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April 23, 2008

Export bans not the answer to food shortages, price escalations

Governments should avoid imposing export embargoes to protect local consumers from soaring food prices and instead invest in boosting supplies, a top US food official said on April 21.

Growing costs of basic foodstuffs have led to angry protests in Asian and African countries that are feeling the pinch more than their wealthier counterparts, many of which protect their farming sectors with subsidies.

Climate change and the increased cultivation of biofuels are blamed for reducing food stocks, while speculative buying in commodity markets is accused of making prices more volatile.

Michael Yost, administrator of the US government's Foreign Agricultural Service, said discouraging exports was not the right answer.

"There are two wrongs there," he said during a visit to Morocco by a delegation of US farm industry officials. "Firstly it is restricting trade and tends to make people think of hoarding. Secondly, domestic producers are sending the wrong signal - don't produce, don't invest in new technology, additional fertilisers or new genetics."

The run-up in food prices has led some policymakers to question the accepted wisdom that liberalising food trade in developing countries brings more benefits than costs. Such liberalisation can hurt attempts to alleviate poverty and damage the environment, a report from a United Nations and World Bank sponsored group said last week.

But Yost said wrong decisions were now being made by countries such as Argentina, which raised wheat export taxes, and Vietnam and Thailand which stopped exporting rice. "I understand why they are doing it," he said. "But we went through the embargo routine in the United States and it was the wrong thing to do, both in 1973 and 1979-80... The key now is improving supply."

In India, for example, estimated post-harvest losses were running at somewhere between 35 to 60 percent. "If we can concentrate on that alone, then we can increase supplies of the food we have," Yost said.

The time was right for countries to invest in improved production practices, better genetics, updated seed technology and wider use of drip irrigation, he said.

"I've been to a lot of countries ... where we can do a lot to improve supply, but things haven't happened -- we haven't got serious about it," said Yost. "Now is the opportunity as the challenge is there."

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