La Crisis Alimentaria Mundial: CAP y Biodiesel

Every now and then, I read something in a newspaper that is so ridiculous - the product of such sloppy thinking - that I visibly grimace. Regular readers of this column no doubt feel the same way.

One such occasion was last week when I saw the words of Michel Barnier, the French farms minister, on the Common Agricultural Policy. The CAP is "a good model," he said. So good, in fact, that Asia, Africa and Latin America should adopt their own versions of it.

Barnier is no back-water politician. A former foreign minister, he is close to President Sarkozy. So we can only assume the French government is proposing that the very system of EU trade barriers which has done so much to undermine global food production, contributing mightily to the current relentless price rises, should be adopted by the rest of the world.

This isn't just a bad idea. It's an idea so self-serving - and dangerous - that political leaders everywhere should publicly rip it to pieces. Barnier - and Sarkozy too - should hang their heads in shame.

Why? Well, as everyone knows, we're in the midst of a nasty food crisis. Having risen steadily for two years, the cost of many basic foodstuffs - including rice, maize and soya - has lately spiked. With indices of real food prices now twice as high as 2005, you have to go back to the 1970s to find anything remotely similar.

As prices have escalated, so has social unrest, with food riots in Haiti, Egypt, the Philippines and across West Africa. And while violence is terrible, an even more worrying spectre looms - mass starvation.

As globalisation has spread, the sharp rise in per capita incomes across much of the developing world has generated massive food demands, notably for meat and the required animal feeds.

This trend has coincided with the expansion of another hugely crop-intensive activity: bio-fuels. Since 2003, as global energy use has spiralled, the output of oil and other fossil fuels has barely grown. Biofuels from grain, sugar and oil seed are starting to plug the gap.

While biofuels provide only 3 per cent of global energy today, they are set to deliver 10 per cent by 2030. And last year, they drove no less than half the growth in the consumption of major food crops. So just as the world population is growing by 70m a year, and using ever more calories per head, the biofuels "revolution" is pressuring crop use even more.

But far more worrying than these demand trends is the growing shortfall in supply - and this is where the CAP is so damaging. In recent years, global food inventories have plummeted - with wheat and rice stocks now only 15 and 18 per cent of global annual demand respectively, down from 30 and 37 per cent in 2000.

This is partly due to droughts and the high cost of oil - which hits supplies hard as modern farming is so energy-intensive. And falling inventories gives the lie to the argument that food prices are being driven mainly by speculation. If that was so, stocks would be growing, not collapsing.

Looking further ahead, while demand will keep cranking up, the medium-term food supply outlook is ghastly. With many mass-produced crops already pumped up by chemicals and genetic modification, numerous academic studies suggest that yield gains, having risen during the "green revolution" of the 1970s and 80s, have now levelled off. And there is compelling evidence of an ever-more pressing global shortage of cultivated land.

That's why the CAP makes matters so much worse. The European Union is a huge agricultural player - the world's biggest exporter and importer of farm products. And our bloated farm subsidies have, over many years, held back the growth of agricultural capacity across the developing world - the very centres of population growth now driving up food prices.

The CAP's import tariffs, by the way, mean EU consumers pay much higher food prices than they should. But worse than that - far worse - is the external impact of our subsidies.

EU farmers are supported to the tune of £33bn a year - with the French receiving the most. The US plays the same trick, buying the farm vote with a similar sum.