Food Shortages

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World Bank: ‘One Shock’ From Crisis as Food Prices Climb

Monday, April 25th, 2011

World Bank President Robert Zoellick said the global economy is “one shock away” from a crisis in food supplies and prices.

Zoellick estimated 44 million people have fallen into poverty due to rising food prices in the past year, and a 10 percent increase in the food price index would send 10 million more people into poverty. The United Nations FAO Food Price index jumped 25 percent last year, the second-steepest increase since at least 1991, and surged to a record in February.

Food price inflation is “the biggest threat today to the world’s poor,” Zoellick said at a press conference following meetings of the World Bank and the International Monetary Fund. “We are one shock away from a full-blown crisis.”

“For most commodities, stocks are relatively low,” he said. “You have one other weather event in some of these areas and you really take a danger zone and start to push people over the edge.”

Zoellick said he opposes export bans that nations use to depress local commodity prices for their citizens, lifting costs for consumers in other countries.

Farmers in Russia, once the second-biggest wheat exporter, are planting the fewest acres in four years, in part because a government export ban kept prices low, a Bloomberg survey of producers, traders and analysts showed last month. India, the largest grower after China, is mulling lifting an export ban in place since 2007 as harvests may reach a record for a fourth straight year, Agriculture Minister Sharad Pawar said this month.

Economic growth “is leveling off after a post-crisis recovery,” Zoellick said. “The question now is whether it’s strong enough to reduce unemployment, particularly in developed countries. Inflation is up in developing countries, and this could lead to overheating or asset price bubbles.”

Source: Bloomberg

 

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5 Reasons To Garden Like Your Life Depends On It

Friday, April 1st, 2011

Why Is Gardening So Important Now?

There are at least five reasons why more of us should take up spade, rake and hoe, make compost and raise good soil and garden beds with a vengeance, starting this spring and with an eye toward forever.

1) Peak oil. Most petroleum experts agree that we shot past peak oil in the U.S. around 1971. Lest you’ve missed the raging, that’s the point at which more than half the readily, affordably retrievable oil in reserves has been used up, what remains is more expensive to retrieve, and the dregs are irretrievable. We’ve shot or are about to shoot past peak worldwide, estimates of when ranging from 2007 to 2013, with many oil company execs agreeing to at least the latter. There are no new cheap-easy oil fields coming on line. Any new fields you hear about or new methods, like tar sands drilling are expensive, water guzzling, dangerous, environmentally disastrous and unlikely to produce more than a few years worth of oil, and that a decade or more down the line. That means abundant, cheap oil is about to be history. What difference does that make?

For one thing, there is no replacement for oil that can do all that oil has done as cheaply and universally as oil has done it. I offer an exercise in Life Rules, “The ABC’s of Peak Oil” which helps readers imaginatively subtract from their lives everything that depends in one way or another on cheap easy oil. It doesn’t leave much. (See Beth Terry’s Web site, for example, for what subtracting plastics may entail.)

The global economy that presently supplies us with our food, runs on cheap oil and lots of it. It runs slower and less predictably on expensive oil that’s hard to get because it’s located in hard-to-reach or high-risk conflict-ridden zones. Cheap, abundant food on the shelves of grocery and big box stores and food banks, on our tables and in our bellies depends on cheap abundant oil for fertilizers, pesticides, and herbicides, and to power farm machinery and transport food from fields to processors and packagers and then to purveyors and consumers, around the world. Past peak, that system’s going to have the half-life of the strontium 90 that’s escaping the Fukushimi Dai-ichi reactor: 29 years, or thereabouts. One good global crisis, and not that long.

2) Peak soil & space. A couple of links between peak oil and peak soil: First, it matters that one of the proposed alternatives to oil is biofuels. Acreage around the world is being converted from production of corn, wheat and soy for human and animal consumption — i.e. food — to production of ethanol and biofuels to put in trucks and cars and … which makes remaining corn, et al., more expensive. Some energy economy geniuses are proposing that Afghans, for example, convert the fields of opium poppies that are their primary agricultural export, not to growing grains or legumes or other staple foods, but to biofuel, which would, not coincidentally, make the gasoline that goes in American military equipment much cheaper and provide Afghans with a profitable market item rather than food.

According to a 2009 National Geographic staff report, “The corn used to make a 25-gallon tank of ethanol would feed one person for a year.” Tell that to Archer-Daniels-Midland, Al Gore’s deep-pockets friend and mega-ethanol and corn products producer. Second, the huge oil-gluttonous machinery that has made factory farming possible has compacted soils, literally crushing the life out of them.

Arable land in the developing or so-called Third World has been at a premium since time immemorial, thanks to geographic location and/or persistent plundering by empires old and new. Revolutions in North Africa and the Middle East are occurring not just to obtain more democratic governments but also to obtain more food and more affordable food. Revolutionaries are barking up a tree that’s seen better days.

In the United States and elsewhere in the developed, read “First” world, arable land has reached peak production. All those petroleum-based products that fueled the Green Revolution of the last century, also produce so many crops, constantly, with support from toxic chemicals and without concern for the microbes that make soil a live, self-regenerating system, that most American farmland — if its farmers didn’t go organic a while back — is comprised of dead soils. Peak oil makes a repeat of the petroleum-driven 20th century Green Revolution impossible, which is good for soil and other living things, not so much for food prices and supplies.

After peak, in soil like in oil, comes descent. Adding insult to injury, every year farmers lose thousands of acres of arable land to urban and suburban sprawl and more tons of topsoil than they produce of grain and other field crops to attrition. Half the Earth’s original trove of topsoil, like that which once permitted the American Midwest to feed the world, has been lost to wind and erosion. Millions of years in the making, it has been depleted and degraded by industrialized agriculture in only a couple of centuries. China’s soils ride easterly winds across the Pacific to settle out on cars and rooftops in California while the American Bread Basket’s soils are building deltas and dead zones at the mouth of the Mississippi. Like oil, that soil isn’t coming back. We can only build it, help it to build itself and wait.

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Food Riots Coming To The UK

Wednesday, March 9th, 2011

Speaking on Jeff Randall Live, senior global economist Karen Ward cautioned that the UK could experience the kind of food riots seen in other countries.

“Even in the developed world I think we have very, very low wage growth, so people aren’t getting more in their pay packet to compensate them for food and energy, and I think we could see social unrest certainly in parts of the developed world and the UK as well.”

She went on to highlight the link between high food prices and the escalating cost of crude oil.

“More and more we are seeing that some of these foodstuffs are actually substitutes for energy itself, particularly biofuels. So I think the energy markets are a significant contributor to these food price gains.”

The comments come as the United Nations warned the cost of food is now at the highest level for 21 years and set to rise further.

Food costs have gone up for eight months in a row, with the National Farmers Union forecasting the trend will continue for the rest of 2011.

The cost of basic foodstuffs has been caused by increasing demand and extreme weather destroying crops and has been partly to blame for the unrest sweeping the arabic world.

Rising prices contributed to riots across North Africa and the Middle East in the past several months that have toppled leaders in Egypt and Tunisia.

Wheat has nearly doubled in price over the past six months and rising demand has caused the cost of sugar to rise by 14% over the past 12 months.

Source: SKY News

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Warming World Makes Food Prices Surge

Wednesday, February 9th, 2011

We’re in the midst of a global food crisis — the second in three years. World food prices hit a record in January, driven by huge increases in the prices of wheat, corn, sugar and oils. These soaring prices have had only a modest effect on U.S. inflation, which is still low by historical standards, but they’re having a brutal impact on the world’s poor, who spend much if not most of their income on basic foodstuffs.

The consequences of this food crisis go far beyond economics. After all, the big question about uprisings against corrupt and oppressive regimes in the Middle East isn’t so much why they’re happening as why they’re happening now. And there’s little question that sky-high food prices have been an important trigger for popular rage.

So what’s behind the price spike? American right-wingers (and the Chinese) blame easy-money policies at the Federal Reserve, with at least one commentator declaring that there is “blood on Bernanke’s hands.” Meanwhile, President Nicolas Sarkozy of France blames speculators, accusing them of “extortion and pillaging.”

But the evidence tells a different, much more ominous story. While several factors have contributed to soaring food prices, what really stands out is the extent to which severe weather events have disrupted agricultural production. And these severe weather events are exactly the kind of thing we’d expect to see as rising concentrations of greenhouse gases change our climate — which means that the current food price surge may be just the beginning.

Now, to some extent soaring food prices are part of a general commodity boom: The prices of many raw materials, running the gamut from aluminum to zinc, have been rising rapidly since early 2009, mainly thanks to rapid industrial growth in emerging markets.

But the link between industrial growth and demand is a lot clearer for, say, copper than it is for food. Except in very poor countries, rising incomes don’t have much effect on how much people eat.

It’s true that growth in emerging nations like China leads to rising meat consumption, and hence rising demand for animal feed. It’s also true that agricultural raw materials, especially cotton, compete for land and other resources with food crops — as does the subsidized production of ethanol, which consumes a lot of corn. So both economic growth and bad energy policy have played some role in the food price surge.

Still, food prices lagged behind the prices of other commodities until last summer. Then the weather struck.

Consider the case of wheat, whose price has almost doubled since the summer. The immediate cause of the wheat price spike is obvious: World production is down sharply. The bulk of that production decline, according to U.S. Department of Agriculture data, reflects a sharp plunge in the former Soviet Union. And we know what that’s about: a record heat wave and drought, which pushed Moscow temperatures above 100 degrees for the first time ever.

The Russian heat wave was only one of many recent extreme weather events, from dry weather in Brazil to biblical-proportion flooding in Australia, that have damaged world food production.

The question then becomes, what’s behind all this extreme weather?

To some extent we’re seeing the results of a natural phenomenon, La Niña — a periodic event in which water in the equatorial Pacific becomes cooler than normal. And La Niña events have historically been associated with global food crises, including the crisis of 2007-08.

But that’s not the whole story. Don’t let the snow fool you: Globally, 2010 was tied with 2005 for warmest year on record, even though we were at a solar minimum and La Niña was a cooling factor in the second half of the year. Temperature records were set not just in Russia but in no fewer than 19 countries, covering a fifth of the world’s land area. And both droughts and floods are natural consequences of a warming world: droughts because it’s hotter, floods because warm oceans release more water vapor.

As always, you can’t attribute any one weather event to greenhouse gases. But the pattern we’re seeing, with extreme highs and extreme weather in general becoming much more common, is just what you’d expect from climate change.

The usual suspects will, of course, go wild over suggestions that global warming has something to do with the food crisis; those who insist that Ben Bernanke has blood on his hands tend to be more or less the same people who insist that the scientific consensus on climate reflects a vast leftist conspiracy.

But the evidence does, in fact, suggest that what we’re getting now is a first taste of the disruption, economic and political, that we’ll face in a warming world. And given our failure to act on greenhouse gases, there will be much more, and much worse, to come.

Source: Seattle Times

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Rising Food Prices Topple Governments

Tuesday, February 1st, 2011

Political unrest has broken out in Tunisia, Yemen, Egypt and other Arab countries. Social media and governmental policies are getting most of the credit for spurring the turmoil, but there’s another factor at play.

Many of the people protesting are also angry about dramatic price hikes for basic foodstuffs, such as rice, cereals, cooking oil and sugar.

The Food and Agriculture Organization of the United Nations says its global food price index is at a record high, above even where it stood during the last food crisis three years ago. In early 2008, rising prices caused riots in dozens of countries — several of which are now seeing uprisings once again.

The problem is one of the top concerns among economists, political leaders and corporate executives at their annual gathering in Davos, Switzerland. At the event, which ends Sunday, participants expressed worries that rising crop and meat prices will further contribute to political instability in developing and impoverished countries.

Rising prices are “leading to riots, demonstrations and political instability,” New York University economics professor Nouriel Roubini said during a panel discussion. “It’s really something that can topple regimes, as we have seen in the Middle East.”

And, the Davos experts warn, higher prices could hurt consumers and derail the economic recoveries under way in wealthier countries.

What Causes Food Prices To Rise

In large part, the food-price crisis reflects the simple law of supply and demand. The supply of food has been diminished by bad weather in many crucial crop-growing areas of the world. Russia, Ukraine and Argentina have had severe droughts, while Pakistan and Australia have had massive flooding.

At the same time, demand for food has been rising as people in fast-developing countries, such as India and China, have been buying more groceries.

In addition, production and transportation costs have been driven up by the rising price of oil. Other factors involve currency fluctuations, food trade policies and financial speculation in commodities markets. Energy policy also plays a role, because ethanol makers are using more corn to produce fuel.

In the United States, these factors have not significantly pushed up consumer prices — yet. The USDA released a new study that showed U.S. grocery store prices rose less than 1 percent last year.

U.S. Food Prices Insulated For Now

The reason for the tame price environment in this country is that the cost of food itself is a relatively small part of what U.S. consumers pay at the cash register, according to Homi Kharas, senior fellow for the Global Economy and Development program at the Brookings Institution, a Washington-based think tank.

He says that when a U.S. consumer buys a box of cereal or a cup of Starbucks coffee, she is mostly paying for the packaging, marketing and attractive store fixtures. So the shopper is not greatly affected by the underlying commodity price the way poorer people are in other countries when they buy, say, a simple sack of rice.

“Take corn flakes,” Kharas says. “Very little of the price of the box reflects the corn inside.”

Also, U.S. food companies often lock in lower prices by using futures contracts, so the price of ingredients they are using today may have been set a year ago, before bad weather drove up crop prices, he says.

Still, the impact of higher grain, dairy and meat prices eventually will filter down to U.S. consumers, he says. The USDA is predicting grocery prices to rise between 2 and 3 percent this year.

Supplying The World’s Food Demand

Around the world, political leaders are looking for ways to slow price increases. In some poorer countries, government officials already have imposed price caps.

In the long run, economists say the only real solution will be to increase the supply of affordable food. They are urging governments in poorer countries to invest in roads and irrigation to support local agriculture and to reduce agricultural waste. More controversial proposals involve increasing the use of genetically modified seeds, controlling population and opening up more markets to global trade.

Source: NPR.org

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Middle East Tensions Signal New Era Of Food Revolutions

Sunday, January 30th, 2011

If you insist on joining the emerging market party at this stage of the agflation blow-off, avoid countries with an accelerating gap between rich and poor. Cairo’s EGX stock index has dropped 20pc in nine trading sessions.

Events have moved briskly since a Tunisian fruit vendor with a handcart set fire to himself six weeks ago, and in doing so lit the fuse that has detonated Egypt and threatens to topple the political order of the Maghreb, Yemen, and beyond.

As we sit glued to Al-Jazeera watching authority crumble in the cultural and political capital of the Arab world, exhilaration can turn quickly to foreboding.

This is nothing like the fall of the Berlin Wall. The triumph of secular democracy was hardly in doubt in central Europe. Whatever the mix of aspirations of those on the streets of Cairo, such uprisings are easy prey for tight-knit organizations – known in the revolutionary lexicon as Leninist vanguard parties.

In Egypt this means the Muslim Brotherhood, whether or not Nobel laureate Mohammed El Baradei ever served as figleaf. The Brotherhood is of course a different kettle of fish from Iran’s Ayatollahs; and Turkey shows that an ‘Islamic leaning’ government can be part of the liberal world – though Turkish premier Recep Tayyip Erdogan once let slip that democracy was a tram “you ride until you arrive at your destination, then you step off.”

Vatch the rest of the story at: Telegraph.co.uk

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1/5 of Russian Wheat Crop Destroyed, Prices Soar Worldwide

Wednesday, August 4th, 2010

Drought and raging wildfires have destroyed one-fifth of the wheat crop in Russia and sent wheat prices soaring around the world.

The fear that Russia, a major wheat producer, will have to cut exports by at least 30 percent is good news for U.S. farmers, who now are getting more money to go along with a bumper crop this year.

That big harvest, analysts point out, should spare U.S. consumers much increase in the prices of bread and other wheat-based foods despite the problems in Russia.

Any price increases will hit consumers hardest in wheat-deficient areas such as the Middle East, Africa and parts of Asia.

The severe drought in Russia is thought to be the country’s worst in 130 years. Most of the damage to the wheat crop has been caused by the drought, but now wildfires are sweeping farmlands in western Russia.

The Associated Press reported that the director of a small state farm outside Moscow said fire destroyed its entire wheat crop one night before the harvest.

“The fruits of the year’s labor of the farm went up in smoke. This is very painful,” Pavel Grudinin, director of Lenin State Farm, said on Russian television.

The drought is also affecting harvests in Ukraine and Kazakhstan, Russia’s neighboring wheat-producing countries.

Troubles with wheat crops aren’t confined to that part of the world. Heavy rains during the planting season destroyed much of Canada’s crop. The Canadian Wheat Board, the marketing agency for the country’s farmers, is forecasting a 35 percent drop in the harvest.

The crop disasters have fed an unyielding price rally. In July alone, prices at the Chicago Board of Trade surged 42 percent, the biggest monthly gain in half a century.

In Chicago, wheat prices breached $7 a bushel Tuesday for the first time since September 2008.

At the Kansas City Board of Trade, the leading exchange for hard red winter wheat, prices are at a 13-month high, closing Tuesday at $6.85 a bushel.

“The Russians have been very active in selling to the world. The drought and fires now mean less will be available this year,” said Joseph Baker, the branch manager for country hedging at the Kansas City Board of Trade.

“The big losers will be consumers where the diets are more pure,” said George Lee, the agriculture fund manager at London-based Eclectica Asset Management. “I don’t think U.S. consumers will notice the price difference very much.”

But U.S. farmers are enjoying an unexpected bump in their incomes.

“The price at harvest time was not that favorable, but we have seen an increase of about $2 per bushel in the past two months caused by the limited supply out there,” said Bill Spiegel, the director of communications at the Kansas Wheat Commission, which represents 25,000 farmers.

Spiegel said the fears of an international shortage were a boon for U.S. farmers who expected a depressed price after recording a huge harvest.

“It is an unusual scenario that we have so much surplus wheat but prices are still rising,” Spiegel said.

The U.S. Agriculture Department has forecast a production surplus of about 1 billion bushels. That diminishes the likelihood of a repeat of the global rally in the cost of grains experienced in 2008, when wheat prices touched a high of $13.84 a bushel at the Kansas City Board of Trade.

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How Britain Learnt to Live on Rations

Friday, January 15th, 2010

70 years ago this week it was announced that food was to be controlled for the good of the war effort. Historian Terry Charman explains how it went down with the public.

Rationing began on 8 January 1940, after ration books had been distributed. Bacon and ham were rationed to 4ozs a week, sugar to 12ozs and butter to 4ozs. Meat was rationed from 11 March 1940, and it was done by shillings and pence instead of pounds and ounces. The ration was one shilling and 10 pence (1/10d) at first, but after some fluctuations it went down to 1/2d on 7 July 1941. Cooking fats and tea were rationed in July 1940, preserves from March 1941 and cheese from May 1941.

It did not end with victory in Europe in 1945. Far from it. On 27 May 1945, barely three weeks after VE Day, the basic ration was cut. Bacon went down from 4ozs to 3ozs, cooking fat from 2ozs to just one, and the part of the meagre meat ration of 1/2d had to be taken in corned beef. Bread, never rationed during the war, was put on the ration in July 1946, where it remained for two years. Rationing was finally abolished after Winston Churchill had returned to office.

How Britain learnt to live on rations (The Independent UK)

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