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A call against ad hoc state food restrictions in new bubble
22 May, 2011 07:06:22
BIG SKY, May 22, 2011 (AFP) - As high food prices push millions of people into poverty, major farming nations are resisting calls to impose trade restrictions and are committing to keep global markets open.
APEC -- a 21-member Asia-Pacific bloc that encompasses more than half of the world economy and includes the United States, China, Japan and Australia -- called Friday for "open and transparent" food markets.

In a joint statement after talks in the ski resort of Big Sky, Montana, APEC trade officials said that open markets would ensure food security by increasing reliability of supply and reducing price volatility.

The calm reaction marks a sharp contrast to just a few years ago, when another spike in prices led some 30 countries to impose restrictions on food exports including Vietnam and India, leading exporters of rice.

Thailand, while not imposing restrictions, at the time briefly floated the idea of creating a rice cartel that could influence prices much like oil-producing nations in OPEC.

Food prices have again jumped in the past year due to factors including severe weather in key grain producers such as Russia and Australia along with higher fuel costs triggered by turbulence in the Middle East.

The World Bank said last month that global food prices had soared 36 percent from a year earlier, pushing some 44 million people below the poverty line of $1.25 a day, with many more at risk if the trend worsens.

However, the UN Food and Agriculture Organization said that overall prices, while high compared with 2011, stabilized in April. Cereal costs kept rising, but large export supplies reduced the pressure on rice.

"Hopefully some countries have learned the lessons of what happened in 2007 and 2008," said David Laborde Debucquet, a senior research fellow at the Washington-based International Food Policy Research Institute.

"But we have to be honest, it's very different from 2007/2008 as rice has not been affected. In terms of poverty and hunger, rice is a very key food and if its price goes up, we'll see a bit more pressure," he said.

He argued that export controls, while perhaps politically advantageous, aggravated problems on a world level.

"If every country thinks only about what's good for itself, the large countries have the capacity to protect themselves but you have to keep in mind that smaller countries have no such capacity and will suffer," he said.

One key exception on the food export issue is India, which is not a member of APEC.

India's government puts a priority on storing grains instead of pursuing exports, believing that it needs a stockpile as an insurance in bad times and to help alleviate poverty in the nation of a billion-plus people.

Prominent Indian activist Vandana Shiva has campaigned against turning to an export model for food, arguing that it would create incentives for farmers to grow crops for profit overseas rather than feeding the hungry at home.

Shiva recently attacked the idea of India allowing companies to oversee grain storage, calling it a "corporate hijack of the food system."

Major corporations have pushed for greater liberalization on food markets. A joint statement by business leaders attending the Big Sky talks called on APEC to make "a commitment to renounce all export restrictions" on food.

"We're in a period of high prices. It's clear we do have the capacity as the world to feed itself and we just need to make sure we're aligned properly in terms of policies," Emery Koenig, senior vice president of agribusiness giant Cargill, told reporters.

A senior executive at retail titan Wal-Mart Stores said that in India -- where the world's biggest retailer is trying to expand -- some 40 percent of produce is wasted after harvest.

Scott Price, chief executive of Wal-Mart Asia, said the best approach was to reduce inefficiency rather than to restrict exports.

Blocking free trade "throws up more risk, more surprise and actually accentuates higher prices," he said.

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