Wednesday, December 03, 2008By Matt McKinney
Star Tribune, Minneapolis (USA)SAMPOAH VILLAGE, CAMBODIA--Some of the worst fallout of the world's food crisis this year hit villages like this one, a ramshackle collection of unsteady huts set next to rice fields.
Here, on a late summer day, Som Samuen stood in her doorway as she considered what had become a daily problem: How would she find dinner for herself and her 12-year-old son, who scampers through the fields on rainy days to hunt for crabs and minnows that dart through the shallow water of the rice paddies.
The washerwoman lays claim to a meager income on most days, and when the price of fish and rice shot up this year during a global food crisis, her tenuous hold on life began to fray. Some days, she and her son don't eat.
Cambodians have a phrase, "the hungry season," for the weeks in late summer that fall just before harvest. This year it hit like a hammer.
People here, some of the poorest in the world, simply couldn't keep up as food prices raced upward this spring, fueled by a food shortage, poor crops and commodity speculation in financial markets around the world.
Food riots broke out in some countries, and dozens of nations began restricting exports to ensure there would be enough to feed their own residents -- which sent food prices even higher in other countries.
Although the crisis has eased, the shocking specter of famine led to a renewed debate about the benefits and limits of free trade, particularly with some food companies and farmers in Minnesota and other developed nations enjoying some of their fattest profits on record.
Today, some 967 million people worldwide -- 44 million more than last year -- exist in a state of hunger like Samuen and her son, unable to afford the higher prices for the 2,100 calories a day needed to nourish the body. And though food prices can be difficult to predict, the United Nations has forecast that the world by 2050 will need twice the amount of food produced today to feed an expected global population of 9 billion people.
Executives at Cargill and other international food companies say free trade is the only way to meet that demand. But a growing chorus of critics say that global trade policies and practices have left residents of developing nations more vulnerable to market gyrations and calamitous natural events, such as the prolonged drought in Australia that has helped drive up rice prices. Producing food locally is far more efficient than carting it around the world.
Stand at the edge of a Cambodian rice field and it's hard to imagine anyone would go hungry here. The neon green fields stretch to the horizon in some places.
But the need for more food in Cambodia has rarely been more urgent than it is today. About one in five Cambodians don't have enough to eat, some 2.8 million people. A full 44 percent of Cambodian children are malnourished, according to the World Health Organization. Rising food prices tipped 105 million people into poverty, a World Bank economist estimated, with about 210,000 Cambodians counted in that number.
Higher prices for their crops didn't benefit farmers in developing countries enough to counteract the extra burden on their budgets. That's largely because many Third World farmers don't grow enough to feed themselves and must supplement their diet with food bought at market, according to a World Bank analysis published this summer.
The Cambodian government urged farmers to plant more rice this year, hoping to increase the national crop from 6.38 million acres to 6.42 million acres, said Prak Thaveak Amida, a government agriculture minister.
That might require more land though since yields have remained steady for a while, according to the International Rice Research Institute.
Annual rice production of about 6.7 million tons would make a valuable cash crop for export, but Cambodian farmers, like those in other poor nations in Asia, Latin America and sub-Saharan Africa, use decrepit machinery that makes the rice unsuitable for export markets. Instead, about a third of the crop in its raw form moves out of the country by informal channels to Vietnam, where it's processed in high quality mills.
If Cambodia's local rice industry were more advanced with storage silos, modern mills and the capital to buy a farmer's crop for processing, the country could export like its neighbors to the east and west, Thailand and Vietnam, the world's No. 1 and No. 2 rice exporters. Corruption and bribery plague Cambodia, foiling outside investors who could help develop the country's economy, according to Transparency International, a group that monitors government corruption.
The pressures that drove U.S. grocery bills up 7.5 percent in the past year were more acutely felt in the developing world, where people often spend a larger percentage of their income on food. The high prices led to the government's collapse in Haiti, and fear of shortages led 47 countries, to restrict trade this year, including Vietnam, Cambodia's neighbor to the east. The move ensured plenty of rice within Vietnam, but left its trading partners scrambling to make up the difference. Prices in Cambodia quadrupled from their historic averages, forcing many families to go with less -- or without.
On a day in late August, a wooden boat laden with bags of unmilled rice ferried up the Mekong River to the shoreline outside the bustling city of Can Tho, Vietnam. The boat was soon swarmed by men lifting bag after bag out of the boat's hold and onto a conveyor belt that ran into Tran Quoi's rice mill. Quoi, a private rice seller, had a competitor for most of this year that he couldn't beat: his own government.
The government-owned rice mill near his office rode out the trade barriers imposed by agriculture ministers in Hanoi, but his business relies on exports.
"It's unfair for some poor people," said Quoi, who normally mills the rice and ships it out for the export market. He was eventually allowed to sell on the export market when the government lifted the restrictions this fall, but by then prices were dropping and he had lost the best market.
Cargill and other companies say trade barriers were precisely the wrong response to the crisis because they send the wrong signals to everyone in the food chain.
They say limiting exports means lenders will shy away from financing purchases of land or equipment; scientists will devote less time and money working to improve crop yields; and farmers will have little incentive to boost efficiency or output.
"In the countries that hold prices down, they send a less vibrant message to their farmers to expand production," Cargill CEO Greg Page told the Star Tribune this summer, drawing on the example of Argentina, where leaders instituted price controls and export restrictions in the face of rising food prices this year. "So I think it's easy to make the argument that in Argentina, by dramatically suppressing the price of grain in the country at the same time they have to pay world price for fertilizer, they mute the signal to the farmers of Argentina to produce more to feed the world's need."
Cargill is not alone in that belief. Economists and government officials in the United States and elsewhere, including the World Bank and International Monetary Fund, argue that each country should simply grow those foods that it's most efficient at growing, and trade for the rest, a model of "comparative advantage" that is the goal of free trade.
The English economists who coined the phrase once made this argument using wool and wine as examples, saying it made more sense for England to trade its excess wool to Spain for wine than to plant vineyards.
For consumers, free trade makes buying Chilean grapes easier. For Minnesota farmers, it creates more markets for their soybeans, corn and milk. And food companies such as General Mills can more reliably replace expensive soy oil with palm oil.
Of course, trade restrictions are not limited to developing nations. The United States, France, and other nations use subsidies or tariffs to protect a variety of agricultural interests from foreign competition.
Despite this year's turmoil, free trade has not been an easy sell to the American public, with many blaming it for the loss of American jobs or the import of contaminated food. A Pew Research Center poll this year found that 48 percent of respondents believe free trade agreements are bad for the United States. A Wall Street Journal/NBC poll found similar fears, with 58 percent of Americans saying globalization has subjected this economy to unfair competition from cheap labor.
The world's on-again, off-again embrace of open trade was off again this summer when the latest round of negotiations at the World Trade Organization blew up in July. The talks -- the Doha Development Round -- came undone because some WTO member nations worried that the agreement wouldn't protect against surges of cheap imported food that would then collapse local farming economies.
For Alexandra Spieldoch, a trade expert and free-trade critic with the Institute for Agriculture and Trade Policy, a Minneapolis-based think tank, the policies in Doha are precisely the problem. Privatization schemes, deregulation and trade facilitation, are "exactly the approach that has contributed to many of the problems we are seeing today in the food system," she said. "It's likely that this approach will worsen rather than ease the crisis."
The priority should be on local food systems, she added. Her argument is the counter to Cargill's view of "comparative advantage," one that says a country's food security relies not on trade but on education and investment in local agriculture. It's a twist on the old axiom that would have people teaching a man to fish rather than giving him food.
Local investment, and not free trade deals with Europe or the United States, would feed more people in Africa, argued Patrick Woodall, senior policy analyst at Food and Water Watch, a Washington-based think tank.
"It's not that tons of people in Africa are drinking coffee and eating chocolate bars," he said. "They're dedicating acreage to crops that are exported to the U.S. and Europe, and the continent's going hungry."
The problem has been exacerbated by low prices for commodities such as cocoa, coffee and cotton. "This has been comparatively advantageous to the people who buy raw coffee beans, and but it's not comparatively advantageous to those who are hungry."
Stepping into the rice market in Phnom Penh's neighborhood of Ben Keng Kong means navigating a warren of stalls and vendors jammed side-by-side. Plastic tarps strung overhead keep at bay some of the heavy rain that comes every afternoon of rainy season. Kol Kim, 65, withered and shirtless, sat in the shade of one such tarp on a late summer day behind mounds of fresh rice.
His customers had been happier lately because prices had retreated since April, when rice sold for nearly four times its historic average. Still, prices are about double what they were, he said, about 70 cents per kilogram for the best quality rice. Some customers were buying more than they needed, fearing prices would go back up.
Said Kim: "They buy it just to store it."
Matt McKinney --612-673-7329
