I am no expert in this, but as an European I hear constant moaning about CAP and butter mountains. I don't know how true this still holds, but certainly a large part of the ongoing Doha round is the failure of the US and Europe to agree on the phasing out of farm subsidies. If they are not removed developing-country farms will remain uncompetitive. Seen in this light, I wonder whether the new found lust for green fuels is all bad. If the extra demand really outstrips supply then the subsidies will no longer be needed (which will remove the pressure that the phase-out entails) and farms with lower production costs (lower wages) will finally be able to benefit from their advantage. Naturally there is more to it, both with positive and negative implications. A big question mark is whether the market will exaggerate the way it is currently doing with commodities. But hopefully short term price hikes will give way to more sustainable agriculture output and employment. Any thoughts?

I know in the south of West Africa, corn has replaced millet in some diets(and earlier in the history of the West African diet, a grain called fonio), even though millet is actually better for people. It has higher nutritional value and is less likely to cause starch-based diabetes, which is surprisingly common over a certain age. When corn prices go up, millet often is the replacement, which means that people are actually eating healthier, and are promoting a crop native to the area. I wonder if this might be an unexpected positive side effect of the impact of biofuels to the world price of corn.

Thanks guys for an interesting discussion, it stimulates a couple of thoughts: 1) I don't know the CAP that well, but very U.S. farm subsidies are direct (i.e. tied to market prices and volumes for crops grown). Instead, most subsidies are indirect, meaning they are dished out regardless of high prices. Indirect subsidies are the source of billion of dollars in commodities market distortions and they are not up for negotiation through the AoA. 2) High food prices may not be such a bad thing in the developed world because they may revitalize investment in ag. r&d and perhaps make it possible for growers to pay living wages. At the BOP, however, these prices are crippling for households. Responses?