Tuesday, June 03, 2008

Are high food prices a problem?

In the short term yes, especially for the poor, however in the long term it means that there will be money to invest in agriculture. The UN has a plan as reported on the BBC here.

For far too long various governments have interfered with food prices, subsidising here, imposing import or export duties there and we have a mess. Vast areas of agricultural land lye idle or underutilised. African farmers can't make enough of a living so move to the cities.

Higher food prices make it worthwhile to bring areas of land back into production and jobs for the rural poor in places like Africa. With a bit of luck we can also stop subsidising our farmers to grow things to dump in other peoples markets as well. This is good.

1 comment:

Chervil said...

I agree with you that subsidies are no good, as they distort the market. This not only works against farmers in poorer countries, it also prevents efficiency gains and fair market conditions. However, I suspect that the high oil price may contribute to a reduction in food exports to poorer countries even without changes to subsidies, as the cheap imports dumped there from Europe suddenly become much more expensive.