Is Uncle Sam Giving the World Hunger Pains?

Is Uncle Sam Giving the World Hunger Pains?

Late last month, the executive director of the World Food Programme (WFP) told the Financial Times that the U.N. agency would soon be forced to consider "cutting [its] food rations or even the number of people reached." This comes as soaring inflation in staple food items such as wheat, corn, rice, and soybeans has produced hunger riots in developing countries and left governments grasping at straws for a solution. Over the past eight years, the price of food worldwide has increased 75 percent; the price of wheat has gone up a dramatic 200 percent. Struggling to keep up with inflation, the WFP must now pick between two unsavory choices: cut back on the amount of food it gives each person or reduce the total number of people it aids. The U.S. Agency for International Development also says it now faces a similar dilemma.

The reasons for mounting food inflation are multiple -- new consumption patterns from rising affluence in Asia, a growing world population, the increasing use of grains for biofuels, disrupted weather patterns associated with climate change, and higher costs for oil (used to produce fertilizer and transport harvested crops). But one factor that has made the spike particularly difficult for many countries to overcome is U.S. agricultural policy. Had it not been for decades of market-distorting subsidized U.S. exports, many of the affected countries likely would have developed their own agricultural capacity and been better prepared for tough times.

The United States accounts for 40 percent of the world's grain exports (compared with 8.8 percent of exports in merchandise and 14.1 percent in services). The combination of being the world's biggest and cheapest supplier means that many countries have come to rely on U.S. production rather than developing their own agricultural capacity. Subsidized US exports push down the global price of grain and create a disincentive for local production.

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