Swaminathan Aiyar at PostGlobal

Swaminathan Aiyar

New Delhi, India

Swaminathan S. Anklesaria Aiyar is the Consulting Editor of The Economic Times, India's largest financial daily. He writes a popular weekly column, titled Swaminomics in the Times of India. He spends roughly half the year in New Delhi and half in Washington D.C., where he is a research fellow at the Cato Institute and an occasional consultant to the World Bank. He has been the editor of India's two main financial dailies, The Economic Times (1992-94) and Financial Express (1988-90). He was also the India Correspondent of the British weekly, The Economist, for most of two decades between 1976 and 1998. Close.

Swaminathan Aiyar

New Delhi, India

Swaminathan S. Anklesaria Aiyar is the Consulting Editor of The Economic Times, India's largest financial daily. He writes a popular weekly column in the Times of India titled Swaminomics. more »

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Both Bush and Greens Fuel Food Shortage

George Bush and the greens, usually foes, have joined forces to create a food shortage that today threatens millions in poor countries with hunger and starvation.

Greens have long demonized the consumption of petroleum and genetically modified foods, and crusaded against carbon. To this fatal broth, Bush has added the notion of energy independence for the US, backed by enormous subsidies and mandatory targets for converting corn to alcohol. This policy aims at doubling use of corn-based alcohol in gasoline by 2008, and quintupling it by 2022. Europe has mandated 10% use of biofuels in transport by 2020.

The result is a rising diversion of agricultural land from food to fuels. This has happened just as fast economic growth has lifted the demand for meat in many developing countries, and it takes several tons of grain to produce one ton of meat. Combined with two successive droughts in Australia, this has caused a modest shortfall in food availability. But food demand is so inelastic that even a small shortfall sends prices shooting up. Other than Brazil, few countries can quickly bring additional arable land under cultivation -- all the best land has long been harnessed, and only marginal lands are uncultivated. And the green agitation against genetically modified foods, backed by many European governments, has discouraged developing countries from planting high-yielding modified varieties, for fear of economic sanctions.

Ironically, even if the US and Europe meet their biofuel targets, these will meet only 6% of their transport fuel needs. So, mandated biofuel use cannot give the West independence from Middle East oil supplies. But it can cause hunger and death for millions of poor people by raising food prices. Many green groups that claim to speak for the hungry millions have been deafeningly silent about the terrible impact of mandatory biofuel targets in the US and Europe, since the greens once led agitations for those very biofuel policies, blissfully ignorant of the consequences for the poor. Today you hear of activists appealing for more food aid, but no agitation for abolishing the insane, inhuman policy of mandatory biofuel targets.

Greens may have reasons to worry about the impact of global warming a century hence. But the law of unintended consequences plagues all lofty planning by those with golden hearts. Today’s food shortage is a classical demonstration of that.

Finally, Third World countries have themselves contributed to high food prices. Many of them have banned or curbed food exports to improve domestic availability. But this in turn has exacerbated the food shortage in the world market, hitting chronic importers like Bangladesh, the Philippines and many African countries. This has rightly been called a “starve-my-neighbour” policy by the head of the International Food Policy Research Institute.

What is the way forward? Scrap biofuel targets and subsidies immediately. That is the only policy action that can boost food production in the short run by switching global acreage substantially from fuel to food. All other policies—improving agricultural research, improving irrigation, ending scientifically nonsensical curbs on GM crops—will have much less impact, and take more time to work.

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