WASHINGTON-Many nations are turning to export
restrictions to ease soaring food prices, but such interventions
may aggravate turmoil on world commodity markets, a leading
research center has warned.
"If one country after the other adopts a
'starve your neighbor' policy, then eventually you trade smaller
shares of total world production of agricultural products, and
that in turn makes the prices more volatile," said Joachim von
Braun, director general of the International Food Policy
Research Institute, or IFPRI.
A growing list of countries, including Egypt,
India and China, has imposed bans, raised tariffs or unveiled
other restrictions to limit crop, mainly grain, exports.
It's a bid to blunt the impact of a global
boom in commodity and food prices, driven by tight stocks,
growing biofuel production, and income growth in developing
nations, a trend that takes the biggest toll on the poor.
IFPRI, an international research institute
funded by governments and private foundations, cautions that
such restrictions send erroneous price signals and will
ultimately deter investment by eroding faith in market prices.
"So that the old saying that 'high prices are
their worst own enemy' is partly, artificially undermined," Von
Braun said in an interview.
Wheat, corn and soybeans have all broken
records in recent months, with the value of Chicago wheat
increasing 77 percent in 2007 alone. But with high prices has
come an influx of billions of dollars from investment funds
diversifying their portfolios into commodities - and historic
volatility.
While data is yet unavailable, Von Braun has
a hunch these trends have prompted a reduction in the volume of
world farm output traded on world markets, which has held steady
for the last 40 years despite the advent of globalization.
So far, the United States, a leading exporter
of wheat, corn and soybeans, has shunned any export limits.
Von Braun said tighter trade rules on
agriculture - which might come if countries can produce an
agreement in the World Trade Organization's Doha round - would
be positive even though they seem more painful in the short run.
"The answer is freer trade ... especially
when we have scarcity," he said. In some countries, unfettered
export policies must be supplemented by government transfers
that will help the most vulnerable buy food.
But such a politically sensitive step may
exceed what even most the ardent supports of free trade can
swallow.
The challenge is not a fleeting one. IFPRI
expects cereal prices could increase by 10 to 20 percent by
2015.
As the world's biggest economy, the United
States has a responsibility to do everything in its power to
push world trade talks to a conclusion, Von Braun said.
The Bush administration is under pressure in
the round to dramatically reduce the subsidies it pays farmers.
The talks have been mired in discord, mainly
over agriculture, for more than six years.
The United States should also rethink its
biofuel policy, which has set up tall mandates for corn-based
ethanol that have driven much of the corn boom here, Von Braun
said.
"The US could be a role model on a global scale" if it
chooses, he said.