17 September 2012

Tyler Cowen Makes the Case for Addressing Global Hunger

Tyler Cowen writes in the New York Times:
One huge problem is that the price of fertilizer in Africa is often two to four times the world price. Yet African soil and rainfall make much of the continent subpar for growing food. In other words, the region that probably needs fertilizer the most also has to pay the most for it, and much of Africa doesn’t have the prosperity to make this an easy stretch. The high prices result in large part from infrastructure and trade networks that aren’t developed enough to create a low-cost and competitive market. And the problem could worsen if economic troubles in China distract it from its beneficial investments in African roads and harbors. 
On top of all that, many African nations have unhelpful policies toward agriculture. Malawi, for instance, subjects corn to periodic export and import restrictions as well as to price controls, all of which thwart development of a well-functioning market. When market speculators save corn in anticipation of greater scarcity, they may be punished by law. These restrictions of market incentives exacerbate the basic supply problems.
He advocates for making global food problems an item that is higher on the agenda for the United States and the economics profession. To do so, he joins the chorus of people calling for the end of US subsides for corn-based biofuels. "With virtual unanimity, experts condemn these subsidies as driving up food prices, damaging land use and costing the taxpayers money. Once the energy costs of producing the biofuels are taken into account, it doesn’t even appear that this policy helps slow climate change. It has become a form of crony capitalism, at great global expense," writes Cowen.

The full article is a good read.