Harvesting Money in a Hungry World

By VICTOR DAVIS HANSON
Published: August 1, 2008

THE latest round of global agricultural trade negotiations that began seven years ago in Doha, Qatar, collapsed in acrimony this week in Geneva. While India and China are getting the blame for refusing to reduce import tariffs and farm subsidies, you can assume that trade officials in Europe and the United States are breathing a sigh of relief that they aren’t going to have to limit their own protectionism.

Nothing new here. Nor is it a staggering blow to world trade: the aggregate loss caused by the trade barriers in question is probably no more than $70 billion in a global imported food market of more than a trillion dollars. But what is different this time is a backdrop of soaring food prices that makes all past assumptions seem ossified. It also makes the world’s poorest people even more vulnerable when trade bureaucrats in both the wealthy West and rising East make vapid arguments.

Usually trade in agricultural produce involves governments’ efforts to prop up farmers who claim they will go broke without subsidies and tariffs. Constant improvements in technology, mechanization, plant breeding and farm chemicals have steadily increased food production per acre, and for the last 30 years led to a world that we assumed would be awash in cheap food.

Yet world prices for wheat, corn, rice, soy, coffee, cotton, dairy products, meats, fruits and vegetables have suddenly reached record levels. Why now?

The answer starts with the half-billion new middle-class consumers in China and India who increasingly wish to emulate the rich diet that Westerners take for granted. And they have the cash to buy the food they want on the world market. Despite slowing growth rates, world population is nearing seven billion people and may reach nine billion mouths in less than 40 years.

In addition, increases in the cost of oil have sent diesel fuel, fertilizers and farm chemical prices sky-high. Those added costs are now being passed on to consumers. Environmental regulations, water scarcities and urban development continue to cut back arable acreage. Technology and machinery constantly improve, but now only marginally improve on past serial leaps in production. More than one-fifth of the American corn crop is now devoted to ethanol. In short, the era of cheap food, like the age of cheap gas, may be about over.

The result is a growing revolution in the way we envision the economics of agriculture, and it should be reflected in the efforts of all nations to ensure much freer trade in food.

Yet Europe — usually the self-appointed voice of global moral conscience on international human rights, climate change and poverty — remains committed to agricultural policies that protect its own farm sector while stymieing farmers abroad. It is past time that the European Union let the market determine what and how its farmers produce, while also allowing its consumers to buy the safest and cheapest food it can, regardless of its origins.

Here at home Congress recently overrode President Bush’s veto to approve a $300 billion, multiyear farm bill awash in subsidy payments regardless of current commodity prices. Yet we all know the tired refrain each time these indefensible farm bills come up for enactment.

First, they are transparent election-cycle harvests for farm-state politicians, who have small constituencies but exercise outsized national political clout.

Second, because such special-interest legislation wins little broad public support, its supporters rely on phony rationalizations if not outright deception. In 1996 the trick was to call billion-dollar subsides the Freedom to Farm Act and vow a phase-out in seven years, a promise that was quickly forgotten.

In 2002, the next farm bill piggybacked onto fears following Sept. 11. So the gimmick was to name it the Farm Security and Rural Investment Act — as if giving millions to corporate wheat farmers might protect us from Al Qaeda. Now with the public worried about gas prices, the latest bill was pushed as the Farm, Nutrition and Bioenergy Act.

Third, all the rationalizations of this Depression-era legislation have become risible. Family farmers — now less than 1 percent of the population — disappeared as the farm subsidy industry grew. Indeed the wealthiest corporations now receive the most federal largess. Political considerations, not scarcities or nutrition, explain why crops like sugar and rice are subsidized and lettuce and fresh fruit are not.

For decades there has been neither a national interest nor a moral need for farm subsidies. But now in times of soaring world food prices there is not even economic justification. As a brave new world fought it out at the Doha talks, it is growing hungrier by the day.

It is understandable that poorer nations are near paranoid in their fear for their own farmers’ livelihoods should they import a glut of imported American and European food that is a product of sophisticated economies of scale. But with food shortages looming, all countries should now support open trade in food to encourage as much supply as possible for a hungry planet.

The best thing that the United States, the beacon of world capitalism, could now do is to stop interfering with its own farmers, let markets and need determine what they grow and how they farm — and then by such a principled American example persuade the rest of the world to do the same.

Victor Davis Hanson, a former raisin farmer and a fellow at the Hoover Institution at Stanford, is the author of “Fields Without Dreams” and “The Land Was Everything.”