- The Washington Times - Saturday, April 19, 2008

China next week is doubling taxes on fertilizer exports to ensure supplies for domestic farmers. Egyptian President Hosni Mubarak ordered the army to start baking bread after deadly riots broke out in lines people waiting for food. Oil-rich Libya is discussing a deal to essentially rent a chunk of land-rich Ukraine on which it can grow its own wheat.

With food and fuel prices soaring, the world’s haves and have-nots are not waiting for the free market or global institutions such as the World Bank to make sure their people have enough to eat.

“A lot of countries are in trouble right now,” said Lester Brown, veteran environmentalist and president of the Washington-based Earth Policy Institute. “We’re seeing various efforts made by countries to ensure they have the food inputs they need.”

Soaring prices for wheat, rice, corn, palm oils and other staples have sparked food riots and reports of hoarding on four continents. Haitian Prime Minister Jacques Edouard Alexis was forced to step down last week because of violence linked to higher food costs, and U.N. and World Bank officials warn that more unrest is likely.

International Monetary Fund head Dominique Strauss-Kahn said the global food crisis could potentially spark resource wars and destabilize even established democracies around the world.

“History is full of wars that started because of this kind of problem,” he said in an interview with a French radio station.

World Food Program head Josette Sheeran blames the surge in food prices on a “perfect storm” of factors: drought in key producing nations such as Australia; massive fuel price increases that make transporting food more expensive; competition for cropland from biofuels; and a surge in demand as hundreds of millions move into the middle class in China, India and other developing countries.

A World Bank study estimates that it will take at least three years to address imbalances in world agricultural markets, but governments must feed hungry, growing populations immediately.

“It’s a crisis that has to be a much higher immediate priority for the world than it has been,” said Kimberly Cadena, spokeswoman for the ONE Campaign. The global poverty advocacy group recommends that the food crisis be the top priority at the Group of Eight summit this summer.

Governments aren’t waiting that long.

Kazakhstan, the world’s fifth-largest wheat producer, announced Tuesday a four-month ban on wheat exports to hold down domestic food prices. The move could prove a hardship for other Central Asian states, which rely heavily on grain imports from Kazakhstan to feed their people.

With major rice growers such as India and Vietnam also restricting exports to curb inflation at home, economists fear that a Great Depression-style beggar-your-neighbor policy is taking root in world food markets.

EU Trade Commissioner Peter Mandelson told a Brussels trade seminar Thursday: “By chasing an illusion of food security, these policies throttle domestic production, choke off supplies to others and risk leading to a spiral of protectionism and dwindling production.”

A World Bank survey of 58 countries found that all but 10 had imposed nonmarket controls on domestic food production, from subsidies and price controls to outright export bans.

The historic staple price increases have encouraged some governments to become even more creative.

Egypt’s Mr. Mubarak last month ordered soldiers to bake subsidized bread for civilian consumption after four people were killed in food-line scuffles. The bread lines, Mr. Mubarak said, “must disappear.”

Egyptian Foreign Minister Ahmed About Gheit, in Washington this week for talks with U.S. officials and lawmakers, said yesterday said his government has $31 billion in reserves to ensure food supplies, but he acknowledged that food and fuel subsidies have put a strain on government coffers.

“The Egyptian state, I assure you, will manage to put things in order,” he said.

But he acknowledged that huge price increases for wheat, rice and other basics meant “we are going to see lots and lots and lots of turmoil in many countries.”

Cairo recently announced what might be the first of a wave of barter deals, bypassing the cash economy altogether. Egypt has agreed to ship some of its surplus wheat to Syria in exchange for an equivalent shipment of Syrian rice. Food economists say such bilateral arrangements, whether in barter or traditional financing, are on the rise.

In China, where food prices have fueled a spike in inflation this year, the Finance Ministry said Thursday that it will increase export duties on fertilizers such as urea and ammonium phosphate. That, in turn, could accelerate the jump in global food prices because foreign farmers who rely on Chinese fertilizers would face higher costs.

The South American nation of Guyana, which already limited rice exports to Africa, announced plans Wednesday to distribute rice and other seeds to rural residents in hopes that they will cultivate idle land and personal gardens.

“I don’t want to say that everyone should become a farmer because not everyone is cut out for that,” President Bharrat Jagdeo told the Associated Press. “But when the economics are right, you can do anything.”

The most unorthodox deal could be one in the works between Libya and Ukraine.

Ukrainian President Viktor Yushchenko said last week that he was negotiating a deal to allow Libya to grow wheat on nearly 250,000 acres of Ukrainian soil, the Wall Street Journal reported. In return, Ukraine would get a cut of future energy and construction deals in Libya.

The Bush administration this week released $200 million in emergency food aid for sub-Saharan Africa and other affected regions, and Secretary of State Condoleezza Rice said this week that more U.S. steps are in the works.

“The rapid rise in global food prices is an urgent concern,” Miss Rice said in a briefing on the crisis for reporters. “Rising food prices are a source of social instability, as we are seeing in a number of places around the globe.”

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