Food Prices and Those Farm Subsidies
Heather Timmons reports:
When it comes to trade, Western farming subsidies undercut agricultural production in fertile areas of Africa, India’s commerce minister, Kamal Nath, said in a telephone interview, repeating the point that Americans waste more food than people in many other countries.
I was rather surprised at the statistics that Americans consume 3770 calories per person per day. And we’re surprised that so many of us are fat? Dean Baker was surprised at something else:
Of course the problem is that food prices are too high, causing people to go hungry. The truth is that the U.S. and European subsidies that cause the Post, the NYT, the World Bank and many NGOs to get apoplectic have the effect of lowering world food prices. That means that fewer people go hungry than would be the case without these subsidies. This isn’t rocket science, it’s almost definitional. The U.S. and European effectively pay their farmers to keep farming, thereby producing more food than otherwise would be produced. This may have negative consequences for farmers elsewhere in the world, but it does mean that supply is greater and prices are lower than they would be in the absence of the subsidies.
If we are talking the world supply of food, then Dean is correct. Kamal Nath, however, seems to be talking about the supply of food coming from Africa which is likely being reduced by the increased competition from the West. If we had perfectly free trade of food, the net impact of these subsidies on food prices in India would be to lower prices as Dean suggest. But the current world market is riddled with all sorts of government interference in the trade of food.