Why Doha progress would mean even higher food prices

So far, most of the consensus on what to do about food prices is (as you might expect) strongly focused on the short term: measures like spending more cash on humanitarian aid, or building up social protection systems for the poorest and most at risk.  But one medium term measure also seems to command widespread consensus: we should press ahead with the Doha trade talks. Here’s Bob Zoellick at the World Bank, for instance:

If ever there is a time to cut distorting agricultural subsidies and open markets for food imports, it must be now. If not now, when?

Peter Mandelson, meanwhile, opines that “without a doubt” a trade agreement would help to restrain spiralling prices.  And for once, this is something where he and Gordon Brown agree: Brown’s recent letter on food prices to G8 heads has trade as the very first action point, noting that

We should surely redouble our efforts for a WTO trade deal that provides greater poor country access to developed country markets and cuts distortionary subsidies in rich countries.

Now you can’t fault the political opportunism here, of course: part of the reason for the push on liberalisation now is that, as food importing countries frantically slash their import tariffs to try to keep the grain flowing in, they’re also achieving liberalisation where trade negotiations have failed. 

But what effect will all of this have on food prices?  If the US and EU start eliminating their subsidies too, isn’t there a risk that the short term impact could be to increase food prices to poor consumers?  Why yes.  Indeed, Gordon Brown actually says as much in his letter to G8 heads [emphasis added]:

…in the short term net food-importing countries may need support to cope with higher prices as a result of liberalisation