NCPA - National Center for Policy Analysis


April 17, 2008

Today's high and volatile prices for food staples make it increasingly costly for governments to cushion the blow for consumers, yet many governments have started to remove import tariffs and impose export bans in an attempt to transfer income directly from farmers to consumers -- in effect preventing farmers from selling their produce at the highest price they can find on international markets, says the Financial Times.

Such measures may alleviate domestic supply problems in the short term, but they also create shortages in global markets, accentuating the problems of those who have to depend on imports.   Particularly vulnerable are those poor countries, many in sub-Saharan Africa, whose variable and low-productivity agricultural sectors make them highly dependent on imported staple foods, says the Times:

  • Grains (including rice) account for 63 percent of the calories consumed in low-income Asian countries and around half in sub-Saharan Africa.
  • Eritrea, for example, imports 87 percent of its grains and the country's export earnings cover only 25 per cent of its food import bill, the rest being aid from rich donor countries.
  • African countries typically export tropical crops such as coffee, tea and fruit, whose prices have not kept pace with the basic staples.

The solution is to create market signals that mean more production, better technology and more stability.  Export prohibitions are not a solution for anyone, says Pedro de Camargo Neto, former chief agricultural negotiator for Brazil.

Source: Alan Beattie and Javier Blas, "Precious Grains," Financial Times, April 14, 2008.


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