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The Truth about Trade

RSS By: Dean Kleckner, AgWeb.com

Dean is Chairman Emeritus of 'Truth About Trade & Technology, a nonprofit advocacy group led by a volunteer board of American farmers.

Farmers Want to Feed the World - Let Them Do It!

Jun 30, 2011

By Dean Kleckner- www.truthabouttrade.org

Ronald Reagan used to say that the nine most terrifying words in the English language are: “I’m from the government and I’m here to help.”
 
If he were around today, he’d probably add that the new ten most terrifying words are: “I’m from the world government and I’m here to help.”
 
That’s why a lot of the world’s farmers breathed a big sigh of relief when the agriculture ministers from the G20 nations failed (including Secretary Tom Vilsack) to agree on much of anything at their food-security summit last week.
 
We don’t need diplomats and bureaucrats telling us what to grow or how to grow it.
 
To be sure, their meeting in Paris had a noble purpose: The ministers wanted to address the rising threat of the demand for food outstripping the supply. “The point of departure was to avoid the 21st century being the century of hunger,” said French agriculture minister Bruno Le Maire, the meeting chairman.
 
The warning signs are clear enough. The planet’s population is expected to swell to 10 billion people by 2050. An expanding group of middle-class earners in developing countries such as China and India are adding more meat to their diets. Meanwhile, growth in farm yields has apparently slowed.
 
The challenge is to produce about 70 percent more food over the next few decades--and to do it without vastly increasing the amount of farmland available to crops. It’s quite a challenge: In February, the food-price index of the United Nations Food and Agriculture Organization set a new record. Prices have slumped a bit since, but they remain high and this latest spike may not have been a freak event. It could represent the shape of things to come.
 
So it’s no wonder the G20 nations want to act.
 
In the end, the agriculture ministers merely agreed to fund research and increase transparency--small steps that may result in minor benefits.
 
Fortunately, they failed to reach a consensus on several more ambitious projects, such as restricting investors and trying to control price swings.
 
France, apparently without success, put commodity speculators in its sights, calling for increased regulation of the derivatives market. This is silly. Speculators are in the market every day. Some would like to see prices rise and others would like to see them sink. We tend to hear complaints about them when prices are going up, but they aren’t the villains in this drama. Focusing on them is a distraction.
 
Price swings are also a bad target. As a farmer, I’ve always been for volatility, especially when prices are low. Right now, with food prices high, consumers should favor price swings--because the next one may very well push food costs down.
 
There’s something to be said for predictability and farmers are always guarding against risk by locking in prices and buying insurance. At the same time, everyone benefits when agriculture has the opportunity to respond to market conditions.
 
I’ve always said that, as a consumer, the solution to high prices is high prices. That’s because farmers will respond to them by trying to grow more of what’s needed. Striving to reduce volatility through government interference will succeed merely in confusing market signals--and delaying necessary responses to food crises as they emerge.
 
Government officials like to think that they can manage global agriculture, but really they can’t. It’s sheer hubris for them to believe that they can control something so vast and complicated--and much better for them to get out of the way and let farmers do what they do best.
 
Going forward, as the G20 agriculture ministers strive to improve food security, they should work to unleash the power of trade and technology. Lowering trade barriers helps connect producers with consumers, even if they don’t live in the same country. Enhancing technology--and, in particular, encouraging reluctant European countries to accept genetic modification--will lead to an abundance that will help feed the planet.
 
In the future, I hope someone will utter these 11 words: “I’m from the government and I’m here to leave you alone.”
 
Dean Kleckner chairs Truth About Trade & Technology. www.truthabouttrade.org
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