Resist the farm lobby, invest more in research: economist

Interview at Radio Australia 5 Feb 2014:

...LAM: What about countries like Thailand and Japan, where rice production is intimately linked to politics, where the farming lobby is strong. What impact does it have on food affordability and food security?

WARR: Right. Well, I think that is a very important question.

What the politics has done in Japan, Korea and increasingly in other Asian countries is to approach the problem of agriculture and food, through raising the domestic price of food within the country. Part of the reason for that is to assist domestic farmers.

What's problematic about that is that when your approach to agriculture is by raising domestic agricultural prices, you raise the cost of food to poor consumers within the country. So although you help large numbers of poor farmers, that's true, you also harm larger numbers of domestic consumers.

LAM: So you're saying that such interventionist actions can have a negative impact on food security?

WARR: Yes, indeed. It certainly assists farmers and that's why the governments do it, that's why the Thai government has this rice pledging scheme. It's to assist the poor farmers who are one of its major sources of political support. But it does so, in the Thai case, at the cost of huge subsidies that have to be borne by the government and at the cost of domestic consumers within the country, because they have to pay more for rice within the country.

And this is also the policy of other South East Asian countries. Indonesia increasingly is going down that same path.

What I'm trying to distinguish is two ways or raising agricultural production, one, you raise the domestic price and encourage the farmers to produce more, but that raises the cost of food to consumers.

The second, you improve the productivity of domestic agriculture - that enables you to increase food output, without raising the domestic price.

LAM: But that higher price for the farmers.. does that not also result in a stockpile? So surely that's good in terms of food security, to have a store of rice grain?

WARR: Well, Thailand's problem is not food security. Thailand has a massive stock of rice as you correctly point out. Some estimates have put it as much as 20 million tonnes of rices now in storage in Thailand. They don't know what to do with it. They're major exporters of rice. But there is a problem of making rice affordable to domestic consumers and their policy goes against that...

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