The head of the U.N. Food and Agriculture Organization urged help Wednesday for countries affected by a global food crisis caused by sharp increases in the prices of rice and wheat. Homi Kharas, Senior Fellow, Wolfensohn Center for Development, recently discussed the food crisis with Jeffrey Brown on PBS’s Newshour with Jim Lehrer, noting that the problem really lies with distribution and not food shortage.
JEFFREY BROWN: And here with more on the causes and consequence of the high cost of food is Homi Kharas, senior fellow at the Wolfensohn Center for Development at the Brookings Institution. He’s former chief economist for the East Asia region of the World Bank.
What jumps out at you, in terms of the causes that are making this affect so many different countries at the same time?
HOMI KHARAS: Well, I think one thing that we see is that markets for some foods are very, very thin. And as prices started to go up, a lot of people said, “Well, we’d better buy now because prices might keep going up in the future.”
So you’ve got a lot of panic buying. And the countries that were previously willing to sell stopped selling, and so that just reinforced the bubble in markets.
JEFFREY BROWN: And some governments are now limiting their exports to protect their own populations.
HOMI KHARAS: They are, which is possibly a good short-run effect for them, but it does prevent their farmers from taking advantage of these higher world prices and increasing production, which is what we really need in the long run.