Commodity Corner

Views on commodities and energy

from Global News Journal:

Can export bans be challenged at the WTO?

 

 

Russian grain harvest

Russia’s ban on grain exports as a heat wave parches crops in the world’s third biggest wheat exporter has raised questions whether such export curbs break World Trade Organization rules. Russia is not a member of the WTO, and it remains to be seen how its new grain policy will affect its 17-year-old bid to join. But other grain exporters, such as Ukraine, which is also considering export curbs, are part of the global trade referee.

WTO rules are quite clear that members cannot interfere with imports and exports in a way that disrupts trade or discriminates against other members. But in practice most WTO rules aim to stop countries blocking imports – shutting out competitor’s goods to give their own domestic producers an unfair advantage.

WTO protest

 

 

Saudi Arabia and other members of the oil cartel OPEC (not all of whom are members of the WTO) routinely control the production and hence export of oil to defend target prices, but have not faced challenges at the WTO.

What can be challenged are restrictions on exports designed to hurt competitors. The United States, European Union and Mexico are currently suing China at the WTO over Beijing’s export duties and other restraints on raw materials. They argue that these make the raw materials more expensive for foreign competitors, putting them at a disadvantage to Chinese processors.

Millions Fed: some solutions close at hand

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More than a billion people go hungry each day — about the same number as did in the late 1950s. That’s both a “tragedy on a grand scale” and an “astounding success,” according to a new report called “Millions Fed,” produced by the International Food Policy Research Institute and the Bill and Melinda Gates Foundation.
    
While the absolute number of hungry people is the same as it was 40 years ago, the proportion is dramatically smaller — one in six today, compared to one in three then, the report said. It illustrates 20 successful case studies where progress has been made in the fight against hunger.

Some solutions come from science: new varieties of wheat, rice, beans, maize, cassava, millet and sorghum. Others deal with markets, government policies, or the environment.
    
Two farmers from the Sahel region of Africa, oft plagued by drought and famine, visited Washington last month to talk about solutions they found close to home — one of the success stories trumpeted in “Millions Fed.”
    
Almost 30 years ago, farmers in Burkina Faso experimented with a traditional technique called “zai,” digging pits in their plots and adding manure to improve soils before the rainy season, resulting in dramatically better yields.
    
Yacouba“There was a long period of drought in my village,” Yacouba Sawadogo told reporters. “Many people left because their life was very, very difficult. But I decided to stay,” he said, explaining how he taught others the technique.
    
In Niger, farmers manage trees on their land to prevent erosion, improve yields, and provide livestock fodder. Before, women had to walk 6 miles to get firewood, but now they have enough for themselves and to sell to others, said Sakina Mati, who coordinates tree projects in six villages.
    
The projects have improved 13 million acres of farmland and fed 3 million people, said Oxfam America, a development group that works with the farmers.
    
It’s food for thought as rich nations ramp up efforts to help small farmers grow more food in poor countries. “In our approach toward solutions and programs, we really need to listen as well as talk,” said Gawain Kripke of Oxfam.
    
“Solutions don’t always come from us.”

But will shareholders back hunger fight?

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The world needs to spend $83 billion a year to ensure it can produce enough food amid a changing climate for its growing population by 2050, the UN’s Food and Agriculture Organization estimates.
    
Rich countries have pledged more than $22 billion over three years to help small, impoverished farmers grow and sell more by investing in seeds, fertilizer, roads and marketing infrastructure.
    
GATES/Philanthropists have thrown their weight behind the goal. Bill Gates challenged research companies last week to make new technologies available to small farmers without charging them royalties. (Click on the link at the bottom to see his full speech to the World Food Prize forum.)

Corporations have said they see themselves as part of the fight too, particularly when it comes to research. But Robert Thompson, a former World Bank official, says he’s pessimistic the private sector will be able to contribute enough. “Their shareholders won’t stand for them solving all the problems of the developing countries, and giving it away,” he told Reuters.
    
Thompson“It’s going to take subsidies or at least a public sector contribution to engage their research horsepower,” said Thompson, now an agriculture professor with the University of Illinois, who has pushed for more spending on agricultural development for 40 years.
    
Agribusiness should be motivated to get involved in developing countries because they represent a future growth market for their products, Thompson said. “They should be willing to accept lower return on their own investments as an investment in the longer term, but we have to keep the short time horizon of the U.S. investment community in mind,” he said.
    
“Shareholders are brutal on companies that don’t meet their short-term profit expectations. In that sense, perhaps some of the European companies like Syngenta, BASF or Bayer … may have a little more license, if you will, to take a longer-term perspective than some of the U.S. publicly traded companies.”

Less talk, more action needed on food security

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World Food Day is Friday, and on opposite sides of the developed world, two large groups of experts have gathered to talk about the risks of food insecurity and what should be done to reduce hunger. In Rome, the UN’s Food and Agriculture Organization is mulling how to feed the world in 2050, and in Des Moines, Iowa, the World Food Prize forum will focus on the role of food in national security.

Last year’s spike in food prices raised the political profile of food security. G8 nations and the United States have pledged money and action. I spoke with Per Pinstrup-Andersen, an agricultural economist at Cornell University and a Food Prize laureate, to get his take on what that means. Here are some excerpts. 
     
pinstrup_andersenQ. What do you think is different now in terms of the political will to address this problem? 
A. I think there is an increase in the political will. However, past initatives or past rhetoric of that kind didn’t really result in much action. I’m very concerned that we’re going to see a lot of additional rhetoric and a lot of plans being designed and discussed during the next year or so, but probably not very much action. Insofar as developing country governments are concerned, I doubt if the political will has changed at all. There is a lot of talk. But unless the developing country governments decide to prioritize the eradication or at least the amelioration of poverty, hunger and malnutrition, not much is going to happen.