It is not often that we agree with any agency of the United Nations, inasmuch as such agencies typically prescribe larger and more intrusive government as the solution for whatever problem attracts their attention. But the U.N.'s Food and Agriculture Organization, which hosted a world summit on the current world food crisis this week in Rome, has issued a mostly sensible report on the current crisis and how governments around the world should respond to it.
The prices of common food staples have risen to record levels. There are many reasons, including several years of drought in Australia, rising demand from China and India, the rising price of petroleum, and increased use of crops to produce biofuels, mostly ethanol.
The U.N. is expected to join the growing chorus of people who are urging at least a moratorium on government-driven use of food crops to produce ethanol and other biofuels. Ethanol producers now enjoy a 51-cents-per-gallon tax credit for ethanol and Congress has passed a bill mandating even more production and use of ethanol. The ethanol program and other factors have driven the price of corn from $4 to $6 a bushel, with secondary effects increasing soybean, wheat and meat prices.
The report also urges governments to suspend or eliminate numerous taxes on farmers, price controls, and protectionist programs like bans on exports (which keep grain in a particular country but deter higher production) and import tariffs.
It also shows awareness of the possible negative impact of beefing up immediate aid to poor countries. It recommends such aid but notes that huge influxes of aid can undermine farmers and entrepreneurs who are the key to any long-run approach to increasing food supplies.
Governments cannot end droughts, believe it or not. But they can abandon policies that make food more expensive. Ending the U.S.'s ethanol program would be a good first step.