Rice's Prices Crisis

This, at least, is not Olmert's fault.

Danny Hershtal,

OpEds לבן ריק
לבן ריק
Arutz 7
Rice is the issue.

For a change, the issue isn't America's Secretary of State or her demands for further Israeli security concessions. This time, the problem is with the eponymous long grain, a staple for almost two and a half billion of the world's residents.
What should we do in Israel to avoid a crisis which could potentially cause mass hunger?

Consumers all across the globe, including Israel, will see a steep increase in the price of rice in the coming week, to compliment the recent rising prices of many other food products.

In Latin America, Africa and East Asia, the food price hikes have already sparked political upheaval and drastic government measures. What should we do in Israel to avoid a crisis which could potentially cause mass hunger and death?

Before tackling the issue, it is important to examine the background of the problem. Here, it is important to state that these price hikes on basic foods are in no way the fault of the Israeli government. Israel, a net food exporter, is a tiny country which can not affect, for the positive or the negative, world food supply. While I am no fan of the current government or its policies, this particular problem is not their fault. So, too, any action Israel undertakes cannot reverse the worldwide problem, but can only help its own citizens cope as best as possible.

Many experts who have examined the food crisis pinpoint several factors contributing to the shortage of supply, which has led to the increased prices. These include increased consumption in developing countries such as China and India, biofuel subsidies and urbanization. The huge countries, China and India, have a burgeoning middle class who can now afford to consume more local goods, leaving less for export. Biofuel subsidies granted by Western governments have made it more worthwhile for American, Canadian and French farmers to grow fuel crops and abandon food crops. Also, the wealth in these Western countries has led to greater demand for meat, so that South American countries like Argentina and Brazil have left their grain fields to the cows, instead of harvesting them for people. In all of the countries mentioned above - in fact, in the majority of countries on the globe - young people have abandoned their family farms for more lucrative and social city life, leaving large tracts of agriculture in the hands of an aging population, without sufficient capital to modernize and increase yields.

The causes of mass urbanization present an interesting topic in itself, which lies beyond the scope of this article. The main focus here must be the initial question: What should the Israeli government due in light of the increase in food prices? And the answer: nothing.

The Israeli government must avoid any excessive intervention, which could only cause the problem to worsen, or create strange, unpredictable side effects, such as bureaucratic corruption and the advent of a black market.

On the other hand, by doing nothing, the market cycle will self-adjust, as it always has. Higher prices for food products will make growing them more worthwhile. City congestion may convince new families to move to the
If the Israeli government just can't help itself... I do have some suggestions.
farms where higher prices for their products will grant them a decent standard of living. Alternatively (and more likely), huge conglomerates will buy and modernize farms to maximize their yields. As always, high-priced goods attract attention. All of this increased attention will create increased market competition, which will eventually lower prices (in real terms - don't expect the number on the price tag to become smaller).

If the Israeli government just can't help itself, and needs to take some action because of political pressure, or because parties like Labour, Shas and Gil are interventionists by ideology, I do have some suggestions:

  1. Remove all price controls. If bread bakers can make a fair market profit, who knows? They just might bake more bread.
  1. Remove tariffs. Mutual tariff reduction agreements will make Israeli food exports more attractive and greater revenues will bring more people into the food growing business. Reduced import tariffs will subject Israeli farmers to greater competition, which will increase the quality or reduce the price of goods in Israeli stores.
  1. Grant more foreign work permits. No matter how much money a farmer can get for a tomato, few computer programmers will leave their air conditioned office to pick hothouse vegetables. A greater willingness to grant work permits will reduce the amount of illegal immigrants in legal industries, and the problems that illegal immigration causes.
Other than the above suggestions, let the market tide ebb on it own. It will only be a few months before a new, lucrative crop can be planted. The market reacts quickly, more quickly than most government programs can be put into place. Also, when the crisis does ebb - and it will, at least in a modern country like Israel - the market can shift again in much less time than a government decision can be repealed or a bureaucracy disbanded.

The main beneficiaries of non-intervention will be the kibbutzim and collectives, poised for a revival after years of decline, and periphery towns, which are local centers for farming communities. The growth of kibbutzim may cause a growth in the natural electoral base of parties such as Labour or Meretz, and the wealth of farmers spent in development towns will enrich the electoral base of Shas - the best incentive for these parties to adopt my ideas. So, why should I encourage this if I am a member of Yisrael Beytenu, a nationalist party that represents a predominately urban immigrant population? For the simple reason that when I come home tonight, I'd like to eat dinner.

Important Postscript
If the government does nothing, what should the individual do?

Donate! Here are some links to a few of the many organizations that provide food to Israel's hungry (with no prejudice):

If you still have some charity left over, give to: