[PEN-L:27154] RE: Re: The IMF and Malawi famine

["Devine, James" <jdevine@xxxxxxx>]

Title: RE: [PEN-L:27151] Re: The IMF and Malawi famine

I haven't read the article in question (yet), but I'm trying to get this e-mail program so that people can read it. This is a test, though I do comment on Sam's comment below.

I vaguely remember having changed the "encoding" at some point before my e-mails started coming in really small type, so I'm trying to right this wrong by switching back to (what I think was) the original. (So I'm going from "Western European (Windows)" to "Western European (ISO).") So bear with me. Please tell me if the print is still too small -- and if you have advice about how to deal with MS Outlook's on-line version.

Sam Pawlett writes:>The last paragraph of this article is quite a statement "As Marcus de Moraes, Brazil's Minister of Agriculture, puts it: "If we eliminated agricultural subsidies for 24 days, we would eliminate hunger in the world.""

>The reasoning in this article doesn't make sense to me. Presumably, the Brazilian means ending subsidies period and not putting that money towards some kind of foreign aid for countries with starvation and malnutrion. The argument,as usual, is that subsidies distort market signals and leads to efficiency and loss.<

I think it's better to be more concrete about what these folks are arguing so that we can respond better: the idea is that the subsidies are linked to trade protection for first-world agriculture (since otherwise they wouldn't work), which keeps third-world farmers from selling to the rich countries _and_ makes dumping by the rich countries more likely. Both the decrease in demand for 3rd-world crops and the increase in supply depress prices, which (given the inelasticity of demand for the product) hurts incomes. So, if you get rid of the subsidies and protection, the 3rd-world crop prices would rise, helping their incomes.

> But the article states that farm subsidies should be given up because they create an unfair advantage for farmers in the North pricing Southern

farmers out of the Northern market. There's nothing here about food markets in the South. Lifting farm subsidies would just give Southern farmers access to Northern markets. Fair enough maybe, but who is going to feed the south? You mean Southern farmers are going to sell to their own people when they can now sell at a higher price in the north? The Brazilian should read A.Sen., a pareto optimal situation may be one where millions are starving to death. The slogan should be "we could feed the world if we ended market-based export agriculture." The Brazilian seems to think a pareto optimal situation is an egalitarian one.<

again, it's best to be more concrete: it's likely that the unification of the world market for food would drive down world prices. All farmers, areas, and countries with the less fertile plots, an inadequate cushion of finance, etc., are likely to be driven out of business and replaced by commercial agriculture. Those who are driven out of business -- along with farm laborers -- are likely to lose their access to food, not because prices are high, but because they no longer have direct access to food or an adequate source of income to buy it.

does this make sense?
JD