Institute Notes: A Dialogue on Overcoming Hunger and Poverty

A quick news round up

There are a few articles that I think are worth calling attention to:

There are signs that farmers in India, China, Australia and other parts of the world are beginning to respond to higher food prices by planting more food crops. This will certainly ease pressures on the record high prices that we have seen in the last 18 month--but particularly in the last six months. This is good news for consumers. The story suggests that rice and grain prices have not come down as much as wheat and soybean. A WSJ article and reports from the World Bank and USDA suggest that while prices have and will continue to decline in coming months as a result of a supply response, it is unlikely that they will go down to pre 2004 levels, when they were quite low. Grain prices in particular will remain high because of the ethanol mandates and subsidies in the US that are diverting corn and land away from food and feed production. For people living in extreme poverty and hunger, an easing of food prices may be of some comfort but they are still very vulnerable to even the slightest fluctuations and will continue to face enormous challenges feeding their families. They need the skills, tools and physical strength to lift themselves out of poverty once and for all and that is where development assistance, trading opportunities, and good governance come in.

This morning's New York Times has a piece by Roger Cohen about Ghana--the kind of story you don't see much in our media about Africa or anywhere in the developing world quite frankly. But many developing countries are making progress, leap frogging technologies, facing up to challenges and there is an energy and intensity about the changes that is quite enticing. Of course there are a great many challenges, far too many people (862 million) go to bed hungry but as Cohen acknowledges, very few of these type of stories make the papers.

Agricultural Trade in the Aftermath of Doha

The definitive collapse of the WTO Doha Round is an overall setback for global food security, but the successful completion of the Doha Round would have entailed costs of its own. A recent study – The Promise and the Perils of Agricultural Trade Liberalization – Lessons from Latin America – by WOLA (the Washington Office on Latin America) and GDAE (Global Development And Environment Institute at Tufts University) points out how agricultural trade liberalization in Latin America has been considerably less than an unqualified success for the rural sector in the countries examined (principally Brazil, Argentina, Bolivia, El Salvador and Mexico).

The question the study seeks to answer is whether the sweeping agricultural trade liberalization undertaken, at the encouragement of the U.S., the IMF and World Bank, have resulted in sustainable rural development. And the answer is, “not really.”

Doha Trade Round Talks Collapse ----- Again

After nine intense days, WTO members have again walked away from negotiations without a deal. We’ve heard the death knell for the Doha trade round several times over the past two years. But despite assertions from some that talks could yet be revived (http://www.reuters.com/article/newsMaps/idUSL943708520080729), this collapse looks to be for real. (http://ap.google.com/article/ALeqM5hnRUkzvRHgL5sj3sGymTKixh3DyAD9289GNG0)

Once again, the major sticking point was agriculture – protectionism vs. the desire to open markets and increase global trade. And again, protectionist sentiments seem to have prevailed, despite the clear evidence of greater mutual economic gain through expanded trade.

Free Trade and Stethoscopes

For the most part, free trade has been a boon to poor people around the world. Free trade, maybe more than anything, has helped raise hundreds of millions of people out of poverty. There is of course a downside. In the United States, many low-skill workers have lost their jobs because of free trade.

Last year, I toured Michigan and Ohio and talked to lots of people who lost manufacturing jobs because their plant had moved overseas. It was always sad, sometimes poignant, and I can't minimize these people's pain. We need better safety nets for people whose jobs vanish because of free trade. Basically, we need better safety nets in this country that all people could benefit from, not just those who lose their jobs as a result of foreign competition.

Senate Farm Bill Misses the Mark

For those who have been closely following the farm bill fight, it’s old news that another milestone has been reached in efforts to reauthorize the farm bill. For those who, in this holiday season, have more important things to think about than the arcane parliamentary proceedings of the Senate, what you need to know is that despite a majority of support for several reform-oriented amendments, the Senate passed bill is the equivalent of a big lump of coal to fill your Christmas Stockings. The process was a fairly rocky one – Ken Cook over at the Mulch Blog has a good post on the tricky politics behind the process and outcome. In the end, despite the well coordinated efforts of groups like Bread for the World, Oxfam, The Environmental Working group, Environmental Defense, Taxpayers for Common Sense, and scores of others, reform efforts were thwarted.

A New Trade Deal for Africa?

The EU-Africa Summit was held in Lisbon this weekend. Everything from climate change to peace and conflict issues were discussed. But what garnered a good deal of attention was the issue of trade. The EU is currently negotiating a trade deal with African, called Economic Partnership Agreements (EPA) that will replace the existing preferential trade system extended to countries in Africa, the Caribbean and Pacific (CAP).

Many African governments did not embrace the proposal with open arms. A Press Release from Oxfam highlights this point and argues that pushing African countries to sign a new trade deal is not fair. Clearly, African governments will need time to review the current proposal and decide whether it makes good economic sense to sign before the deadline at the end of this month.

More Challenges to US Farm Subsidies

Canada and Brazil are set to ask the World Trade Organization Dispute Settlement Panel to examine whether US farm support payments violate limits on the amount of subsidies WTO member states can offer domestic producers. The joint complaint asks the WTO to determine whether US subsidies paid to producers of rice, soy, and corn among other commodities, exceed the Amber Box cap for trade-distorting payments. Under the current WTO agreement, the United States cannot spend more than $19.1 billion per year on such subsidies. The complaint alleges that US spending has exceeded this cap every year between 1999 and 2005, except 2003.

The Cotton Case

A recent decision by the World Trade Organization puts a fine point on the unfairness of US farm policy, particularly cotton subsidies. Farm subsidies are rightfully blamed for exacerbating the plight of poor farmers in developing countries such as Burkina Faso. This issue is explored in-depth in the 2007 Hunger Report, Healthy Food Farms and Families.

The decision is the latest in what has already been a long and drawn out dispute between Brazil and the United States. Brazil claims U.S. cotton subsidies violate WTO rules and depress world prices for cotton. The case has dragged on for some 5 years already, and this most recent decision certainly does not signal an end to the fight. Enough procedural steps exist to drag the dispute out indefinitely.

This sad state of affairs comes thanks to competing interests, some which seek to create a more free, more fair international trading system, and others which simply want to protect the status quo. Subsidies are, after all, big for business. The Environmental Working Group finds that cotton subsidies amounted to more than $3 billion in 2005 alone.

It's unfortunate that millions of the world's poorest people have to be stuck in the middle.