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Asia Times: Bankrupt policies, empty stomachs

No good deed ever goes unpunished. Asians are quickly discovering the wisdom of this idiom, as they suddenly confront staggering shortages in basic food items. The price of rice has gone up exponentially in the past few weeks, crossing US$1,000 a tonne, despite the absence of any discernible decrease in global production nor a concurrent increase in consumption. <...>

Agricultural produce has been the source of much abuse by the Europeans, whose Common Agricultural Policy (CAP - surely an acronym that deserves an "R" as its second letter) is uniquely responsible for keeping a billion people in dire poverty. The American response has been both through their own subsidies, and by increasing the alternative uses of agricultural crops such as ethanol for corn that is heavily subsidized in the name of energy self sufficiency.

CAP ensures that vast farms producing overly expensive produce in Europe are sustained at taxpayer expense, leaving fallow the fertile lands of Africa and many parts of Asia as excess production is dumped on global markets. These countries cannot export to Europe or the United States due to the tying of agricultural trade with unrelated items, creating astounding tariff and non-tariff barriers to trade. <...>

There is however another culprit here, one that gets away scot-free usually. As most regular readers of this column know, I am referring to the root cause of the current mess of inflation amid excessively depressed interest rates, the US dollar. More simply, the idiot central bankers of Asia who squander their responsibility at the altar of conformity by purchasing billions of dollars worth of useless financial assets have done their region a great disservice. <...>

Locking up savings in a currency that has terminally declining purchasing power means that Asian authorities have less fiscal and monetary policy leeway to regulate the dynamics of their own economies. This is what causes structural inflation, that is, the achievement of a new level in prices, as different from a cyclical increase in prices, which has in turn manifested in food prices.



A language is a dialect with an army and navy.
by marco on Mon Apr 21st, 2008 at 10:33:32 AM EST
[ Parent ]
uniquely responsible for keeping a billion people in dire poverty

Without defending subsidised exports (or the current structure of the CAP)in any way, I'd all the same like to see the calculations there.

It's also plain nonsense to put America in second position as having simply "responded" to European abuses. Chan Akra might recall that Europe is not, for example, a rice producer of any importance. Complaining about the rice market and immediately calling Europe to the bar is somehow unconvincing...

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Apr 21st, 2008 at 10:45:02 AM EST
[ Parent ]
I read the article and thought that it was somewhat odd in that respect.

Have the UN report on European rice.

FAO - TWENTY-FOURTH FAO REGIONAL CONFERENCE FOR EUROPE

Rice is not a major food crop in Europe. However, rice consumption has steadily increased during the last decade. The cost of rice production in Europe remains relatively high making competition with imported rice difficult. In addition, concern over the negative effects of rice production on the environment and biodiversity has continued to increase. However, the rice-based production systems in Europe have a number of opportunities for sustainable development.


Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Mon Apr 21st, 2008 at 11:06:32 AM EST
[ Parent ]
The top twenty rice-producing countries are listed here by the FAO. No European country is among them. Even EU total production wouldn't get it into that ranking.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Apr 21st, 2008 at 12:37:42 PM EST
[ Parent ]
so comparing the two sets of figures, the EU's excess rice total comes to 1/5 of the production of the worlds 20th largest rice p[producing country.

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Mon Apr 21st, 2008 at 12:52:41 PM EST
[ Parent ]
Excess?
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Apr 21st, 2008 at 01:00:33 PM EST
[ Parent ]
exportable do you instead?

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Mon Apr 21st, 2008 at 01:16:19 PM EST
[ Parent ]
and according to this graph

US rice exports account for half of their production

<Quick back of envelope calculation>

so roughly US exported rice has ten times the market size than EU exported rice.

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Mon Apr 21st, 2008 at 01:25:49 PM EST
[ Parent ]
Sorry, I had to go out last night and couldn't continue this.

After a lot of dredging around, in which Eurostat was f---ing useless and the FAO not much good, I found a note from EC Trade (pdf) that contains a good summary re EU rice.

With an average yearly production of approximately 2 million tonnes out of a total world
production of about 400 million tonnes and an average yearly consumption of 2 million
tonnes out of global consumption of over 400 million tonnes, the EU is neither a leading
world producer nor a major consumer of rice. Asia is both the leading producing area and
the major consumer.

Here's the import/export balance:

Rice is imported mainly from India, Thailand, USA, and Pakistan, and exported to Turkey, Switzerland, UA Emirates, Norway... and small amounts to Mediterranean countries other than Turkey.

Rice-sector reform of the CAP has recently resulted in increased imports, reduced exports. The USDA's Rice Yearbook 2008 (pdf) gives EU 25 exports at 150,000 tons a year, with US exports at 3.3 to 3.4 million tons a year (table p. 88). So a ratio of roughly 1:23.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Apr 22nd, 2008 at 03:43:45 AM EST
[ Parent ]
The image of people out planting rice in the plains of Flanders is ... bizarre.

They have squiffed their squib.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Apr 21st, 2008 at 12:00:05 PM EST
[ Parent ]
from the same report,

FAO - TWENTY-FOURTH FAO REGIONAL CONFERENCE FOR EUROPE

13. As rice plants originate from sub-tropical and tropical zones, they are easily damaged by low temperatures at any growth stage from germination to ripening. The cool weather and strong winds during stand establishment in Mediterranean climate areas may cause partial stand loss and seedling drift, which lead to poor crop establishment. In many temperate areas, emergence rate quite often does not exceed 30-40 percent of the planted seeds.

14. This low rate of crop emergence is due primarily to the effect of anaerobic conditions during germination that occurs under low temperatures. To avoid low temperatures during crop establishment stage, therefore, some growers end up with delays in crop planting. However, a delay in crop establishment leads to the occurrence of reproductive stages of the crop during periods of low temperatures during the autumn that causes the death of pollen cells at the meiosis stage and subsequent grain sterility. Damage to rice yield caused by spikelet sterility could be one of the most severe in some years.



Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Mon Apr 21st, 2008 at 12:55:30 PM EST
[ Parent ]
We grow a lot of rice on the Mediterranean coast of Spain. This weekend I saw a news report showing a pissed/off rice farmer from Tarragona complaining about water being taken to Barcelona for basic human consumption needs.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Mon Apr 21st, 2008 at 01:33:26 PM EST
[ Parent ]
afew:
Chan Akra might recall that Europe is not, for example, a rice producer of any importance.

He's aware of that.  But he claims CAP is partly responsible keeping a billion people in dire poverty for two reasons:

  1. By subsidizing products that compete with farmers' products in poor agricultural countries, the CAP reduces those farmers' (and related workers') incomes. For example, he claims that CAP reduces the sugarcane market for "many farming countries in central Africa" by 1/5th, since it subsidizes European beet farming in Europe, which is "five times inefficient compared with sugarcane product due to its higher consumption of energy and other factor inputs."  Thus, his logic goes, those central African countries are deprived of income from sugarcane product sales, income which could have gone towards buying rice from Asian countries.

  2. His second reason is more vague and convoluted, though here is where he tries to make the connection with rice: The international system of agricultural trade -- notably, the CAP -- is so complicated, confusing and inefficient that small disturbances in one area (geographical and/or product) have disproportionate and devastating consequences in other areas:

The largest consumers of rice being in Asia, a few minor weather disturbances caused exports to decline and as prices rose as a consequence, quickly caused a domino effect of trade bans and other barriers, accentuating the problem. The Philippines is the worst affected by the mess, but others like Indonesia are also suffering.

Rice may be an Asian problem, but the unnecessarily complex system of trade agreements in place is clearly a legacy of corrupt European governments, who bear all the moral shame in this matter.



A language is a dialect with an army and navy.
by marco on Mon Apr 21st, 2008 at 06:03:18 PM EST
[ Parent ]
A lot of people seem to forget that Europe is the largest *im*porter of agricultural products on the planet, and the only exporters that are really penalised by the CAP are those in the agro-business from not very poor countries (like the Cairns group).

Europan aid policies are probably damaging African agriculture more than the CAP, which tends to support imports from the poorest countries.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Apr 21st, 2008 at 11:34:41 AM EST
[ Parent ]

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