How much more for a piece of bread?

The age of cheap food has abruptly come to an end, and food prices are likely to remain high for some considerable time.

The age of cheap food has abruptly come to an end, and food prices are likely to remain high for some considerable time. The reasons are soaring demand in the developing world, high oil prices contributing to the costs of planting, fertiliser, harvesting and transport, poor harvests in major grain and rice-producing regions because of drought in Australia and cold summers in Europe and parts of North America, and, finally, disastrously timed official policies on ethanol and other biofuels. Take all these together, and the result is a jump of 40 per cent in the UN’s 2007 global food price index.

For British households, more expensive food means less spare cash at the end of the month. For Afghans faced by flour costing up to 80 per cent more, it means going hungry… For everyone, persistently higher food costs will translate into hefty wage demands, and make it much harder for governments to finesse the nasty combination of weakening economies and gathering inflationary pressures…

Governments are worried not only by costs, but by supply, as traditional sources of imports dry up. US wheat stocks are at their lowest since just after the Second World War, and in Europe proverbial seas and mountains of surplus produce have vanished. Argentina has set ceilings on its beef exports, and China…has, Heinz-like, slapped export taxes on 57 varieties of farm produce.

Export tariffs are the worst possible response to shortages. Farmers need every encouragement to expand production. Trade barriers send the opposite signal. There is scope for increasing productivity per hectare right across Asia and, even more so, in Africa. Genetics has the potential to usher in a second green revolution, if science is not fettered by superstition. But these are long-term solutions. There is one thing that politicians can do in the here and now: free up farm trade while the going (for farmers) is good, and when even the EU is busy cutting tariffs unilaterally and has eliminated, albeit “temporarily”, all barriers to cereal imports. A Doha deal will be done this year, or not at all. The time is now.

Excerpted from an editorial in ‘The Times’, London, February 13