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The farm bill and the food crisis

ASK THIS | May 01, 2008

What with soaring prices, shortages of staples and energy concerns, this year’s farm bill, now in conference, could have major national and international ramifications.

By Joseph A. Davis

Food riots are rocking Haiti. High prices and staple food shortages have not only brought malnutrition to nations like Egypt, Indonesia, Cameroon, and Peru, but are threatening to destabilize governments. UN agencies are pulling alarms for a "global food crisis."

The price of a bagel in Bethesda, Md., is threatening for the first time to spike above a dollar. It's the wheat prices, reports Dan Morgan in the Washington Post. And the Post, which still sets agendas, has been running a front-page series on the food crisis.

It's a serious and complex issue, linked to many facets of our health, economic well-being, environment, and energy situation.

Corn prices spiked in the past 18 months to near double what they had been. The problem goes well beyond increased demand for corn for ethanol. Wheat and rice prices are also soaring. In fact, the food and energy markets have become linked in many new and profound ways. Fuel is needed to grow food and deliver it to market – and fuel prices are soaring. Fertilizer is also heavily dependent on petrochemicals and energy – and fertilizer costs have also risen so high that farmers worldwide are using less.

It gets worse. Many commodity prices, both food and fuel, are actually going up because the U.S. dollar and economy are weakening. Not only are more dollars required to buy the same barrel of oil or ton of rice, but investors see commodities as a better investment than stocks. The result is speculative pressure driving the price of many commodities higher. When Costco recently limited how much rice customers could buy in a single purchase, it set off a panic-hoarding frenzy, even though there was not really any shortage of rice in the U.S.

Then there are the environmental threats. A relentless drought has all but killed the wheat crops in Australia, the country which has for decades helped the U.S. feed an often-starving world. Many think the Australian drought is a symptom of global climate change. Whether it is or not, a whole host of environmental limits are putting a crimp on global food production: bad weather, water shortages or conflicts, and soil depletion to name a few. Even the U.S. faces such limits – as irrigators in California learned last year when threatened with water rationing to protect endangered smelt in the fragile Sacramento-San Joaquin delta.

Just reading the U.S. papers, you would have to work hard to discover that Congress is poised to pass a $300-billion farm bill. Other news has swept it from the front pages of all but a few Midwestern dailies. Yet this farm bill could impact not only the global food crisis, but the price of tortillas in Texas and those bagels in Bethesda. It’s time the media started asking questions about it.

Some Questions to Ask About the Farm Bill (Now in conference):

1. Does it raise, lower, or maintain subsidies for corn-based ethanol?

2. How does it treat subsidies for other biofuels, and how will this affect commodity prices and the environment? Do alternative biofuels have a level playing field vis a vis corn ethanol?

3. Does it encourage or discourage the planting of additional acres for food and energy crops?

4. How does it change incentives for soil and water conservation? Will commodity subsidies encourage or discourage efficient use of water?

5. How will the bill's provisions affect price and availability of the major staple food commodities like corn, soy, wheat, and rice?

6. How will the bill's subsidies change as farmers get higher prices – and returns – for major staple crops?

7. How will the bill's trade provisions affect staple food commodity prices and food availability in hungry nations?

8. What will happen if President Bush vetoes the bill, as he has threatened to do?

9. How do the major presidential candidates stand on the key issues of the farm bill – not only how it affects the well-being of farmers, but how it affects the well-being of U.S. consumers and the hungry people of the world?

Some Background Resources for Food Policy Coverage

-- Washington Post "Global Food Crisis" feature series portal page


-- UN World Food Programme


-- UN Food and Agriculture Organization


-- USDA Economic Research Service, Farm Policy briefing page


-- American Farm Bureau


-- Sustainable Agriculture Coalition


-- International Agriculture Assessment


-- House Agriculture Committee's Farm Bill Homepage http://agriculture.house.gov/inside/FarmBill.html

-- Senate Agriculture Committee's  Homepage


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