There are plenty of voices blaming biofuels for the world food crisis. They all are right, and also are wrong. There is a link between biofuels and food prices — the move to biofuels to counter the high price of oil has taken massive amounts of land out of food production, resulting in higher prices for both cereals and animal feed. But biofuels are not the root cause of the price hikes; they and the high price of oil are simply the straw that broke the camel’s back. The real villain is the phasing out of subsidies in so many parts of the world at the behest of the IMF and the World Bank. More land has been taken out of food production as a result than any shift to biofuels. It has hit poorer countries particularly hard because they are the ones that have most needed IMF and World Bank support. Without subsidies, farmers in countries such as Ghana or Gabon — West Africa has been particularly affected — could not compete against cheap imports from the big producers, and gave up. But no one realized a crisis was brewing because cheap food imports continued to arrive. It is only now, with prices rocketing, that poorer countries find they do not have enough local producers to fall back on.
Last week, France announced that it would double its emergency food aid budget to counter the effects of the food crisis. But something far more coordinated, far bigger than individual government responses is needed if millions are not to starve or political instability sweep over the poorer parts of the world.
Half a century ago, the precursor of the European Union, the European Economic Community, chose to subsidize farmers to ensure that Europe never went hungry again. The policy was a brilliant success. Europe has been a net exporter of food ever since. In the 1980s and 1990s, however, with the fixation on free-market forces and the political victory of capitalism over communism, subsidies became a dirty word, not just in Europe but worldwide. They were associated with socialism and state-controlled economies despite virtually all developed economies operating subsidies of one type or another. The result was a campaign against them, led by the IMF and the World Bank. Inevitably the countries that had to accept this were the poorest, the ones that needed IMF and World Bank help the most.
Europe’s success with agricultural subsidies, which continue despite repeated efforts by European free- market ideologues and cost-cutting bureaucrats across the continent to do away with them, should be a lesson to all. They are the obvious answer to a food crisis that is only going to get worse. But in today’s interconnected global economy, they cannot be left to individual governments to operate, particularly given that the countries that most need them are the ones least able to afford them. What is needed is an international body to coordinate subsidies. Ironically, it is an obvious role for the very bodies that have so vigorously attacked them, the World Bank and the IMF. The food crisis is an international problem and it requires an international answer.
