Food prices are on the rise across the globe, fueling much of the political unrest that continues to rage in parts of the Middle East. Unexpectedly severe weather and soaring demand have pushed food prices to “dangerous levels and threaten tens of millions of poor people,” said World Bank President Robert Zoellick earlier this month. “Global food prices are approaching an all-time high,” agreed Secretary of State Hillary Clinton in her testimony before the Senate last week.
If food shortages caused by the rise in prices continue, Latin America could see turmoil and unrest in the near term.
Costs of basic food staples such as sugar, wheat, and maize have risen sharply since last summer. The price of wheat doubled between June 2010 and January 2011, while maize prices jumped 73 percent.
As in Egypt and Tunisia, soaring prices stretch many Latin American countries to their breaking point. The lethal combination of high poverty rates and dependence on imports put Haiti, Bolivia, Guatemala, and Honduras at a heightened risk of social upheaval. While a few exporting countries like Colombia and Brazil have weathered the storm quite profitably, countries that rely heavily on food imports are taking a major economic hit.
On the whole, the response from Latin American governments has been to stem the bleeding without addressing the long-term wound. Officials in Tegucigalpa recently froze prices on 33 food products after extreme weather wiped out swaths of agricultural land last year. Shaken by protests over sugar prices, the Bolivian government says it plans to stockpile food to guard against a crisis.
Despite the best of intentions, these actions may actually be counterproductive. Governments that impose price controls and subsidies run the risk of subsidized food being sold outside the country, in which case the shortages become even more drastic.
The U.S. response has been even more fruitless. Global food shortages would not be so severe in the first place if not for the disastrously inefficient subsidy regime the government perpetuates. For decades, high agricultural subsidies in the U.S. and Europe have put farmers out of business in countries like Haiti and Honduras. The persistence of ethanol subsidies only intensifies the problem. The U.S. government is directing its energy into increasing counterproductive farm subsidies and foreign food aid. Instead, it should focus on reining in its own reckless spending and letting market conditions determine global food prices.
Unless U.S. and Latin American governments can step out of their own way, seeds of discontent may grow into a full-blown political crisis.
Ashley Mosteller is currently a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm