WTO Director: Agricultural Trade Policies Don't Fuel Food Crisis

May 11, 2009 9:38 a.m. EST

Washington, D.C. (AHN) - In a speech to the International Food and Agricultural Trade Policy Council, World Trade Organization (WTO) Director-General Pascal Lamy rejected the idea that restrictive trade policies help fuel the ongoing global food crisis.

"Ladies and gentlemen, international trade was not the source of last year's food crisis," Lamy told the Council at a meeting in Austria. "If anything, international trade has reduced the price of food over the years through greater competition, and enhanced consumer purchasing power."

"International trade in agriculture is less than 10 percent of world trade... It is important that you know that only 25 percent of the world's food production is traded globally. In addition, of that 25 percent, the vast majority is processed food, and not rice, wheat, and soya as some would like to claim. To suggest that less trade, and greater self-sufficiency, are the solutions to food security, would be to argue that trade was itself to blame for the crisis. A proposition that would be difficult to sustain in light of the figures I just gave you," Lamy said.

Nonetheless, according to the United Nations Food and Agriculture Organization (FAO), "the food crisis of last year has not ended in developing countries as cereal prices in most remain generally very high, in some cases at record levels."

In its April report, the FAO found domestic food prices are up 80 percent in 58 countries - with several countries reporting the highest prices on record. In sub-Saharan Africa, for example, the prices of maize, millet and sorghum are higher in 89 percent of the countries compared to a year earlier.

"Food and agricultural trade policy does not operate in a vacuum. In other words, no matter how sophisticated our trade policies may be, if domestic policies do not themselves incentivize agriculture, and internalize negative social and environmental externalities, then we will always have a problem," Lamy added.

"In many parts of the world, in particular in the world's poorest corners, land is getting divided through inheritance amongst a growing population, and farm sizes are dwindling. In India, the average landholding fell from 2.6 hectares in 1960 to 1.4 in 2000, and is still declining. In Bangladesh, the situation is worse... It is also well-documented that some of the world's poorest countries have taxed agriculture the most, and that reinvestment of tax revenue into agriculture has been low," Lamy said.

"Trade policy - no doubt - has its place in this landscape. But it cannot and does not, by itself, answer each and every challenge in agriculture," Lamy concluded.