When Market Forces Cant Feed the People

May 9, 2015

When Market Forces Cant Feed the People Thats the headline of this front-page story in todays Globe and Mail, Canadas largest national newspaper, concerning how the African nation of Malawi has rapidly transformed its food economy from famine to surplus, saving countless lives: Back in the 1990s, the Malawi government gave the poorest farmers a package of fertilizer and seeds every year. The program was so popular that in 1999, they made it universal, for all farmers, and posted a large national surplus. But starting in 2000, the donor nations on whom this country depends for nearly half its budget forced the government to scale back and then finally to scrap the policy, saying it distorted the market and would prevent a sustainable agricultural base. The result? Smaller and smaller harvests and two years of famine. [snip] Starting in 2006, and on a larger scale this year, the government distributed coupons to low-income farmers to allow them to purchase 50-kilogram sacks of fertilizer for 950 kwacha($7) rather than the market price of 4,500 kwacha. As a result, the average farmers yield jumped to two tonnes a hectare from 800 kilograms. Bottom line: food production is up 150%. But at what cost? The fertilizer subsidy cost the government $62-million - 6.5 per cent of the total government budget, a whack of cash in the words of one top economist - but that pales in comparison to the $120-million the government spent importing food aid in the 2005 famine. And the sale of maize to Zimbabwe and other countries will inject an additional $120-million into the national economy In other words, the subsidies only cost half as much as previous measures, and generated enough income to pay for themselves. Twice over. In addition to ending the famine. This is, of course, pure sacrilege to those who hold free markets as a hallowed force of religious power. (Odd to see it front-paged in a national newspaper. Of course, Im not in the US at the moment. Im in Canada, where comparatively well-funded public health, transport, and educational systems would have destroyed the economy by now, if some disembodied heads on CNBC were even lightly tethered to earth.) My point here is not to promote or decry any particular economic agenda I have none, personally but to yearn for the sort of open-minded pragmatism that allows, yknow, a newspaper to actually report something useful like this without being instantly denounced for a breach of ideology. What worked in Malawi may or may not work anywhere else. But it worked in Malawi. Ideology apparently helped cause a famine. Moving past ideology helped stopped one.

 

Source: Bob Harris, Oct 12, 2007 citing "When 'Market Forces' Cant Feed the People," Globe and Mail.

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