April 15, 2008

The Missing Element To Understand High Food Prices: Past Developed Countries Policies Matter

These days there is a lot of media coverage on high rising food prices and their impacts on developing countries. Media, scholars, NGOs and International Organization underline 3 causes that explain the rising of food prices:

  • Emerging Markets growing demand of food (notably milk and meat).
  • Growing Biofuels production.
  • Market speculation.

All these elements played a crucial role in increasing food prices. Nevertheless, there is another explanation that it is never mentioned: the long-term impact of developed countries subsidies and protectionism.

In fact, developed countries dumping reduced and reduce the incentive for developing countries farmers to produce more food. What is more, dumping on international and local markets in the last couple of decades pushed out of business an important number of developing countries. The consequence was a reduction of the (growth of) developing countries food production. In fact, for example, the number of ha used for cereals production in developing countries decreased of more than 13% (FAO stats) since 1975.

Developed countries are in large part responsible of the current situation (also because of the negative impact on developing countries agriculture of the liberalization promoted by developed countries in the 80s and the 90s). They should pay for their responsibilities.

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