industrialized developed countries export or dump food to the the agricultural developing countries.
The transformation in European and American agricultural policies started in the late eighties as shown in Chart 2, was not done in order to correct this unfairness and ensure the North and South comparative advantage, but to reduce the excess financial burden of the above mentioned agricultural protection, preserve the environment and to correct inter regional differences in EC and America. Net food exports from developed countries decreased considerably in 1985, and showed a rapid reduction in the nineties. The developed countries' agricultural production index of FAO has fallen from 1986 to 1992.
According to the FAO, food production per person in Europe showed a declining trend from the peak in 1984 to 1992. Also, the same tendency can be noticed in America from its peak in 1981. These changes have been enhanced by the agricultural reforms within the EC, American Agricultural Laws in 1985 and 1990, and the agricultural trade agreements of the Uruguay Round talks. Thus the transformation has caused the continued reduction in the world grains stock as previously described, and a corresponding continuous grain price increase.
This transformation will be maintained into the 21st century under the World Trade Organization (WTO) system, the decoupling in the Agricultural Law of 1996 in America which will not force the Federal government to hold large agricultural surplus, and the continuous reduction of agricultural protection within the EU. The state of low global grain stocks and high grain prices will be maintained. As a result the above unfairness will be reduced, and the comparative advantage will be restored to some extent. However, the grain price will rise and will be de-stablized as the international grain stocks of Europe and America will run low, and a significant risk will result as 1.1 billion impoverished people and 800 million starving people throughout the world willface a crisis.
