Food price crisis: more complex than first thought & putting food beyond the reach of the planet’s poor
Building the Green Economy, Crisis Policy Forum, Food Security: Africa, Quipu Economic Forum ::
FEATURE FROM SUSTAINABLE DEVELOPMENT UPDATE, ISSUE 3, VOLUME 8, 2008
Fredrik Moberg/Miriam Huitric, Albaeco :: Food prices are skyrocketing. Initially, many put the blame on the rising demand of biofuels in the transport sector, but bio-ethanol is far from the only thing driving up food prices. New diets, soaring oil prices and climate change are all in the complex soup of explanations behind the recent development putting food beyond the reach of the planet’s poor.
The price of wheat has doubled in less than a year.
Photo: Wen-Yan King: medapt.org, azote.se
More than 800 million people are still undernourished in the world today. The Haitian riots over soaring food prices in April this year were a startling reminder of the inequalities between developed and developing countries – with the latter feeling the impact of the growing global food crisis in ways that go beyond the imagination of most people living in developed countries.
The price of wheat has doubled in less than a year and prices for milk and meat have more than doubled in some countries. International nominal prices of all major food commodities are at the highest levels in nearly 50 years. While this crisis is real – so much so that the UN’s Food and Agriculture Organisation (FAO) recently held a High-Level Conference on World Food Security: the Challenges of Climate Change and Bioenergy – its causes are not so clear.
Initially, many put the blame on bio-ethanol and claimed that food prices were surging because we have chosen to feed our cars instead of feeding human beings (see SDU Issue 4/2007). Lately, however, the discussions have broadened to also include a whole set of other explanations. A recent post on the ecogeek weblog was right to the point: “All-in-all, it’s not a good time to be burning what can otherwise be eaten. But there is no good reason to say that biofuels are the one and only problem. SUV’s are certainly limiting the future of the world, but not by burning hungry people’s food.”
Six major factors behind the rising food prices
- Soaring fossil-fuel prices (needed to produce fertilizers, pesticides and for transportation)
- Emerging economies and Westernisation of diets (rich people eat more and buy more meat and milk that increase demand for grains to feed livestock)
- Population growth (food demand growing faster than supply)
- Climate change (drought, more frequent flooding etc already beginning to have significant impact on agricultural production)
- Use of crops for fuel (shifting production from food to biofuels)
- Market speculation (investors from traditional markets now focus on financial products tied to agriculture commodities as food prices increase)
Even more recently, however, the British daily “The Guardian” claimed to have obtained a confidential World Bank report that claims that biofuels are the main cause and have forced global food prices up by 75% – far more than previously estimated (at the other extreme, the US Government says it is less than 3%).
Key causes of the soaring food prices
Until recently global production of food matched demand. In fact, for a rather long period of time there has been an excess of production in many parts of the world. These surpluses have often been “dumped” at low prices in developing countries with disastrous impacts on national farmers who could not compete with the low prices offered. This was until recently. Demand now seems to have passed the tipping point where it exceeds production, according to several experts.
Another key aspect to consider when trying to understand the food price crisis is drought, which is predicted to increase in frequency and severity as the climate changes. In 2007, prices soared to a large extent due to failed crops in the drought stricken fields of Australia’s food bowl that are central to the worldwide price of grains.
The problems of reduced production is further exacerbated by the increased global demand for meat and dairy products. This is because the production of meat requires large areas both for the animals themselves but also to produce their inputs: feed (soya, cereals, oils), grasslands, and the water that goes into all of these. Producing 1 kg of beef uses 8 kg of grain, and for every kilogram of grain produced, 1000 kg of water is required. While occurring globally, increased demand in China and India are particularly significant due to the sizes of their populations but also steadily increasing per capita meat consumtion. In China it has grown from 20 kg a year in 1980 to today’s 50 kg. It is, however, important to note that the per capita consumption of meat still lies well below that of the North, and a large portion of the global population rather need to increase meat consumption in order to improve their diets. The goal should not, however, be a western consumption of meat!
Yet another factor is the current increases in oil prices, which have increased the production cost of agricultural produce as many of the inputs – e.g. industrially produced fertilisers – are fossil fuel-dependent. Fertiliser prices are also predicted to increase in the future due to a shortage of phosphorous (see SDU 2/2007).
The price of rice (staple food of 3bn people) has risen by as much as 70% during the past year. On the picture rice from Vietnam is unloaded in Manila the capital of the Philippines.
Photo: Raymond Panaligan: IRRI, azote.se.
Who are the winners and losers?
High food prices tend to hit poor urban people in developing countries the most, while it benefits farmers in US, Brazil, Argentina, Canada and Australia, who now get more paid for their harvests than ever. Many also hope that the rural poor who earn their living by growing and selling food can take advantage of the raised prices. Others hold that this will not be the case as the poorest farmers tend to be net buyers, rather than net sellers, due to small landholdings with low productivity. In addition, the cost of production, particularly for fertilisers that require large amounts of energy, has accelerated much more than gains in food prices.
What can be done about it?
Without direct and effective action, the world’s poor and hungry face great suffering due to the soaring global food prices. FAO’s director-general Jacques Diouf recently claimed that $30 billion a year is needed to relaunch agriculture in the developing world and avert future food conflicts. Moreover, a growing number of countries are subsidising the price of food, and the World Bank has called for targeted subsidies to help the poor. The UN World Food Programme says it needs another $500 million to make up the gap in emergency food aid and many international aid agencies have called for more money to support food production. World farm production will need to rise by 50 per cent by 2030 to meet growing demand, according to the UN.
Removing misguided agricultural subsidies, mitigating and adapting to climate change, shifting the diets of the emerging middle class in India and China and reducing oil and fertiliser prices (or replacing them with organic methods) are no easy tasks. Even though many observers now do their best to find one single cause, there seems to be no easy solution to the food crisis. There are apparently a number of limitations of thinking along simple cause and effect lines in this case.
Another key aspect to bear in mind is that the world now needs more food at the same time as the environmental impacts of agriculture needs to be diminished. Several recent studies have also shown that it is possible to increase harvests in sustainable ways, through farming based more on biological diversity and ecosystem services than fossil fuels (see SDU Issue 6/2007). Any progress achieved in reducing hunger and poverty is unlikely to be sustained if it comes at the expense of the ecosystem services on which both agriculture and humanity relies.
- UN Food & Agriculture Organization:
http://www.fao.org/worldfoodsituation/isfp/en/ - Final Declaration on World Food Security:
http://www.fao.org/fileadmin/user_upload/foodclimate/HLCdocs/ declaration-E.pdf - The Guardian article about the new World Bank Report:
http://www.guardian.co.uk
Joseph Eugene Robertson @ July 19, 2008
By http://www.PanEarth.org — This article advocates finding creative ways to increase food production. There is, however, a hidden difficulty with this position, a position known in the scientific community as “the food race.” The food race is the term used to describe the endeavor to keep food supply at or ahead of demand. However, in Wikipedia, the “Food Race” entry states “intensification of cultivation in response to population growth—-merely leads to still more population growth.” In other words, global increases in food production precipitates global population growth. This perspective has been pointed out in both the Japan Times and the Christian Science Monitor. The narrated slide show at http://www.PanEarth.org clearly elucidates the impact of continuing the food race. If this site is truly dedicated to “Hunting the Paradigm Shift,” it is imperative that we understand the long term impact of continually increasing food production.
A very useful comment. First, we should examine as closely as possible the meaning of a coincidence between population growth and increasing crop yields. Then, we should look at why we need to increase crop yields now. As ecologist Lester Brown notes in his book ‘Outgrowing the Earth‘, we have been pushing the Earth beyond its resource potential for some time now. We need to increase crop yields, because if not, tens of millions of people will die from malnutrition-related causes.
From the mid-20th century till the 1990s, innovations in irrigation and agriculture likely saved hundreds of millions of lives, and those technological advances coincided with other technological advances that, taken together, help the human population live more years, and grow. But, one of the major contributing factors to uncontrolled population growth is poverty: when surviving hardship is less likely or even unlikely, a larger family can protect against the forces of economic degradation; there are more people to do the work that sustains life, but when population increases, as Russ notes, we have a food race.
The paradigm shift we are seeking in the food supply crisis is to move from a paradigm in which increasing quality of life on average stresses the environment and our food-productive capacity, to one where we are able to balance those challenges with solutions that actually secure us against such degradation. New clean energy and renewable technologies should help us reduce the environmental cost of energy production and formulate new solutions for food production and distribution, perhaps having a downward impact on prices.
By http://www.PanEarth.org — In response to ADMIN – The connection between population growth and increasing crop yields is more than coincidence. It is a basic ecological law that if the food availability for the population of any species is increased, the population of that species will increase. The human species is no exception to this fundamental ecological law. We have been proving this for the past 10,000 years. Globally, human food production has been increased annually and, globally, the human population has grown annually. As for the need to increase crop production to feed the tens of millions of malnourished — first, the excess that we produce each year does not go to feed the starving millions. It didn’t go to feed the starving millions in 2007, it didn’t go to feed the starving millions in 2006, it didn’t go to feed the starving millions in 1993, it didn’t go to feed the starving millions in 1980 — and it won t go to feed the starving millions in 2008. Where did it go? It went to fuel our population explosion. Second, everyone involved in the problem of world hunger knows that the problem is not a shortage of food. Producing more food does not solve the problem, because that’s simply not the problem. Producing more food just produces more people. Third, are the starving and malnourished supposed to wait for sowing, growing, harvesting and shipping? If crop production were the answer to the problem, the people in need would die waiting for the food to get to them. The paradigm of “increase food production to feed the starving millions” is as new as it is effective. A true paradigm shift is needed. I urge you to view the slide show at http://www.PanEarth.org – there is nothing to lose and a lot to gain.
We need a quicker production of products either these are for consumption (food) or equipment. I support the advancement of nanotechnology and nanoreplicators which can change the molecular structure of materials. The control of this technlogy will allow humanity to resolve many of its continuous issues including the food race.