US-Europe food battle escalates. Such fighting contributes to food shortages in third world, experts say

When the world's agriculture ministers gathered here this week, their stated goal was to launch a war against famine. Instead, the United States and Western Europe escalated their battle over food subsidies, which many experts believe contributes to food shortages in many developing countries.

US Secretary of Agriculture John Block declared yesterday that the US would go ahead with its offer of a million-ton wheat ``bonus'' to Algeria.

Secretary Block added that the US was prepared to spend up to $6 billion if the recently announced $2 billion US farm export aid program proved insufficient to regain shares of sales worldwide lost in competition to Europe.

The Europeans reacted with fury -- especially the French, who are most affected by the proposed bonus to Algeria. Speaking at the annual conference of the United Nations World Food Council, French President Franois Mitterrand blamed the US subsidies for ``ruining several years of effort.'' Previously, Agriculture Minister Henri Nallet had warned, ``We, too, can be aggressive.''

Meanwhile, the experts at the World Food Council were left to react in horror. Charged with monitoring food problems and mobilizing aid, the council produced a salvo of reports for the conference that put much of the blame for famine in Africa on huge European and US agricultural susidies.

Of course, council officials said African governments themselves are most responsible for not paying enough attention to boosting their own food production.

But Western subsidies -- which totaled $19 billion for the US and $17 billion for Europe last year, according to council spokesman Tom Stevens -- have forced prices so low that developing countries find it almost impossible to boost production.

Much of Africa lives on cheap food imported from abroad, not on the output of its own country's farmers.

``Let's say a Mauritania needs wheat,'' Mr. Stevens explained. ``They can produce it at home for say $200 a ton or they can buy it subsidized from the West at $110 a ton. The choice is easy.''

Easy -- and dangerous. Block argued that a subsidy war would let ``the buyer benefit from the lower prices.'' But Stevens contended that the lower prices produce a ``long-term danger.''

``No one is going to invest to produce food when it's so cheap to buy from the outside,'' he explained. Despite all the attention given to the famine in Ethiopia, throughout Africa investment in agriculture is expected to fall by $1 billion this year. The result, Stevens said, is that ``Africa becomes even more food dependent than ever.''

What to do, then? The ultimate paradox is that all those involved in the dispute -- the Americans, the Europeans, and the experts -- agree on the general solution. The incentives to overproduce in the rich countries must be reduced while the incentives to produce in poor countries must be increased.

But reducing the subsidies that create overproduction means putting the least efficient farmers out of business, a tough task for any politician.

As Block pointed out, US exports have dropped by one-quarter over the last five years. He admitted that some of the loss is a result of the rise in the value of the dollar. But he blamed most of it on ``unfair competition'' from the Europeans and said the subsidies are needed to counter this competition.

In the long run, Block argues that only a free market in agriculture will bring production and consumption into balance. Consider sugar sales, he says. Developing countries produce it most cheaply. But heavily subsidized European and American producers dominate the markets where most sugar is sold.

The Europeans remain skeptical. They say they favor competition. They say their recent export gains are the result of their products' becoming more competitive on world markets. They also realize that they cannot afford higher subsidies and have moved to control spending on the European Community's Common Agricultural Program.

But the Europeans don't want a fully free market. Even with the dollar disadvantage, farmers in the US can produce most products cheaper than can farmers in Europe. For these reasons, French President Mitterrand refused to agree on a date for new round of trade talks at last month's summit of industrial nations in Bonn, and in front of the food council, he called for greater planning of international agricultural markets.

``In the highly vulnerable sector of food crops I do not believe that unbridled freedom of trade is the best way,'' he said.

Broadening his argument to include the effect of free trade on developing countries, he asked, ``How can an emerging agriculture in developing countries be expected to compete with older, more efficient, more highly mechanized farming?''

Overcoming this deadlock will be difficult. Agriculture has become a global industry. Stevens says the trade has grown sixfold since 1950, and so have the pressures to protect market shares.

Until Europe and the United States stop fighting over food, though, the World Food Council will continue meeting every year to complain about subsidies -- and face the same haunting specter.

``The North grows too much and can't get rid of it,'' Stevens says, ``while the South can't grow enough and doesn't know why.''