions, overlaid with a heavy dose of politics.

And from that, the lessons are clear. If market mechanisms are allowed to work, agriculture is well able to feed the current world population, and accommodate population growth for the foreseeable future. The only thing standing in the way of that are the politicians. We do not have a food crisis – we have a political crisis.

Comments

Add to that the recent US initiative, offering money to African countries to buy grain - grain which the US cannot itself provide to them because NGOs have convinced some countries to ban US imports of food for fear of GM foods slipping in.

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