Comments on: Food Price Kerfuffle: Sen Weighs In

By: gaddeswarup

gaddeswarup — Fri, 30 May 2008 04:46:27 +0000

Caution: Tentative comments. I have no expertise in this area. Improvement in the short term; Center for Global development reported on May 9 http://www.cgdev.org/content/publications/detail/16028/ “Because of its WTO commitments under the Uruguay Round Agreement, Japan imports a substantial amount of medium-grain rice from the U.S. and long-grain rice from Thailand and Vietnam. Tokyo, however, seeks to keep most of this rice away from Japanese consumers (perhaps fearing a realization that the taste of foreign indica rice is not so bad and a bargain compared to the $3,900-per-ton locally-produced short-grain varieties of japonica rice). But under WTO rules, the government cannot re-export the rice, except in relatively limited quantities as grant aid. So the Japanese government simply stores its imported rice until the quality deteriorates to the point that it is suitable only as livestock feed and sells it to domestic livestock operators. Last year about 400,000 tons of rice were disposed of in this manner at a huge budget loss, displacing an equal quantity of corn exports from the U.S. and thus displeasing another constituency, the U.S. corn growers. Japan currently has over 1.5 million tons of this rice in storage, roughly 900,000 tons of U.S. medium-grain rice and 600,000 tons of long-grain rice from Thailand and Vietnam. Most of this rice is in good condition, and is incurring large storage charges. Japan would be very happy to dispose of this rice to the world market, but it cannot do so without U.S. acquiescence.(Technically, Thailand and Vietnam will also need to give approval for rice supplies originally imported from their countries to be released to world markets.)” Latest report says that CGD’s research and Arvind Subramanian’s testimony before the House Financial Services Committee have resolved this issue, rice prices have started coming down but more has to be done. See http://blogs.cgdev.org/globaldevelopment/2008/05/rice_prices_tumble_but_remain.php For the long term, as Sen says “The first task is to understand the nature of the problem”. Low food prices discourage farmers where as high food prices are disastrous for the urban poor. Food self-sufficiency with higher food prices vs rest of the development etc. If there are global instutions for food storage and distribution, many countries can focus on what they can do better with out worrying about self sufficiency in food. Such strategies need international co-operation which seems to come about mainly in times of crises. But sometimes food is used as a threat and weapon (I think that this happened during Indira Gandhi-Lyndon Johnson regimes). This sort of problems and global warming etc may be what Sen had in mind when he said that the first task was to understand the nature of the problem.

By: Bookaholic

Bookaholic — Thu, 29 May 2008 19:30:43 +0000

I think he wanted to emphasize the basic growth assymetries which are causing the food crisis, oil prices being a supporting cause ie the food crisis was inevitable independant of the oil situation

By: Bridget Jones

Bridget Jones — Thu, 29 May 2008 04:09:22 +0000

10 Â· Harbeer said

8 Â· portmanteau said
what of the people starving now?
See my perfect solution in comment #6. Let them eat meth!

Btw many Afghan farmers are probably happy with the rising food price and are provng to be a shot in the arms for Bush camp ;)

Afghans swap poppies for wheat as food costs soar

By: Bridget Jones

Bridget Jones — Wed, 28 May 2008 22:56:03 +0000

I wonder why Sen didn’t talk about increased transportation cost due to oil price increase. This is one of the most direct and noticeable factor.

By: Harbeer

Harbeer — Wed, 28 May 2008 22:09:11 +0000

11 Â· Ennis said

I read that as "Let them eat methi" and I thought ... yummmmm .... methi!

You haven't lived until you've tried my mom's meth di roti. She grows it in her own backyard ~~garden~~ lab. One meth di roti will satisfy your hunger pangs and give you energy to work for days. Days!

By: Ennis

Ennis — Wed, 28 May 2008 21:28:55 +0000

Let them eat meth!

I read that as "Let them eat methi" and I thought ... yummmmm .... methi!

By: Harbeer

Harbeer — Wed, 28 May 2008 21:15:28 +0000

8 Â· portmanteau said

what of the people starving now?

See my perfect solution in comment #6. Let them eat meth!

By: Dizzydesi

Dizzydesi — Wed, 28 May 2008 21:14:16 +0000

Sen implies or feels that increase in production is not a part of the solution or that he is against it.

FTA, Sen seems to be for it

However, a demand-induced problem also calls for rapid expansion in food production, which can be done through more global cooperation

(Actually I kinda prefer a combination of changing eating preferences and moderate growth in production. Rapid growth has its drawbacks. Rapid growth in food production => more industrial farming => more dependence on oil, fertilizer and mono-cultures => less diversity, faster depletion, and more prone to shocks)

By: portmanteau

portmanteau — Wed, 28 May 2008 21:02:30 +0000

By contrast, I tend to focus on the production / supply side. Thatâ€™s more stuff like finding ways to replicate Brazilâ€™s food production miracle in other countries and bring down prices via the market so even the extremely poor can afford food.

your solution needs time to be implemented. while that is a great long-term measure, what of the people starving now?

By: RC

RC — Wed, 28 May 2008 20:59:33 +0000

Price of commodities going up has a huge component of institutional investors (pension funds and other large investors) speculating in commodities index funds. Michael Masters, a hedge fund manager in front of a congressional committee on a hearing on this subject said the following:

"You have asked the question 'Are Institutional Investors contributing to food and energy price inflation?' And my unequivocal answer is 'YES.' In this testimony I will explain that Institutional Investors are one of, if not the primary, factors affecting commodities prices today. Clearly, there are many factors that contribute to price determination in the commodities markets; I am here to expose a fast-growing yet virtually unnoticed factor, and one that presents a problem that can be expediently corrected through legislative policy action."

here's his entire testimony before congressional committee on homeland security and govt. affairs

Masters suggests transperency and regulation on commodity exchanges.