Why did Global Food Prices Rise?

1. Who benefits from government polices to a. promote production of ethanol and

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b. place tariff barriers on imports of sugar cane? Who suffers as a result of these polices?

United States government intervene in the market by strongly promote production of ethanol. Giving subsidies can incentive people to produce more quantities of the crops. Besides, subsidies help domestic producers compete against low-cost foreign imports. Therefore, the most benefit people are the ethanol producers or the farmers. Besides, high tariff barriers on import of sugar cane will benefits also the farmer because tariff are pro-producer and they wouldnt buy the sugar cane from other countries because the import quotas policy restrict the quantity of some good that may be imported into a country. Tariffs can also increase government revenues. But these kinds of policy almost anti-consumer and force consumers to pay more in term for certain imports duties. Because high tariffs is strictly increase the burdens of consumer to use the bio fuel or even buy the sugar cane just for simply house using. Sugar cane is widely more environmentally friendly raw material for bio fuels then either corn or soy beans.

Why did Global Food Prices Rise?

BFMA 2023

2. One estimate suggests that if food prices rise by one- third, they will reduce living standards in rich countries by about 3 percents, but in very poor ones by about 20 percent. According to the International Food Policy Research Institute, unless policies change, cereal prices will rise by 10 to 20 percent by 2015, and the expansion of bio-fuel production could reduce calorie intake by 2 to 8 percent by 2020 in many of the worlds poorest nations. Should rich countries do anything about this potential problem? If so, what?

Yes. The rich countries in the world such as European should take their responsibilities to control the food prices. The dynamic of the increasing food prices will make consumer eat the more expensive food. Hence, it will increase the burdens of the consumers. There are some ways that the rich countries governments can use various methods to intervene in markets. For examples, tariffs, subsidies, import quotas, voluntary export restraints, local content requirements, administrative trade policies, and antidumping policies to prevent the food prices increased in the future. Rich countries s government can also curtailing subsidies and reforming policies, particularly in the United States and Europe to minimize bio fuels contribution to volatility in international and domestic food markets. One measure would be to reward lower carbon intensities in bio fuel production resulting from the use of feedstock that is more energy-efficient than grain.

Why did Global Food Prices Rise?

BFMA 2023

Harmful import tariffs and non-tariff barriers should be dismantled in the poor country. The Doha Round of World Trade Organization (WTO) negotiations should be completed to reduce maximum tariff levels and the risk that poor country governments will resort to policies that destabilize world food markets. Promote agricultural growth in the poor county through improved smallholder productivity. Besides, investment by rich countries into the national governments in climate change adaptation and mitigation using the full potential that agriculture offers. Improve the transparency, fairness and openness of international trade to enhance the efficiency of global agricultural markets. Existing export restrictions should be eliminated and poor countries should refrain from imposing new ones. Rich country should explore the viability of an international humanitarian emergency grain reserve to protect the most vulnerable people during food price crises. Such a reserve should be managed by an experienced global institution such as the World Food Program (WFP) and could consist of multiple physical reserves strategically positioned near major food-importing poor countries.

Why did Global Food Prices Rise?

BFMA 2023

3. The argument for giving subsidies to ethanol producers rests upon the assumption that ethanol results in lower CO2 emissions than gasoline and therefore benefits the environment. If we accept that global warming is a serious problem in itself, should we not be encouraging government to increase such subsidies? What are the arguments for and against doing so? On balance, what do you think is the best policy?

Yes, give subsidies to ethanol producers to minimize the global warming. Normally, governments intervene for political reasons and for economic reasons. Political arguments are concerned with protecting the interests of certain groups within a nation, normally producers, usually at the expense of other groups like consumers. While economic arguments are typically concerned with boosting the overall wealth of a nation. Political argument for giving subsidies to ethanol producers are included protecting jobs, protecting industries deemed important for national security, retaliating to unfair foreign competition, protecting consumers from dangerous products, furthering the goals of foreign policy, and protecting the human rights of individuals in exporting countries. Economic arguments for giving subsidies to ethanol producers are included infant industry argument, and strategic trade policy. However, Paul Krugman, who helped develop new trade theory, argues that strategic trade policies that are designed to establish domestic firms in dominant

Why did Global Food Prices Rise?

BFMA 2023

positions in the global market will probably result in retaliation. Besides, he also claimed that special interest groups in a country tend to influence governments that want their support on critical issues such as global warming, government policies on trade dont always support national interests. In my opinion, I think protecting industries deemed important for national security is the best policy. Since the bio fuel is less pollution, government should strongly protect from others nation interact it. Because by giving subsidies to the producer is one of the action from government to support this new high technology which is using the bio fuel to generate the energy. As we know, our petrol will be exhausted in the future. Therefore, scientists find the way to regenerate energy which can be use in many institutions. The resources to get the bio-fuel are comes from crop. So, government have to encourage their people to plant more of the crop to ensure fulfill the demand of the bio-fuel used in worldwide. Government protect this bio-fuel industry will enable production of the crops enough for market. Hence, they can control the food pricing from being manipulate by one power in the world. Many kinds of the policy that government can be took which are suitable with the environment changing.