allAfrica.com: Ghana: The Global Food Crisis - Misconceptions and Facts (Page 1 of 2)

Recently, a commentator published an article about the free market and food security on a much patronised Ghanaian news website.

His views summarised a great deal of the reactions to the so-called global food crisis that have come from pundits in recent weeks.

We are taking the opportunity therefore to use excerpts of his article to address some of the misconceptions that have characterised the debate so far. In the said article the writer, one Agbodza, accuses the free market of many crimes.

He acknowledges that the reasons advanced for the general rise in food price levels are numerous and complex, but offers in the same breath a point of view that suggests that free-market driven, private sector-based policies are solely responsible for the supposed crisis. To crown this string of insights, he asserts that " the free market private sector has little interest in feeding Ghana by meeting the costs of this required investment." The facts of the matter, as far as the food security is concerned, are in direct contradiction of most the claims. We will examine the following key assertions.

1) "You have land-producing food and you switch it to produce biofuel when you cannot feed yourself; who in their right mind will do this except the lunatic free market?"

The free market or its proponents have never been the driving force behind the fashionable trend towards farmland conversion to biofuel use. Indeed, by free market terms, biofuel production was unprofitable, and therefore unadvised, until very recently. The steam that pushed farmers to switch to biofuel production in certain countries was supplied by government and foundation subsidies under the well-intentioned, but misguided, belief that biofuels could replace less environmentally friendly fossil fuels. The most enthusiastic national producers of biofuel, on GDP relativity terms, were countries like Malaysia and Brazil. None of these countries can be accused of a history of being pushed around by free market fundamentalists. More often than not, centrally devised "national development plans" made biofuel exploitation a cardinal feature of economic policy.

The Brazilian project Mr. Agbodza cites has been brought to Ghana under the auspices of the unquestionably leftist Lula Da Silva, President of Brazil, not libertarian activists in Rio. Mr. Agbodza makes the elementary error that free market ideology is identical to "corporatism", which one will suppose equates to a belief that "syndicalism" is the same thing as scientific Marxism. Rule by giant corporations has been seen under both fascist and communist regimes, but is abhorred by all classical liberals. Corporations are not natural allies of free market enthusiasts.

In fact for each group of shareholders of corporation X, the best market conditions might actually be found in the situation where corporation X enjoys a monopoly in the industry granted by a corrupt government. Classical liberal free market ideology is about "competition, competition, competition". The central tenets of the libertarian faith, such as comparative advantage and property rights, are all glued together by the principle of just, free, and unfettered competition amongst enterprises to service the self-determined needs of free individuals on a level playing field guaranteed by impartial institutions. We sincerely doubt that Mr. Agbodza, when he refers to the free market, actually understand the matter at hand to adequate depth.

2) "What we know for a fact for Ghana is that like all other developing countries we now have to spend a lot more on food imports. There are estimates developing countries spend up to 80% of their budget on food imports."

The point Mr. Agbodza wants to make with the statement above is not clear, but it appears he is rehashing the old theme: "imports bad, exports good". Once upon a time, that viewpoint would have been laughed out of court as "mercantilism". Why do we have to spend "more" for food imports? For as long as I can remember the concern of leftist-statists like Mr. Agbodza had been that we were the victims of price-dumping.

As a result of the Common Agricultural Policy, they argued, we, here in Africa, were being inundated with cheap food. Now that a temporary blip in food prices is being observed, the argument has taken a 180% turn: we are being hammered with expensive food. The resolution of this false puzzle is a matter of basic economics. If food imports were indeed expensive, local producers would simply have exercised their comparative advantage (akin to what some call market arbitrage) and begun to recapture market from importers.

If there is a genuine case of alarmingly increasing food imports (an odd scenario giving that malnutrition is supposedly still a concern, and we are yet to see surplus imported food being carted into the sea), the sound inference can only be that they are relatively cheap. If they are, then Ghanaians are saving resources (by buying relatively cheap food) that can be used in other economic endeavours. If a trend is discovered that suggest categories of food that used to be produced in Ghana are now being imported, then that trend should be seen as an economic signal highlighting Ghana's growing un-competitiveness across those relevant categories. Those signals are then used by shrewd local investors to shift resources around to areas where Ghanaian production factors suggest greater competitiveness. Jobs lost in the old uncompetitive economic sectors are re-gained by new jobs being created in the competitive economic sectors.

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