1 Peter Atkins and Ian Bowler (2001) Food in society: economy, culture, geography London: Arnold ISBN 0 340 72003 4 (hbk); 0 340 72004 2 (pbk) http://www.routledge.com/books/details/9780340720042/ 11 FOOD SURPLUSES INTRODUCTION In a world plagued by hunger and famine, the existence of food surpluses could be interpreted as, at best, paradoxical or, at worst, morally indefensible. Surely, some argue, the food surpluses of the developed world can be used to eliminate the food deficits of the developing world, as revealed by Chapter 10. But circumstances are never as simple as they might first appear, and the purpose of this chapter is to throw some light upon the causes, and characteristics of food surpluses, so as to lay the foundations for an understanding of their place in food aid (Chapter 12) and food trade (Chapter 13). Looking in brief at the meaning of ‘food surplus’, in one sense achieving a level of food production surplus to domestic demand is a laudable achievement: such a surplus can form the basis of both international trade, with its economic advantages to participants, and food aid, with its humanitarian benefits. In addition, in circumstances where food production can vary from year to year according to the vagaries of climate and economics, a surplus in one year can help offset the deficits of another. But the term ‘food surplus’ is not generally used in this positive sense; rather it is applied pejoratively to production in excess of domestic demand that occurs, over a number of years, at production costs and prices above those prevailing on world markets. Such ‘structural’ or persistent surpluses can only be sustained by an economic environment subsidised by the state and protected from international competition and its world market prices. Otherwise prices would fall on an over-supplied market, farmers would respond by reducing their production, and a new equilibrium would be established in the market between supply and demand. So as to enter lower-priced international trade, traders of high-cost food surpluses have to be further subsidised by export refunds. Not unreasonably, producer nations operating under world market prices resent this ‘unfair’ competition and the instability it can bring to international trading relations. Just what ‘free market’ price levels might be for any agricultural product is uncertain, however, not least because of the distorting effects on trade caused by subsidised food surpluses (i.e. internal market protection and external subsidised exports), and the varying levels of protection given to the farm sector by most developed countries. Rather, ‘shadow prices’, usually higher than existing international market prices, have to be estimated as the likely global prices of each agricultural product in the absence of aggregate state assistance to the agricultural sector (Ritson and Harvey 1991, 250).