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Economy
Thursday, May 1, 2008
Hungry huff

Global food prices have risen 140% between the period January 2002 and January 2008. A major reason is the alternative use of corn. In the United States by the end of last year 25% of corn production was now being diverted to the biofuels industry. The global haul is 11%.

Rising food prices have caused street protests from Mexico to India to Senegal. US and EU ethanol subsidies are partly to blame. But by imposing tariffs on imports and exports, the governments of poor countries are at least as responsible.
“A whopping 70% of the world’s trade barriers are imposed by governments of poor countries,” said Alec van Gelder, Network Director of International Policy Network: “Governments that really care about their people should remove those tariffs immediately.”
The Indian government imposes average tariffs of over 60% on agricultural goods.
According to the UN FAO there are 200 million underfed people in Africa, yet average tariffs on agricultural goods between Sub-Saharan African countries are 34%.
Nigeria has actually banned imports of various staples at different times, including wheat, rice, maize and vegetable oil.
The removal of tariffs on fertiliser and other agricultural inputs would lead to increased crop productivity, improving the lives of farmers and reducing further the cost of foodstuffs. Average fertiliser use in poorer countries is 107kg per hectare. In Africa it is only 8kg (yes, eight). Tariffs on fertiliser imports are a major reason for this low use-rate.
The removal of subsidies to biofuels (including requirements to include a proportion of such fuel in petrol and diesel – such as those being implemented in the EU) would also reduce food prices and must be a priority for rich countries.
Some countries have recently imposed tariffs and bans on exports of foods. While such trade restrictions temporarily reduce local prices, they increase prices in importing countries, result in reciprocal bans, and reduce the incentives to produce those foods in the next season – leading to reduced global supplies.
“Reducing agricultural trade barriers would increase supply and reduce the cost of food, benefiting the very poorest people in the world,” Caroline Boin, IPN’s Environment Programme Director said.
International Policy Network is a London-based think-tank which seeks to educate the public about the role of markets and their underlying institutions

Credits and footnotes:
• Number of hungry people in Africa - FAO figure
• Sub-Saharan countries’ average tariff of 33.6%, Global Economic Prospects, World Bank 2004, quoted on page 9 (rounded up to 34%)
• 70% of the world’s trade barriers are imposed by governments in poor countries on people in other poor countries - “The Benefits of Trade for Developing Countries” from the Office of the United States Trade Representative. Trade Facts, June 2006
• Nigeria: More Goods to Join Ban List, This Day (Lagos), 25 March 2004
• India’s tariffs - WTO
• Life expectancy in Sub-Saharan Africa - UN
Articles on this topic
• Rising food prices, protectionism and the poor, Business Day (South Africa), 20 March 2008, by Caroline Boin and Alec van Gelder
• Warped Policies Plant Hunger, Business Daily (Kenya), 29 October 2007, by Caroline Boin
• World trade begins at home, New Times (Rwanda), 17 December 2007, by Alec van Gelder
Contact: International Policy Network
Caroline Boin, Environment Programme Director caroline@policynetwork.net +44 (0)207 836 0753
Alec van Gelder, Network Director alec@policynetwork.net +44 (0)20 7836 0750

Copyright © Insurance Times and Investments® Vol:21.4 1st May, 2008
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