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Trade barriers fuel world food shortage: NFF

2 June 2008

IN THE midst of an escalating global food crisis – precipitating riots in several countries – Australian farmers are increasingly uneasy about the knee-jerk leap to trade distorting policies by foreign Governments in a misguided bid to lower their domestic food prices.

The May Westpac-NFF Commodity Index recorded a global shift – dropping 5% – as buyers delay purchasing stock.

“With the northern hemisphere wheat harvest drawing closer, international Governments are hoping prices will continue to ease as production increases, particularly developing nations struggling with the increased price of food,” National Farmers’ Federation (NFF) Vice-President Charles Burke said.

“Egypt, Morocco, Senegal, Cameroon, Haiti, Indonesia and the Philippines have all seen violent riots and mass protests as their people struggle with high agricultural prices and a lack of supply. Despite softening slightly this month, agricultural commodity prices remain 22% higher than this time last year.

“In response to high food prices, some Governments have counteracted with short-sighted policies to restrict food exports in an effort to bolster domestic supplies. Farmers in Argentina, Kazakhstan, Egypt, the Ukraine and Vietnam, among many others, are actually discouraged from boosting their production to meet world demand owing to poor policy decisions by their Governments. These actions are, in effect, exacerbating and drawing-out the global shortage of food.”

The NFF – longstanding advocates of free trade – asserted: “those politically weak and ill-advised policy decisions, which saw Doha stall, are now coming home to roost”.

“Trade distorting subsidies, tariffs and other artificial trade barriers mire all production and send the wrong market signals – a sure-fire way to create dangerous situations of under- and over-supply, while breeding inefficiencies within the sector,” Mr Burke added.

“Until recently, the net effect of irresponsible protectionist government intervention has driven over-supply, distorting markets and driving the global price of agricultural produce down to, in many cases, unsustainable levels.

“However, over the past few years, the global market has drastically turned to under-supply. Amid muddied market signals caused by world agricultural domestic support policies and trade barriers – especially in the European Union, the United States and other developed countries – the global farming community is actively prevented from responding to the food crisis in a timely fashion.

“Now, government intervention restricting exports to meet domestic food shortfalls is only further exacerbating the problem. This bizarre set of events starkly highlights the critical need for governments to get serious about, and genuinely re-ignite, the World Trade Organization’s Doha Round of global trade reform. Ending this farcical and dangerous charade is now critical.”

[ENDS]

Media Enquiries: Brett Heffernan on (02) 6273 3855 or 0408 448 250.

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