Food trade caps faulted

The Bush administration’s top economist warned yesterday that emergency trade restrictions on food imposed by a growing number of nations are making a global crisis worse and could cause long-term damage to the world’s ability to feed itself.

Edward P. Lazear, chairman of the Council of Economic Advisers, issued the warning at a Senate hearing on the crisis posed by soaring world prices for staple foods such as wheat, corn, soybeans and rice.

The high prices have led to rioting and protests in dozens of countries in recent months. Many nations have moved to cut food exports, boost subsidies and take other steps to ensure their people have enough to eat.

Some food importers, including China, South Korea and the United Arab Emirates, are even considering locking up fertile land in other countries to grow their food.

“We’ve been encouraging countries to eliminate their export restrictions,” Mr. Lazear told the Senate Foreign Relations Committee.

“We think that’s bad for other countries and also for the country in question because it creates distortions that … in the long run may not be the best even for the people of that country,” he said.

Liberia this week became the latest country to clamp down on its domestic food market, banning all food exports as a way to keep profiteers from buying up its stocks and re-selling them at higher prices abroad.

A U.N. Food and Agriculture Organization survey found that, among the world’s leading rice producers, only Thailand, Pakistan and the United States have not placed restrictions on exports in recent months.

Lawmakers from both parties expressed alarm at the surging food prices and the possibility of social unrest, especially in impoverished countries where food purchases can account for up to 70 percent of a family’s income.

“We have to get real about this,” said Sen. Richard G. Lugar, Indiana Republican. “Before people will starve, they will fight.”

But analysts say a number of short- and long-term factors have contributed to the surge in food prices, from rising demand for grain as Asia grows more prosperous, to higher energy costs and extended droughts in Australia and the Balkans. U.S. officials say the higher prices are likely to last at least for another two to three years.

“We are in the midst of a global food crisis unlike other food crises we have faced, one not caused by natural disasters, conflict or any single event such as drought,” Henrietta H. Fore, administrator of the U.S. Agency for International Development, told the panel.

“It is not localized — instead it is pervasive and widespread, affecting the poor in developing countries around the world.”

The result: The global index of food prices shot up 43 percent from March 2007 to March 2008, with wheat prices up 123 percent, soybean prices up 66 percent and both corn and rice prices rising by about 36 percent.

President Bush released $200 million in emergency food aid for the world’s poorest nations last month and has requested $770 million to deal with the crisis in the coming fiscal year, which begins in October. But Sen. Bob Casey took Mrs. Fore to task for the administration’s resistance to a Democratic proposal to add another $200 million in food aid to the Iraq war spending bill now moving through Congress.

“To say this is a crisis is a dramatic understatement,” said Mr. Casey, a Pennsylvania Democrat.

“I just wish that the actions by the administration would match the gravity of the human misery that we’re seeing,” he added.

Farm-state senators yesterday rejected criticisms that the U.S. biofuels industry is a major contributor to the food crisis. A recent International Monetary Fund study said the diversion of U.S. corn to the biofuels market accounted for up to half of the recent surge in global food prices.

Mr. Lazear said diversion to biofuels in the United States and other nations has contributed to higher corn prices, but said government economists estimate that biofuels were responsible for just 3 percent of the recent increase in world food prices overall.