PAUL JAY: Welcome to The Real News. I'm Paul Jay in Washington. When the G-20 met in France
a few weeks ago, one of the things they were expected to deal with was the issue of food
security and the role of speculation in creating price bubbles. Well, not much was accomplished
on this front, nor, most observers thought, on any other front by the G-20. Well, as we
speak, the ministers of the WTO are meeting in Geneva, and they're supposed to be directly
dealing with the issue of food security. Well, what should we expect from those meetings?
Now joining us to talk about all of this is Timothy Wise. He's director of research and
policy at the Global Development and Environment Institute at Tufts University in Boston. Thanks
for joining us, Timothy.
TIMOTHY WISE: Good to be here, Paul.
JAY: So tell us what these meetings--what people hoped would be accomplished. And what
are you expecting?
WISE: Well, I think the hopes are incredibly low for the World Trade Organization meetings
right now. The Doha Round, which has been going on for ten years, is all but dead. It's
virtually been declared dead. The communique issued, the sort of pre-agreed declaration
that's already been developed in advance of the meetings acknowledges that there's unlikely
to be much progress, that there may be a need to look for alternatives to the Doha Round
because it may not be completed. The expectations are tremendously low.
JAY: For viewers that have not been following this story, what was Doha supposed to solve?
WISE: Well, Doha was the development rounds. It was named that because the previous round
of world trade talks was seen as inordinately favoring industrialized countries. And so
developing countries insisted on a more ambitious development agenda that would put the needs
of developing countries first. It stalled over a wide range of issues, not the least
of them agricultural issues, with India and other countries insisting on key measures
to protect food-producing sectors in their countries.
JAY: So talk, then, about what--the current state of things. Like, what is the real problem
that needs to be addressed? And I guess then that will become clear, what policy's not
being developed. Let's get to the underlying issues here. What is causing the food insecurity,
mostly for developing countries, but not only developing countries?
WISE: Well, in part, the WTO should bear some responsibility for the food insecurity that
we see. Up until 1980, least-developed countries actually ran a net food trade surplus--that
is, they exported more food than they imported--until 1980. After 1980, that switched. And since
the Doha Round began in 2001, the liberalization of agricultural trade has resulted in an enormous
ballooning of the trade deficit for food for the least developed countries, those who can
least afford to pay. It's more than double what it was in 2001, the food import bill.
And the FAO just recently estimated that the total food import bill in the world this year
is going to be $1.3 trillion, an increase of some 20 percent over 2010, and that the
countries hardest hit by that rising food import bill due to rising prices and rising
volumes of imports are the so-called low-income food deficit countries, those who most need
the food, and least developed countries, who are seeing an estimated 30 percent increase
in their food import bills. So that's one of the problems that definitely needs to be
JAY: Now, just as in several of our previous interviews we've talked about how NAFTA affected
Mexico and how dumping of cheap agricultural--American agricultural products undercut the domestic
production of food in Mexico, is it something similar in these other countries?
WISE: Absolutely. These were structural adjustment programs that mandated, you know, that the
state reduce its involvement in the economy with the liberalization of trade in agricultural
goods. So the removal of protections for domestic food producing sectors and [incompr.] the
industrialized agricultural products from the global north and swamp out those markets.
So that's a direct--the rise in the--in food import bill in the global south is a direct
result of some of these liberalization policies. And, unfortunately, that's one of the ironies,
really, about this current round of negotiations. No one expects anything really significant
out of these meetings. But even modest measures that were proposed by low-income countries,
by least-developed countries--.
JAY: What are examples of those measures?
WISE: There was a proposal to simply exempt humanitarian aid shipments from export restrictions,
something that the G-20 had actually endorsed, and the WTO General Council, they couldn't
get agreement--enough agreement on it to even include it on the agenda.
JAY: So what's the obstacle to reaching even minimal agreement if they're so paralyzed?
WISE: Well, there are so many obstacles that we've seen. In effect it's the same obstacle,
I would say, that we're seeing in most multilateral negotiations now, which is the most powerful
countries are now seated at the table with some emerging economies, and they want to
exact concessions from those emerging economies for their companies' benefit. And emerging
economies, like Brazil, like China, like India, are not so willing to grant these. They're
newly industrializing. They don't feel like they've benefited from the trade rules and
other international rules so much up to now, and the concessions are seen as kind of late
demands in a process that, remember, was supposed to bring about development.
JAY: Now, apart from the trade imbalances, there's another issue, which is the real underlying
cause of some of these food bubbles. Is anything being done about this? Which has to do with
speculation, and I guess the other big component is biofuels. But there was supposed to be
some kind of controls on speculation. And we know some of these big commodity traders
that are starting to own so much of the world's food supply, not only do they own it, but
they also hedge it and speculate on it after they own it. So is anything being developed
on this front?
WISE: No, and that's the--I think there have been modest--very modest efforts to control
some of those things through legislation, right, the Dodd-Frank law and the weak implementation
of it, reforms in Europe. The G-20 actions on this were particularly disappointing, because
the French president, Nicolas Sarkozy, had really taken on the food security agenda and
made it central to the G-20's [incompr.] That raised a lot of expectations that there was
going to be some real action, some real movement on controlling volatility, on speculation,
on biofuels policies, another key kind of recognized drivers of the price spikes that
we've seen in the last four years. And by the time the G-20 met in Cannes in November,
that agenda was basically gone. The food security barely made it onto their final communique.
The steps that they took were incredibly modest, endorsing calls for market transparency measures,
so that we might know better what the physical inventories are of different stocks of food
in the world. That could be good. It might not work. And in any case, it doesn't get
at the underlying problems with speculation. There's very clear evidence, a really important,
interesting paper that showed really very persuasively that the cause of underlying
price rises over a long period of time in food prices was the U.S. ethanol program in
particular, that you could track the generalized rise in food prices, separate from the speculative
bubbles, by that rise in the conversion of U.S. corn land to ethanol, and you could track
the price spikes to speculation in very clear ways. And yet what has been done on speculation
and biofuels convergence? Virtually nothing. Virtually nothing.
JAY: So if Americans are going to demand something of their government, those are the two issues
they should be demanding something about, speculation and biofuels.
WISE: Those are really top-priority issues. They are top-priority issues. And they--and
there is, I would say, on the biofuel expansion question, close to an international consensus
[incompr.] this is a very important driver of high food prices. On the speculation question,
there's a lot more debate, but I think there's still a very strong body of evidence to say
that first you should do no harm, that speculation and regulation of that speculation would actually
impose very few costs on society at large, only on the large traders who benefit from
it. But failing to re-regulate would--runs the risk of huge costs for the population
at large.
JAY: And to what extent is corn ethanol still subsidized by public money?
WISE: Oh, no, still highly. It's still very highly subsidized, and there are still [incompr.]
protections against ethanol from outside. So it's still a--the truth is that removing
those supports at this point with oil prices so high wouldn't necessarily--isn't likely
to stop the conversion of land to ethanol, but it would probably slow it somewhat. And
in any case, the larger question for food security issues is: are there measures that
the international community should take that will proactively slow biofuel expansion? One
that some have suggested is that there should be a way to trigger the shifting of use of,
say, corn in the United States from ethanol production to food when food prices are high,
so that there's--in effect, the ethanol industry, corn for ethanol serves as kind of a reserve
of corn for food. That really doesn't get much of a hearing at this point among the
powers that be.
JAY: Well, that's going to take some government intervention. It won't just happen by market
forces.
WISE: Absolutely won't happen by market forces. And the market--and that's the scary thing
about the--thinking about the food crisis, right? The food--what we call the food crisis
was a food price crisis in 2007 and '08, and that repeated itself in 2010 and '11. And
all of the ingredients are still in place for there to be further food price spikes
like we saw before. And the prices at this point are so much higher than they were five
years ago that the cost is already dramatic and devastating to those least able to afford
it.
JAY: Yeah, I guess that's the point. We're talking about malnutrition and even starvation
amongst millions of people. Thanks very much for joining us, Tim.
WISE: Thank you, Paul.
JAY: And thank you for joining us on The Real News Network.