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Food crisis, an announced disaster: between protectionism, humanitarian aid and free market – A column by Ingo Plöger

Ingo Plöger | President of CEAL, Brazilian Chapter

The combination of the conflict in Europe, the end of the pandemic, and the reestablishment of global production chains, resulted in energy and supply inflation, which directly hits the price of food worldwide, without the population’s purchasing power having adapted to this level. In September 2021, we already had a gloomy picture of food shortages and price increases; however, with this combination, the situation has deteriorated significantly. More than 800 million inhabitants of the 7.8 billion are in the hunger zone, and this number increases day by day 1). In Brazil, the population index regarding severe food insecurity or hunger rose by 50% 2). Developed countries, such as the European Union, USA, Japan, among other, have made areas subject to  environmentally protection more flexible to encourage domestic producers to plant soy, corn, rice and wheat in these conservation areas, regardless of whether they are transgenic or not.

Other countries that have high stocks of products offer their products at subsidized prices on the market for the sake of immediate trade in the short term. Countries at high supply risk do not receive the basic supply for their population in time. It is in this climate that countries linked to the WTO are meeting in Geneva at the MC 12 (12th Ministerial Conference), to try to find sustainable solutions. India, which is trying to postpone its protectionism, including offering its stocks below market prices in the market, is speeding up the distortion of protectionism. Meanwhile, the WTO expects the US to reappoint the arbitrators of the Controversy Settlement System, which is literally at a standstill, as it is unable to issue resolutions. This mechanism, however precarious, established an order in international trade in relation to fair trade.

In the current situation, without an enforcement body, the rules for fair and balanced trade are no longer effective. The consequence is the abandonment of good multilateral governance, which harms everyone, but much more so developing countries and countries at high humanitarian risk.

The consequence is the abandonment of the slightest sense of solidarity, with hunger crises perhaps never witnessed before by humanity. Protectionism takes place in developed countries, which, in addition to preventing good free trade practices, encourages other countries to do the same.

The complete demonstration of lack of solidarity in the pandemic, where developed countries kept vaccines in stock, while countries that had very low vaccination rates were exposed to the virus, was not enough. Everything indicates that we are heading in the same direction as far as the world food supply is concerned. The European Union, which is certainly in a delicate situation regarding its security, as it is failing to receive the expected wheat from Ukraine, it is opening its European environmental protection floodgates to encourage production in hitherto environmentally protected areas.

It did not occur to any of the MEPs who voted for this authorization that importing these cereals could be done with no problem, but in the name of safety, they preferred to keep the market closed and give subsidies making protected areas available.

The same absurdity is done in relation to bioenergy fuels, where the intention is to reduce the mixture of ethanol in gasoline, based on “land use” to provide more areas for food production. The option of using an agreement negotiated over 20 years ago, like the MS-EU, to import sustainable biofuels to alleviate the costs of fossil fuels, today well above US$100/barrel, does not cross the European legislators’ minds. They decide that, from 2034 onwards, they no longer want combustion vehicles, determining that Hybrid Flex vehicles using biofuels emit less than the electric vehicle.

The so widely publicized Green Deal is increasingly showing itself as a Green Wall, where intelligent cooperation options are replaced by demagogic protectionism that imposes principles of agriculture from the semi-temperate region to tropical regions in other countries. Humanitarian aid for regions in extreme poverty finds support if directed through management bodies recognized by the World Food Program, among other.

Protectionism, and subsidized regulatory stocks were shown to be state interventions in free trade that do not benefit the needy population. For many years, we have already recognized that the distribution of food free of charge in the medium and long term achieves exactly the opposite as the humanitarian objective, and is additionally subject to corruption, misuse of the intents and total lack of investment in this area for the development of food production.

Brazil and other countries have shown that, with well-controlled minimum income programs, the local economy gets market incentives to start a development process. While this agenda of solutions for the free market is very far from the eyes of the government, expenditures in security for the first time managed to exceed 2 trillion US$/year. According to UNDP’s own calculation, the minimum income against  hunger is around US$1/day/person, while the minimum income against extreme poverty is around 5 US$/day/person.

We are currently evidencing somewhere over 800 million people who are considered malnourished, with around 5 million people dying of hunger, most of them children. As the corporate world engages in ESG and launches its commitments to employees, customers and stakeholders, hunger and government intervention increases. The best remedy against hunger and misery is work, income and free enterprise, with education. For the least favored population, it seems that this principle is being ignored, and this not only here in our Latin America, but around the world; and then we are surprised because radicals and populists are advancing in our democracies.

 

Ingo Plöger is a Brazilian Entrepreneur, President of CEAL Brazilian Chapter

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