World Trade Organisation (WTO) director-general Pascal Lamy has reiterated that international trade is part of the solution to global food crises, not part of the problem, adding that international trade has reduced the price of food over the years through greater competition, and enhanced consumer purchasing power, as well as unlocking efficiencies in agricultural production.

He also stated that the efficiency gains brought about by international trade were vital in light of the environmental challenges that the world currently faced.

“International trade in food is water-saving. And, with the impending climate crisis, international trade in food will rise further in importance as we come to the aid of drought-stricken countries.”

The World Bank Food Price index showed a 33% rise in July from a year ago in 2010, staying close to 2008 peak levels.

Many factors have been cited as the cause of the repeated food price crises, some long-term structural factors, and others short term, such as biofuels production, rising oil prices, changing Asian diets, declining grain stocks, financial speculation, and climate change and its associated risk.

Lamy said that the world had a long way to go in designing a coherent international agricultural trade policy framework. International trade, if properly instrumentalised, could help exit these repeated crises, and the WTO Doha Round remained an opportunity for vital agricultural reform.

However, he affirmed that no matter how sophisticated international trade policies were, if domestic policies did not incentivise agriculture, and internalise negative social and environmental externalities, there would be continued dissatisfaction with agricultural systems.

“Land management, water and natural resource management, property rights, storage, energy, transportation and distribution networks, credit systems, and science and technology, are all key elements of a successful agricultural policy and food security system.”

Discussing the difficulties within the WTO Doha round of negotiations, Lamy highlighted that members disagreed on whether or not the agricultural sector ought to be exposed to the same level of competition as other economic sectors.

Efficient agricultural exporting countries believed that it should be, but several others believed the opposite. Their argument is that labour-intensive subsistence agriculture, or production for local consumption, cannot compete in open markets against produce emanating from highly capital-intensive agricultural systems.

Whereas trade-distorting subsidies for industrial goods were legally-actionable in the WTO, many trade-distorting agricultural subsidies have found shelter in amber and blue boxes, and a Peace Clause.

“Whereas the world's trade-weighted average industrial goods tariff is about 8%, in agriculture it is 25%. Not to mention tariff peaks, which in agriculture still rise up to 1 000%!” Lamy enthused.

He stated that the Doha Round could bring about reform to agricultural trade policy, and highlighted that it was the developing world that placed the agricultural negotiations at the heart of the Doha Round, calling them the “engine” of that Round. Doha seeks to redress what was viewed as a historical injustice in world trade rules - rules that allowed the rich to continue to heavily subsidise their agriculture.

“I would argue that the greatest challenge before the Doha Round today lies in the area of industrial goods, and not agriculture. And, yet, the result is that the agricultural package of reforms is being held hostage too.”

Lamy was addressing a congress of agricultural economists in Zurich.