13 Aug 2008

Invest More in Farming?

In this op/ed, the Director General of the International Water Management Institute pleas for more investment in farming, claiming that "invest in water for farming, or the world will go hungry."

I have not been pleased with the policies advocated by IWMI, and I left this comment:
Dr. Chartres is clearly knowledgeable about this topic, and his organization has the capability to address it -- assuming this op/ed is not a plea for more funding.

However, he fails to consider how the current regime for pricing both water and food results in perverse incentives and thus lower production of food per unit of water.
  1. Water is too cheap. (It is often sold at the cost of delivery -- or lower, as in India, where farmers pay nothing to run their pumps.) Because of this, much water is wasted.
  2. Food prices are often controlled. This results in lower productivity from farmers.
  3. Trade is often constrained -- again, in an attempt to feed the hungry via autarky.
With reform to pricing of water and food, every country can have more food from less water. With the addition of trade in food, countries can benefit from their comparative advantages -- and increase the supply of food even further.
Bottom Line: There's no need for more investment -- farmers with money can invest -- there's need to free farmers to do what they do best -- grow food.

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