The Doha Dilemma

Doha Dilemma

May 29th 2008

What is to blame for the global food crisis? Is it government intervention in agriculture or free farm trade that is responsible for the current price spikes on food, which primarily affect the poor? Even though critics of a free farm trade think that only the government can guarantee food security and stop the unfair situation of the poor people, whose businesses are disadvantaged by rich world's subsidies, free farm trade doesn't necessarily preclude these points and furthermore it has shown that free farm trade alleviates poverty in most of the cases.
The argument of food security can be countered at the example of North Korea. In this country, people experience an increase in food prices, since trade barriers prevent the export of food especially rice. Thus, the global supply of rice is disrupted and farmers cease producing rice which makes rice scarce and therefore the price of rice goes up.
A study executed by scientists of the world bank have shown that free farm trade would reduce poverty in most of the cases. On the other hand, another study has shown that due to free farm trade, staple foods will get more expensive (slash of subsidies) and thus increase poverty. However, this study has only taken staple food into consideration as opposed to the other one, which focused on all farm goods. And that's why the effect of expensive staple food can be outweighed by the increased demand for farm exports as the rich countries cut the tariffs.
So in conclusion, these two studies suggest that the nature of trade reform matters, since it would be more sensible to fight poverty by cutting tariffs than slashing rich world's subsidies. It can be said that free farm trade is not a cause for the global food crisis, however the crisis has shown that it is important to establish the right reforms.