COMMODITIES - FOOD

The Grains of Wrath

Wednesday 02 April 2008

Are we as a planet sowing the seeds of a future food crisis?

While the food debate in the rich world typically revolves around perceptions of dwindling “purchasing power” in well-stocked supermarkets, billions of the less fortunate  scrounge for the most basic staples.
 

In recent months, we’ve seen recurrent episodes of social unrest tied to soaring food costs and shortages: "tortilla" riots in Mexico City sparked by surging maize prices; unrest in Indonesia linked to shortages of palm oil used for cooking; the use of military convoys to transport flour and wheat in Pakistan; and violence over costly bread in Egypt.
 

At issue, analysts say, is an incipient food fight between farmers who (perhaps understandably) seek to profit from the boom in food commodities, and ordinary consumers who need food (and affordable food) to survive.
 
And survival is the right word: white rice is the predominant source of nourishment for half of Asia’s population.
 

In Europe, the average person consumes about 4.5 kilograms of rice a year. Compare that with an average of 60 kilograms in Asia.
 
In the Philippines, four out of five people eat rice for breakfast. According to some reports, the government has asked fast-food outlets to serve smaller portions of rice to prevent wastage.
 
This is hardly a petty policy, given that world rice stocks are at their lowest levels in over 30 years and that about a third of the rice normally found on the international market has disappeared.
 

Governments are caught in the middle of the farmers and consumers.
 
But with rice prices up some 60% in the past six months, and wheat surging at an even faster rate – tripling in price in 10 months – many regimes feel compelled to take drastic action to keep their populations from going hungry or malnourished.
 
Among the more popular measures: restricting exports of basic food staples and imposing price controls.
 
These are measures that economists say solve the short-term problem of taming spiraling prices, even as they threaten to drive food costs higher over the longer term.
 
As a result, one of the planet’s top rice exporters – Vietnam – says it plans to cut rice exports by 11% this year. Others, like India, Cambodia and Egypt, are taking similar steps.
 
There is no dearth of explanations as to why these shortages are occurring.
 
One factor is the rising demand from China and India. The burgeoning middle class in these countries is bringing with it a change in dietary habits in favor of more meat and dairy products. These foods require extra pasture land to grow the grain to feed livestock.
  
Then there’s the boom in bio-fuels such as corn-based ethanol, which induces farmers to divert land that might otherwise be used for human food crops. Ethanol’s star is showing signs of dimming, amid questions over its value as an environmentally friendly alternative to oil. But it remains a coveted crop for many farmers, especially in the US.
 
Finally, a host of other factors are conspiring to drive prices higher: climate change, which triggers droughts and floods, bad harvests, speculation in commodities and population growth.
 
All of this adds up to a recipe for a perfect food storm in years to come.