Feed the World the Economist Essay

  • Length: 10 pages
  • Sources: 3
  • Subject: Economics
  • Type: Essay
  • Paper: #4137780

Excerpt from Essay :

Native populations never had such concepts. That many nations are artificial creations incapable of food self-sufficiency undercuts the self-sufficiency argument. Nations around the world may need, at the very least, to organization into larger, more diverse blocs the way Europe has in order to have any hope of attaining food self-sufficiency.

Externalities

Inefficient and illogical colonial-era boundaries are just one externality that is impacting the ability of the world to feed itself. Trade regulations are another. No matter the justification, trade barriers and tariffs reduce the efficiency of the global food trade. When nations protect certain industries with these barriers, they fail to take advantage of comparative advantages. Worse, such regulations stifle innovation. When regulations are removed, innovation allows industries to find a new equilibrium. An example of this can be found with Canadian wine production. Prior to the U.S.-Canada Free Trade Act, the Canadian wine industry was subsidized heavily. When the free trade act removed those subsidies and barriers, the market became flooded with American wine, which because of competitive advantages was cheaper and better. This spurred a bout of innovation at Canadian vineyards, resulting in a strong domestic industry based on premium product rather than the weak domestic industry that existed previously without innovation for decades and needed government assistance merely to exist. By removing government-mandated self-sufficiency in wine, the Canadian government ultimately ensured the long-term survival of what under protectionism was an industry on life support.

Innovation is one of the most important externalities in the global food market. In the United States, agricultural yields have been improved through the development of genetically modified foods -- foods that are disease resistant, that are hardier or that grow larger than otherwise would. genetically modified foods, however, are subject to considerable controversy (Whitman, 2000). They have been banned in Europe, for example. Europe may feel sufficiently comfortable with its agricultural base to enact such a ban, but the net effect of the ban is to create a barrier to entry, reducing the efficiency of global food markets. If such bans are spread to other parts of the world, the result could be an exacerbation of existing food supply crises. Improved yields are essential to feeding the planet's growing population, especially given the fact that the world is running out of arable land, is facing water supply constraints and that the average caloric intake per capita is increasing as the result of widespread economic progress.

These externalities cause harm to global food markets, but this is accepted because the underlying reasons for them - the banning of genetically modified foods for example -- are non-economic. This leaves open the question of how best to ensure food security for the world. At present, there are essentially two types of arguments. The purely economic argument is for food markets free from intervention and externalities. The other set of arguments may vary in the details, but stem from the underlying philosophy that the ideal path is one in which food markets are managed, with a full slate of measures in mind. Under these philosophies, the outcomes sought in our global food market system are not simply with respect to maximizing the intersection between calories, acres and dollars. Non-financial measures are incorporated under the theory that just because something cannot be easily quantified does not mean that it has no value.

Another externality that contributes to the food supply/demand problem is the nation state. Ever since modern home sapiens came into existence, humans have followed the food. Our global trade system is based on stationary humans and moving food, contrary to the system we have followed for tens of thousands of years. Modern borders create mini-crises, localized famines that are difficult to resolve. The people cannot easily move to more agriculturally productive areas, yet trade barriers, corruption, transportation issues and other problems of the modern nation-state result in a failure to bring food from global markets to the people. This is a failure of both the supply and demand sides. If people are allowed to move more freely to the areas of surplus food production, these two sides come together. While massive migration is typically viewed by policy makers as a problem -- the coming of a great crisis (Eide & Kracht, 2009) -- it is in fact the historically proven solution to food supply problems. For abundant nations to fear an influx of people that they can easily feed is nothing short of xenophobia.

Freeing human movement will alleviate a large portion of short-term, temporary hunger. It may not, however, alleviate long-term hunger when the physical limits of the earth are reached, but then neither will trade.

The Way Forward

From a purely economic point-of-view, it is the maximization of the intersection between calories, acres and dollars that we should seek. Producing the most food energy on the most arable land for the fewest dollars should be the ultimate goal of food policy. This approach would involve the removal of all barriers and externalities. Food markets today are rendered inefficient by subsidies, trade barriers and the rejection of innovation. While such approaches may not compromise our ability to feed ourselves today, they may in future as the population increase brings us to the limits of our planet's physical capabilities. Even the modern notion of free trade is unacceptable to meet this lofty end goal. The current global trading system even when free is often subject to a high degree of regulation, the result being that the system benefits some nations while putting others at a disadvantage. We must understand that if we are seeking perfectly free markets in food that our current perception of "free markets" does not qualify. It is unlikely, given the high strategic value of food as a commodity essential for our survival, that truly free markets could ever exist. Nations with stronger bargaining power will inevitably game the system to gain advantage and secure their own food needs regardless of the impact this may have on other nations to meet theirs. This has occurred in Africa, turning that continent from an export of food to an importer in defiance of established economic models (Bello, 2008). At no point in human history have we ever demonstrated that ability to implement truly free trade in a strategically vital commodity.

It is recommended, however, that a free market approach be developed that recognizes these limitations. True food security for the human race must be developed with the understanding of our own limitations as a species. Thus, regional food security should be the outcome, achieved through trade based on comparative advantage. Europe, in its post-WWII spirit of cooperation, has been able to build a system that ensures a high degree of food security on a small and highly populated land area. North America, sparsely populated by comparison, has the ability to develop similar food security within the NAFTA bloc.

The geographic diversity required for food self-sufficiency is substantial, and in some parts of the world can only be attained through the pooling of the physical resources of several resources. This approach should be pursued through the elimination of trade barriers between regional blocs that better balance food production resources and populations. For example, nations in the Sahel that are faced with famine as a result of diversification can pool with nations to the south that have food production capabilities but may lack other resources.

However, it must also be recognized that to achieve equilibrium between food production capabilities and population, restrictions on human traffic flow must be reduced. When human beings are compartmentalized into nations -- especially colonial ones not endowed with food production capabilities -- they are placed at risk of running out of food. Before borders, humans were able to migrate to better food production areas in order to relieve famine and achieve equilibrium. Famines in 18th and 19th century Europe fueled emigration to North America, for example. Restrictions of the flow of human beings inherently represent an externality on the demand side that skews the supply-demand dimension in global food markets.

The way forward, therefore, is to remove many of the trade restrictions in global food markets. Comparative advantage works. It does, however, have flaws in its assumptions. These can for the most part be addressed by attempting to consolidate food trade into blocs, rather than attempting to regulate free flow of trade of a strategically essential commodity on a global scale. While an admirable goals, it is entirely unfeasible given the limitations of human nature. In addition, the main externality on the demand side needs to be removed to alleviate short-term hunger crises -- people have always followed the food and they must be allowed to continue to do so.

Works Cited:

Eide, W. & Kracht, U. (2009). Official responses to the world food crisis in light of the human right to food. WorldHunger.org. Retrieved March 20, 2010 from http://www.worldhunger.org/articles/08/hrf/wb_eide.htm

Whitman,…

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