People are starving, but I need Iowa

The recent food crisis has hit the world with full force--prices have risen dramatically, hunger is all too common, and political regimes are growing increasingly vulnerable as violent riots continue to erupt. The effects have even reached the U.S., with the price of organic milk now as high as $7. And yet the candidates have paid little attention. Politics--and agricultural lobbyists in particular--cloud their eyes and the routine of campaign topics lets them off too easily.

Though analysts have occasionally referenced supply factors (like Australia's recent drought) as the source of rising prices, most food experts agree that this crisis is the result of shifts in demand. The rise of bio-fuel production, the fall of the dollar, and China and India's economic growth (which leads to increased direct demand for grain, and also significantly increases indirect demand through rising meat consumption) have influenced demand most. Though Bush has looked to the third factor for a solution, unrealistically and perhaps even offensively hinting that India should decrease its grain consumption to help lower prices, the 2008 candidates have wisely chosen to focus on domestic ethanol policy instead.

The current US ethanol policy is ludicrous. We require a high level of production for this relatively expensive good and simultaneously subsidize the producers involved. Production quotas and subsidies are economically suspect in general as they alter incentives in the relevant market and generally move it away from efficiency. In this case, however, the effect reaches beyond the ethanol market, hurting the food market as well. Ethanol production quotas and subsidies convince farmers to shift land towards corn production and therefore away from other staple crops, changing supply significantly. More importantly, because that corn is used for ethanol--which is more expensive than the corn itself--and is also subsidized, its price rises sharply. This then bleeds into other grain prices (which can be treated economically as corn substitutes). Thus, the overall price of food must rise.

The economic case for changing ethanol policy is therefore clear. The political one, however, is anything but.

McCain, the bravest of the three candidates when it comes to this issue, was the first to criticize ethanol subsidies and production requirements. Obama held to pro-ethanol arguments for longer, heralding it as a cleaner energy source and framing the issue as an environmental one in an effort to justify a position that would keep him popular in Iowa. Recently, however, he has changed his tune, finally acknowledging the link between ethanol and food prices. Clinton, though edging ever closer to Obama's position, still lags behind.

The rising food prices represent a dire crisis. The U.S. has the power--and perhaps even the responsibility, given the significant market distortions our farm policy creates--to curb it. And yet politics, and particularly the power of the American farmer, are eerily close to keeping the candidates quiet.

More attention needs to be paid to the crisis, both by the politicians and the voters. And credit--as well as support--must be given to those candidates that do address the issue effectively. It's the least we can do to counterbalance the strength of the agricultural lobby.