The Ethanol Effect and Global Hunger [Graphic]

The Ethanol Effect from Mother Jones

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I disagree with one assertion from this graphic in particular. It states that as the U.S. increases the production of ethanol, corn exports will have to shrink to meet internal demand. Since we currently export 2/3 of the world’s corn, this would lead to the worsening of global hunger.

Hmm, but how is it possible for the U.S. to export that much corn and outcompete local producers in developing countries in the first place? U.S. agricultural subsidies allow us to sell corn and other foodstuffs at such low prices that many producers/farmers in emerging markets are forced out of business. I would argue that in the long term, the reduction of corn exports by the U.S. would have a better chance of decreasing global hunger as local providers could sell their wares at competitive prices and bolster their local economies.

From the Economist:

Three-quarters of the world’s poor live in rural areas. The depressed world prices created by farm policies over the past few decades have had a devastating effect. There has been a long-term fall in investment in farming and the things that sustain it, such as irrigation. The share of public spending going to agriculture in developing countries has fallen by half since 1980. Poor countries that used to export food now import it.

Reducing subsidies in the West would help reverse this. The World Bank reckons that if you free up agricultural trade, the prices of things poor countries specialise in (like cotton) would rise and developing countries would capture the gains by increasing exports. And because farming accounts for two-thirds of jobs in the poorest countries, it is the most important contributor to the early stages of economic growth. According to the World Bank, the really poor get three times as much extra income from an increase in farm productivity as from the same gain in industry or services. In the long term, thriving farms and open markets provide a secure food supply.

Update: Pete sent me this interesting story on Farmers in Africa fighting back against Western subsidies.