Reflecting on the food crisis

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

Fear has spread across the globe and people are beginning to act on impulse to tackle issues such as the food crisis, so it is time to start using our heads, argues Norbert Walter in a 16 May commentary for Deutsche Bank Research.

With no shortage of hot topics doing the rounds such as financial market turmoil and sky-high oil prices, food has joined the queue as milk, rice and sugar become more expensive, says Walter. This, he claims, will lead to “blind fear”. 

He warns that panic leads to erratic thinking and people acting “solely on impulse.” For this reason, recent controls placed on the price of food by a number of countries are hardly surprising, he says. Some countries have even stopped exporting agricultural products or placed “draconian export duties” on them, he adds. 

There are also debates raging over whether it would be feasible to reduce consumption taxes, albeit temporarily, to keep prices down. However, Walter questions whether these measures would actually alleviate the problem. 

The author says the reason for the food price increases is simply an increase in demand. Thus the simple cure for this would be to push for “more efficient and increased production and a more effective use of products”. Although this is an important point, the author believes that the heated international debate at the moment glosses over this fact. 

The result of this neglect is a well-meaning policy instead of a well-thought out policy, claims Walter. He continues by suggesting a “good policy” where states would “immediately stop paying all subsidies for the setting-aside of agricultural land”. Instead there should be incentives for farmers to use fallow land, he adds. 

Finally, the author suggests “subsidies for using biomass as a source of energy should be concentrated on organic waste” which, he claims, would be conducive to inexpensive food supplies. 

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