It’s the Stupid Politics

The crisis, however, has upended the WTO debate. While many parties, particularly the United States and Europe, were arguing over which side needed to do more to free markets, the race is now on to close markets. Surplus-rice growers, including India, Vietnam, Thailand and Cambodia, have imposed new export restrictions to curb inflation at home, leaving the Philippines, Indonesia and other major importers to scramble. It's a starve-thy-neighbor policy that is sure to raise global prices and worsen the crisis.

It makes little sense to press for more farm market manipulation when that's what created the problem. For decades, America and the European Union have lavishly underwritten agribusiness—subsidies totaled $283 billion in OECD nations last year—while keeping domestic prices artificially high. That created a vast problem of overproduction, which rich countries solve by dumping the excess on world markets, which, until recently, was driving down prices.

Mexico is a prime example: after NAFTA came into effect in 1993, subsidized U.S. corn flooded Mexican markets, slashing local corn prices by 70 percent within several years. The same dynamic has sent cheap European sugar to Africa, cheap U.S. rice to the Caribbean, and chicken from both to Ghana and Cameroon. All the while, the EU and the United States retain high tariff walls to keep out developing-world competition. In many cases, says Jack Thurston, founder of the U.K.-based farm-policy watchdog Farmsubsidy.org, even food aid is thinly disguised dumping. It's no surprise that when grain prices exploded this winter (Thai rice was up 280 percent from December to April), driven by rising demand and supply shocks (declining yield growth, bad weather and the shift of corn to biofuels), poor countries were ill prepared to ramp up production.

Of course, it's not only rich countries that are at fault. Governments across Asia and much of the developed world have their own trade distorting policies (map), and have made mistakes that choked supply. They've allowed irrigation systems to break down, public agricultural spending to fall and irreplaceable rice land to be grabbed for pell-mell urbanization undertaken by "city planners who seem to take Los Angeles rather than Hong Kong as their inspiration" and build out instead of up, as Standard Chartered put it in a recent report about China. According to the International Rice Research Institute, Vietnam, Thailand and Bangladesh are losing tens of thousands of hectares of prime farmland a year to urban and industrial sprawl.

Asian countries geographically ill suited to large-scale rice production have come to rely heavily on imports and now regret it. In Malaysia, the government has promoted export-driven palm-oil plantations, which are better suited to the local climate and geography than rice. Now the annual food bill has grown so expensive that Prime Minister Abdullah Badawi recently announced a $1.3 billion scheme to create massive new rice farms on Sarawak.

Even the Philippines, a rice importer since the 19th century and now the world's largest importer, is rethinking its reliance on global markets. Agriculture Secretary Arthur Yap says it is "an imperative" that the country achieve rice self-sufficiency by 2011. But that will require massive investment into places like Queru Bin, a hardscrabble village on the island of Negros, which was hit by famine in 1973 and again in the 1980s. Residents, most of them too poor to buy enough rice at today's high prices, sow tiny plots of yams or cassava to fill their bellies.