"How To Win The War Against Food Inflation?"

Around the world, governments are trying every play in their books to stave off food riots — sending troops to hand out food in slums, ordering sweeping wage increases, banning grain exports and suspending futures trading. The United States is promising millions in emergency food aid.

But many experts call these Band-Aid solutions, saying what's needed is a radical rethink of how the world gets its food.

However, they're deeply divided about which way to go.

Some would in effect reverse the fundamentals by investing massively in small farmers, instead of letting them sink in a free-trade world. That would be very different from what the U.S. has long been evangelizing — take uncompetitive food producers off the land and put them in new jobs with paychecks that would buy them cheap food, efficiently farmed.

Others argue that the problem is not that trade is too free, but that it should be freer. U.S. and European farm subsidies are bad enough, they say, and things will only worsen if the present crisis triggers more restrictions.

Those at the sharp end of rising prices feel like victims of a bait-and-switch maneuver — when they quit the land, they were promised food would get cheaper, and now it's costlier.

"Not only are farmers not growing food, but we are going hungry because we can't afford the foreign food that drove us off our farms," said Mario Aguila, 48, who left his farm in Oaxaca state because he could no longer support his family.

The pain inflicted on Mexican farmers by NAFTA, the North American Free Trade Agreement, was supposed to be offset by cheap grains for consumers, said Jeff Faux of the Washington-based Economic Policy Institute. "But when the U.S. Congress realized the potential of ethanol, corn was diverted there and Mexico was left high and dry," Faux said. "The corn turned out to be not that cheap."

The campesino federation estimates 200,000 Mexicans a year have fled the countryside for the city or the United States since NAFTA was launched in 1994.

World Bank chief Robert Zoellick, a former U.S. trade representative, defended trade pacts and said they serve to lower world food prices, not cause them to increase.

"NAFTA is one of the reasons prices are not higher," Zoellick said Wednesday at a Mexico City news conference.

There are those who say it's not free trade that's to blame but the sudden seismic shift in the global economy — ballooning oil prices, a biofuel boom that is gobbling up farmland, and a voracious Chinese market for food. Get used to it, they say — the era of cheap food is over.

But Tyler Cowen, a professor of economics at George Mason University, recalls that the last big food price increase, in the 1970s, was followed by agricultural advances known as the "green revolution" that hugely increased the supply and brought down costs, and "If we don't mess this up we can expect the same today."

However, he worries that U.S. and European Union farm subsidies and tariffs, plus grain export bans and taxes triggered by the latest crisis, will make things worse.

Meanwhile, rice alone has more than tripled in price since January. Corn, wheat and other staples also have soared beyond the ability of millions to pay for a healthy diet.

Some blame price inflation on speculative trading of futures — contracts to buy or sell grains, metals, oil and other commodities at a set price on a future date.

India on Thursday suspended futures trading in four major commodities, including soybean oil, chick peas and potatoes, in a bid to tame rising inflation driven largely by the soaring cost of food.

So how does the world get out of this mess?

U.N. agencies recommend truly leveling the playing field by cutting subsidies to huge agricultural companies, ending export bans, lowering tariffs and increasing investment in small-scale agriculture, one farm at a time.

"This could be a window of opportunity for governments to relaunch the small-farming sector and traditional farming," said Fernando Soto, the FAO's policy chief for Latin America and the Caribbean.

U.N. Secretary-General Ban Ki-moon says a "green revolution" in Africa, fueled by new techniques and agricultural investment, could double African food production in just a few years for "a relatively modest" $8 billion to $10 billion a year.

But the world can't donate itself out of this crisis, said Paul Polak, founder of International Development Enterprises, an aid organization that says it has helped 17 million small farmers escape poverty by selling them low-cost technology such as water-saving drip irrigation systems and foot-powered water pumps.

Polak says of the world's 525 million farms, 450 million are less than five acres, with the poorest working a single acre or less. Modern methods — especially in irrigation and crop rotation — won't work well there, he said.

"We need a revolution in small-plot agriculture to allow farmers to grow the food they need to eat and to grow high-value crops they can sell on the market to lift themselves out of poverty," Polak said.

Cowen says the idea is good, but points to Brazil, which has made great strides in strengthening its food security by allowing its farms to get larger and more corporate.

"Small farms," he says, "are a sign that your agriculture is very inefficient."

     The problems of global food inflation are very complex and the solutions to global food inflation are equally complex. Clearly one solution is a global moratorium on corn ethanol gas and futures trading on food crops. As I see it banning exports on food crops only exacerbates global food inflation because so many nations are dependent upon food imports. These nations that currently depend upon food imports will have to start growing food themselves. In my opinion putting money into small farms is wasted money. Large corporate and cooperative farms get more yield for less investment. For right now the world needs a kind of modern day feudalism or tenant farming where farmers are paid fair wages for their crops as they farm for large corporate or government entities. Because of the effects of global warming many farms will have to turn to greenhouse farming. Donations of food to hungry nations is only a very short term solution. "Give a man a fish you feed him for a day. Teach a man to fish you feed him for a lifetime".

    No nation can be isolationist when it comes to food inflation. Whether Ron Paul or anybody else likes it or not, we live in a global economy. Free trade and cooperation between nations is absolutely necessary for the survival and well being of every nation's citizens. I believe it is in the national interests of every nation to work together to solve the problems of food inflation and the effects of global warming. Capitalists and socialists will have to work together for the good of all, in my opinion.

tags: food inflation  business  capitalism  disaster capitalism  economy  free enterprise  social  society  un  farming  corporate farming  cooperative farming  

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