Letter from Jay Lim, Straits Times Forum 26 Sep 08;
I REFER to your article in The Straits Times, "Speculators make food too costly for the poor", on Wednesday.
There are many other factors affecting the rising prices of food rather than attributing it solely to speculators.
Firstly, ineffective governmental policies that are aimed more at obtaining votes and protecting their local farmers/coffers.
Energy security policies have failed to realise that even if we took all the vegetable oil or biofuel to burn as fuel today, it would contribute to only 3 per cent of annual global usage.
Inefficient duties which created barriers to entry for too long a time in populous countries like China and India led these countries to fall behind in technology and efficiency in farming methods. At one time, the import duty of vegetable oil into India cost almost as much as purchasing it. What was ironic was how local rapeseed oil in Germany was given a rebate for diesel blending usage and they had to import it for consumption.
I do agree with the writer in highlighting the changing climate which has brought upon unfavourable yields in the United States, China and Australia for the past three years. We should not forget that the cost of production has also gone up significantly in the same period of time as well. Fertiliser cost alone has more than doubled and transportation cost has surged as well. Thus, cheap food will not come about with the higher costs.
The main commodity companies mentioned by the writer are merely purveyors of a free-market economy who are trying to balance the agronomy equation. Instead of pointing fingers at the speculators, perhaps one should think about giving more assistance to emerging market farmers and improving technology and yield.
I am still a believer of the saying that the only cure for high prices is high prices.
