MeatyREADS

The Food Crisis

April 26, 2008 – 11:27 pm by BH

Poor rice yields are not the major problem. The United Nations Food and Agriculture Organization estimates that global rice production increased by 1 percent last year and says that it is expected to increase 1.8 percent this year. That’s not impressive, but it shouldn’t cause starvation.

The more telling figure is that over the next year, international trade in rice is expected to decline more than 3 percent, when it should be expanding. The decline is attributable mainly to recent restrictions on rice exports in rice-producing countries like India, Indonesia, Vietnam, China, Cambodia and Egypt.

[…] Export restrictions send a message to farmers that their crops are least profitable precisely when they are most needed. There is little incentive to plant, harvest or store enough rice — or any other crop, for that matter — as a hedge against bad times.

That’s Tyler Cowen, writing this week’s Economic View column. Fortunately Canada is stepping into the breach by paying to put down pigs. Wow, talk about making things more difficult for ourselves. Haitians, you’ve probably heard, are eating mud cookies. The Economist had a cover story on the food crisis last week, and most major newspapers have followed suit this week. This isn’t a return to the Great Depression and the fields are not dry. Mostly the problem is man made and reflects many, many bad policies. It is public policy at its saddest.

Update: Dani Rodrik has a minor quibble with the article. I think his post is right but I didn’t think Tyler implied what Dani read. But there are different effects on prices for exporting and importing countries and it’s worth emphasizing the differences.