[DEBATE] : What's the Best Course of Action for People and the Environment?

[Yoshie Furuhashi]

On Fri, May 2, 2008 at 9:30 AM, Dominic Tweedie
<dominic.tweedie at gmail.com> wrote:
> Aren't you being a trifle, shall we say, Malthusian?

Climate change won't have the same impact on everyone.  The most
vulnerable in the near future are the countries that don't produce
oil, depend on import to meet large shares of their food needs, and
have high population growth rates.

<http://online.wsj.com/article/SB120813134819111573.html?mod=googlenews_wsj>
PAGE ONE
	
Food Inflation, Riots Spark
Worries for World Leaders
IMF, World Bank
Push for Solutions;
Turmoil in Haiti
By BOB DAVIS and DOUGLAS BELKIN
April 14, 2008; Page A1

WASHINGTON -- Finance ministers gathered this weekend to grapple with
the global financial crisis also struggled with a problem that has
plagued the world periodically since before the time of the Pharaohs:
food shortages.

Surging commodity prices have pushed up global food prices 83% in the
past three years, according to the World Bank -- putting huge stress
on some of the world's poorest nations. Even as the ministers met,
Haiti's Prime Minister Jacques Edouard Alexis was resigning after a
week in which that tiny country's capital was racked by rioting over
higher prices for staples like rice and beans.

<http://s.wsj.net/public/resources/images/P1-AL176_FOODPi_20080413204705.jpg>
[photo]
As food prices soar, protests are breaking out around the world,
including this riot Saturday in Port-au-Prince, Haiti.

Rioting in response to soaring food prices recently has broken out in
Egypt, Cameroon, Ivory Coast, Senegal and Ethiopia. In Pakistan and
Thailand, army troops have been deployed to deter food theft from
fields and warehouses. World Bank President Robert Zoellick warned in
a recent speech that 33 countries are at risk of social upheaval
because of rising food prices. Those could include Indonesia, Yemen,
Ghana, Uzbekistan and the Philippines. In countries where buying food
requires half to three-quarters of a poor person's income, "there is
no margin for survival," he said.

Many policy makers at the weekend meetings of the International
Monetary Fund and World Bank agreed that the problem is severe. Among
other targets, they singled out U.S. policies pushing corn-based
ethanol and other biofuels as deepening the woes.

"When millions of people are going hungry, it's a crime against
humanity that food should be diverted to biofuels," said India's
finance minister, Palaniappan Chidambaram, in an interview. Turkey's
finance minister, Mehmet Simsek, said the use of food for biofuels is
"appalling."

James Connaughton, chairman of the White House's council on
environmental quality, said biofuels are only one contributor to
rising food prices. Rising prices for energy and electricity also
contribute, as does strong demand for food from big developing
countries like China.

But beyond taking shots at the U.S., there was little agreement this
weekend on what should be done. Mr. Zoellick pushed the ministers to
focus on the food issue in a dramatic Thursday news conference at
which he held up a 2-kilogram (4.4-pound) bag of rice, which he said
would now cost poor families in Bangladesh half their daily income. He
kept up the pressure over the weekend. In a Sunday news briefing, he
said, "We have to put our money where our mouth is now -- so that we
can put food into hungry mouths."

But the weekend's meeting produced few concrete results. Mr. Zoellick
recently urged rich nations to contribute another $500 million to the
United Nation's World Food Program, but he said that the U.N. has
received commitments for only about half the money.

Integrated Response

Meanwhile, the IMF's board of governors -- basically, the world's
finance ministers, who run both the IMF and World Bank -- urged the
IMF to work with the World Bank for "an integrated response through
policy advice and financial support."

On Sunday, the committee that oversees the World Bank noted that
"large groups of poor people are severely affected by high food and
energy prices across the developing world." The committee echoed the
IMF committee's call for "timely policy and financial support to
vulnerable countries" and urged rich countries to be more generous in
"immediate support for countries most affected by the high food
prices."

The World Bank plans to nearly double its agricultural lending to
Africa next year to $800 million, and is urging members to ramp up
relief for hard-pressed nations. The World Bank, IMF and big
industrialized nations also are pushing for the completion of the Doha
global trade talks, though cutting food subsidies in the U.S. and
Europe under a trade deal would boost prices of food for impoverished
importing nations.

Last week, British Prime Minister Gordon Brown urged the G7 nations --
the U.S., Britain, Canada, France, Germany, Italy and Japan -- to
develop a comprehensive strategy for the food problem, encompassing
trade, agricultural productivity, technology, biofuels and short-term
aid for poor countries. In the past, Britain has taken the lead in
pushing the G7 to write off the debts of the world's poorest nations.

The situation in Haiti underscored some of the problems afflicting the
world's poorest countries. Haiti has enough food in the marketplace to
feed its populace, but prices have increased beyond the means of many
of the urban poor to pay for it, said Michael Hess, an administrator
in the U.S. Agency for International Development's Bureau for
Democracy, Conflict and Humanitarian Assistance. "People are making
two bucks a day," he said. "And we're seeing food prices go up around
the world."

Wave of Protectionism

In the Philippines, the world's biggest importer of rice, a shortage
of the grain has become acute. The government is considering a
moratorium on converting agricultural land to construction of housing
developments and golf courses. The government also is urging fast-food
restaurants to offer half-portions of rice to slash the country's rice
bill.

Aggravating the problem, in some countries food inflation has prompted
a wave of protectionism. Countries usually impose trade barriers to
imports to protect local industries and try to boost exports. But
food-trade protectionism works the opposite way. Recently at least a
dozen of 58 countries surveyed by the World Bank have reduced tariffs
to food imports and erected barriers to exports in hopes of
restraining food prices domestically and moving toward
"self-sufficiency."

"Food Trade":
<http://s.wsj.net/public/resources/images/NA-AQ070A_FOOD_20080413193627.gif>

India, home to more than half the world's hungry, is restricting grain
exports, including a ban on the export of non-basmati rice. Taxes on
edible oils, corn and butter have been decreased or eliminated.

Egypt similarly halted rice exports for six months as of April 1. The
price of cereals and bread there has climbed by nearly 50% over the
past 12 months. Eleven people have died in the past two months in
incidents related to lengthening bread lines. The shortage compelled
President Hosni Mubarak to order the army to bake additional loaves.

The global effect of export barriers, however, is to drive food prices
even higher than they would be otherwise. Such policies "distort
global prices," said Mr. Simsek, the Turkish finance minister, in an
interview. Rather than erect barriers, he said, Turkey plans to pick
up the pace of constructing irrigation canals near dams in Anatolia,
in southeastern Turkey.

Arvind Subramanian, a former senior IMF researcher, said that when
countries adopt restrictive trade policies regarding food, "it becomes
a bizarre kind of beggar-thy-neighbor. You're not trying to sell more
to the other guy; you're trying to keep more in your own country."

With the international financial institutions working on a slow track,
countries have been cutting their own deals. Ukrainian President
Viktor Yushchenko said on Tuesday that he had agreed to let Libya grow
wheat on 247,000 acres of land in the Ukraine. In exchange, Libya
promised to include the former Soviet republic in construction and gas
deals.

Brazil recently invited Egypt's minister of commerce to discuss a
possible trade deal which would have a strong agriculture component.
China also cut its first free-trade deal with a rich country, picking
New Zealand, a major food exporter, and is talking about a pact with
Australia, another big agricultural producer.

Meanwhile, Uganda plans to sell more coffee, milk and bananas to
India. "Our problem is too much food and little market," Uganda
President Yoweri Kaguta Museveni told reporters, according to news
reports,

About 18 of the countries sampled by the World Bank also are boosting
consumer subsidies and instituting price controls. That prompted a
warning from U.S. Treasury Secretary Henry Paulson to "resist the
temptation of price controls and consumption subsidies that are
generally not effective and efficient methods of protecting vulnerable
groups." He said, "They tend to create fiscal burdens and economic
distortions while often providing aid to higher-income consumers or
commercial interests other than the intended beneficiaries."

Better-Targeted Subsidies

Instead, the World Bank's Mr. Zoellick urged countries to look at
better-targeted subsidies -- such as providing food in exchange for
work, or increasing school-lunch programs for poor families, so that
children can take food home to their families.

During informal conversations and interviews, ministers mainly agreed
that the U.S. policies on biofuels were especially harmful. U.S.
ethanol is made from corn, which, ministers said, could be exported to
feed the hungry, and benefited from tariffs that block Brazilian
ethanol, which is produced much more efficiently from sugar cane.

The White House's Mr. Connaughton said the U.S. is working on
developing "second generation" biofuels that would use varieties of
grass or agricultural wastes -- not food -- as source material.
"That's where we need to get to go," he said.

The World Bank also has blamed the boom in biofuels for the rise in
global food prices. That has put Mr. Zoellick in a ticklish position.
Before taking his job at the World Bank, he was U.S. Trade
Representative, and defended U.S. agricultural positions. In his
Thursday news briefing, he didn't mention the U.S. by name, but he
praised sugar-based ethanol of the sort made in Brazil and questioned
whether tariffs to block the fuel -- such as the U.S. uses -- make
"economic sense."

--John W. Miller in Brussels and Scott Kilman in Chicago contributed
to this article.

Write to Bob Davis at bob.davis at wsj.com and Douglas Belkin at
doug.belkin at wsj.com

-- 
Yoshie
<http://montages.blogspot.com/>