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« The WTO Cannot Solve the Food Crisis | Main | An Impressive First Step: Now Time for Action »

June 04, 2008

Lessons from China on the Food Crisis

IATP President Jim Harkness is blogging from China through June 14. Due to internet access problems, Jim sent this blog via e-mail. I am posting it for him - Ben

Yesterday, IATP and the Rural Development Institute (RDI) of the Chinese Academy of Social Sciences held a workshop on agriculture and trade. Daryll Ray of the University of Tennessee’s Agricultural Policy Analysis Center and Li Guoqiang of RDI gave excellent presentations, followed by a lengthy and animated discussion that continued through lunch and into the afternoon. Daryll presented a history of U.S. farm policy, and laid out the basic economics of why certain policies succeed and others fail. Central to his argument is the notion that agricultural markets have a strong tendency to fail, and therefore require government action to buffer against volatility and guarantee food security.  He also used USDA data (with a strong disclaimer concerning its accuracy) to show that contrary to conventional wisdom, China’s increased demand for meat has not been a significant driver of the global food price crisis. He makes the same argument in a policy brief that you can find here.

The short version is this: meat consumption his indeed increased a lot in recent years, but instead of importing more grain (or meat) China has been releasing grain from its massive reserves onto national markets. China’s grain market, including its feed market, is therefore effectively insulated from international price fluctuations.

This is, of course, precisely the kind of “market-distorting government intervention” that the World Bank and IMF have argued against for decades. My friend Yoke Ling Chee of the Third World Network said after the workshop that she was sorry it wasn’t a panel at the World Food Crisis Summit in Rome. Instead, the world is being treated to the spectacle of World Bank President Robert Zoellick blaming poor country export bans for skyrocketing prices, bans put into place as a desperate measure in the face of a crisis the Bank helped create.

IATP's Carin Smaller is blogging from the Rome meeting this week on all the happenings at the food crisis summit.

Ben Lilliston


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