Subject: Timor's Ramos-Horta Says Farm Subsidies Will Help Food Security

Timor's Ramos-Horta Says Farm Subsidies Will Help Food Security

By Jason Gale

May 26 (Bloomberg) -- East Timor President Jose Ramos-Horta said his country must use subsidies to bolster agriculture and protect its food security in the face of soaring import costs.

East Timor, Asia's youngest and <> least-developed nation, can be ``mostly'' self-sufficient within five years, Ramos-Horta, 58, said in an interview in Singapore today. About two-thirds of the rice consumed in the country is bought from Vietnam and Thailand.

Cheaper food from overseas can't be relied on because rising fuel prices are ratcheting up transport costs and major rice- producing countries, such as China and India, will need more to feed their own people, leaving less for export, Ramos-Horta said.

``Food security must be priority No. 1 for us,'' he said. ``For our own food security, our survival, our independence, we should spend more money -- including subsidizing our farmers -- to produce more.''

The Nobel laureate, who served as prime minister from 2006 until his inauguration as president last year, was shot and almost killed in a Feb. 11 rebel attack.

``At the time I was prime minister I said I am going to subsidize our agriculture sector,'' he said. ``We have to. That would make us independent, and eventually it will be cheaper.''

Ramos-Horta said that using subsidies to protect farmers and encourage domestic agricultural production may rankle multilateral finance agencies, such as the <>World Bank and International Monetary Fund, which advocate free trade as a mechanism for lowering food costs.

``If we do the opposite of what they say, I think that will be about right,'' he said.

Import Surge

The cost of importing rice has more than doubled this year as countries including Vietnam and China curbed overseas sales to protect domestic supplies. Governments worldwide may spend a record $1.035 trillion on imported foodstuffs in 2008 because of higher commodity prices and escalating transport costs, the Food and Agriculture Organization of the United Nations said in a <>report last week.

In East Timor, which derives about $100 million a month from its petroleum reserves, farmers are offered incentives to expand crop production, and new roads and bridges are being built to bring food to consumers faster.

The government is considering building warehouses to store food in strategic areas around the country for emergencies to assist ``vulnerable people,'' said Ramos-Horta. About 40 percent of the nation's 1 million people live on $1 or less a day.

`Matter of Decency'

Ensuring the availability of affordable food is ``a matter of decency and morality for the poor, but also a matter of stability and security,'' Ramos-Horta said. The poverty-inducing affects of food inflation ``will set back development efforts in developing countries at least 10 years,'' he said.

Food prices would have escalated more in East Timor had the government not stepped up imports of rice, corn and potatoes to bolster local supplies, the president said.

``With climate change, more industrialization and the development of countries like India and China, there will be less and less land available for agriculture,'' Ramos-Horta said. ``We have to quickly make ourselves completely independent in food.''

East Timor, formally known as Timor-Leste, was established in May 2002, ending 24 years of Indonesian control and three years of UN administration.

To contact the reporter on this story: Jason Gale in Singapore at <> Last Updated: May 26, 2008 05:04 EDT

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