Tuesday, June 16, 2009

The hungry people are watching!

Javier Blas reviews Enough: Why the World’s Poorest Starve in an Age of Plenty. This paragraph shows the irony of ‘invisible hand’ belief.

“Much of the chronic, everyday hunger in the world is now a man-made catastrophe, caused one anonymous decision at a time, one day at a time, by people, institutions and governments doing what they thought was best for themselves or sometimes even what they thought at the time was best for Africa,” they write.

The global food industry typifies a market dominated by few players, vested interest groups, and predatory pricing in the form of food aid, which is not only lowering food prices (crucial for meeting household needs of a farmer in the developing world) but also discouraging farmers from engaging in agriculture business (because the rate of return is very low). The aid industry is tied up with food industry and basically supply their surpluses to developing countries leading to two fiscal effects: (i) increase in debt, and (ii) decrease in revenue as farmers get displaced by the inflow of cheap food from the West. The poor always remain poor and the masters always prevail!

Nothing could illustrate the shortcomings of US food aid policy, in which Washington sells American farmers’ output in Africa rather than sending money to buy local food, better than a dialogue between an Ethiopian farmer and a US executive at a food aid meeting in Addis Ababa. The farmer asks the executive enthusiastically: “Can you help our farmers sell their beans in America?” He receives an unexpected answer: “Actually, we represent American bean growers.”

Advice from the western world has not helped, however. It is telling that one of the best agricultural programmes in Africa – a subsidy system for fertiliser and high-yielding seeds in Malawi that has transformed the country into a net exporter of corn – was objected to, even to the point of threats to withhold some aid, by the Washington-based World Bank and the Department for International Development in Britain.