by mariam katz
for tbl
In recent months, the food
crisis has increasingly been in the news. There have been riots
in many different countries all over the world including Mexico,
Egypt, India and Yemen due to the increase in food prices. Even
though these riots have only happened recently, the increase in
food prices has been building since 2005. Between 1974 and 2005,
food prices actually dropped 75 percent and have since increased
by
75 percent, according to Fritschel in an article published in
Open Democracy. In the last year, wheat prices have increased
by 130 percent, soy beans by 87 percent and rice by 74 percent,
say McKir and Stewart in The Observer. April 2008. Prices for
other staples such as sorghum and cassava have also risen considerably,
greatly affecting developing countries.
Many economists believe that
prices will keep rising for the foreseeable future due to five
main factors: high speculation in commodities markets, the lack
of availability of cheap oil, rising meat consumption in developing
countries, biofuels and lastly, climate change.
Speculation
in Commodities Markets
Food prices have risen due to speculation, but it is extremely
difficult to measure. Speculation means that many investors are
putting money into commodities, creating a market that is likely
to fluctuate - and remain in their control, skewing market forces.
Many people believe that speculation is not happening because
food reserves are at extremely low levels and speculation tends
to promote hoarding of resources. According to the Food and Agriculture
Organization (FAO), food reserves are at their lowest in 35 years.
However, in spite of this, there is still evidence that speculation
is increasing food prices. Investments in corn, soy, wheat and
cattle have increased to $47 billion now from $10 billion in 2006,
according to Hanim Adnan, news editor of StarBiz. Because of this,
some countries, including India, are now prohibiting futures trading
in food commodities. This action is thought to decrease food price
inflation. However, this is but a temporary measure. In the short
term, investors should stop chasing too few commodities and invest
money in true TBL-based initiatives instead.
The Effects
of High Oil Prices
Food prices increasingly follow oil prices - which have skyrocketed
in recent years. A barrel of oil now costs approximately $130;
in January of this year, oil cost $100 per barrel. A Food Policy
Report by the International Food Policy Research Institute (IFPRI)
states that since 2000, oil and wheat prices have tracked each
other. Both increased three times what they were before.
Many scientists and economists
believe that we have already reached peak oil, meaning that there
will be a point at which oil production will start to decline
and prices will increase indefinitely due to this. In the last
145 years, the world has used between 2 and 2.5 trillion barrels
of oil, which is approximately half of the supplies available;
in the next 40 years, it is expected that the other half will
be used because of the rise in consumption from countries such
as India and China. In addition,
98 percent of the oil the world uses comes from just 45 countries
and half of these have reached peak production, according to a
report titled 'Peak Oil and Food Security: Fuelling a Food Crises'
by the Pacific Ecologist.
In the developed world, this
has already started to be a problem for food prices, mainly due
to the fact that much of the food bought there comes from supermarkets,
which tend to use Heavy Goods Vehicles (HGV) that require a lot
of gas. In addition, the type of industrial farming done in the
developed world uses 50 times more energy than traditional farming,
according to the report. This is due to increased use of pesticides
and nitrogen fertilizers, the latter of which require 2 litres
of diesel for every kilogram. In addition to increasing the food
crisis, this has also led to a decrease in the quality of soil
and a degrading in the quality of water. As oil depletes, the
developed world should move toward farming with less fossil fuels.
Meat Consumption
As the developing world has grown stronger economically, demand
for meat and other luxury items has also grown. In China, meat
consumption has risen
150 percent since 1980, state McKie and Stewart. In the last 15
years, meat consumption in India has risen 40 percent.
Because cattle are mainly
fed grain, more grain has been fed to cattle instead of humans,
creating a shortage. In addition, as meat consumption rises, so
do prices. Since May 2007, meat prices have risen 12 percent.
It is important to note that the production of meat is a big contributor
to climate change. According to the New Scientist, "a kilogram
of beef is responsible for more greenhouse gas emissions and other
pollution than driving for 3 hours while leaving all the lights
on back home." Thus, if meat consumption continues unabated,
both food prices and the climate will suffer. The developed world
should set an example and start eating less meat. In fact, if
just one-seventh of calories in the U.S were shifted from red
meat to chicken, fish and vegetables, more greenhouse gas emissions
would be saved than if all food was bought from local sources.
So much for food miles calculations.
Biofuels:
Fuelling Cars, not People
Biofuels were once viewed as a way to decrease emissions and increase
energy independence for the developed world; however, it has become
clear in recent months that biofuels are in fact a contributor
to high food prices. Some organizations such as the International
Food Policy Research Institute believe that biofuels account for
as much as 25 to 33 percent of food price inflation; however,
the FAO believes that it may only account for 10 to 15 percent.
The main reason why biofuels have contributed so much toward food
price inflation is because the U.S is the world's largest exporter
of corn and much of the corn harvest in recent months has gone
towards biofuels. In 2007, when the U.S experienced a record corn
harvest, one-third of the crop was diverted to biofuels, according
to the Financial Post.. Since then, the price of corn has risen
44 percent.
However, this has been very
beneficial for farmers who have begun growing corn for biofuels
- not food.
In addition, even if 20 percent
of the corn in the U.S was diverted for biofuels, it would only
be enough for 2 percent of U.S car use, according to The Guardian,
UK.
Biofuels are also affecting other parts of the world such as Indonesia.
The European Union (EU) has a mandate that by 2020, biofuels will
contribute 10 percent of transport fuel. Much of the EU biofuel
will come from palm oil, which is being grown in Indonesia and
other tropical countries. Unfortunately, the best place to grow
these palm trees is in cleared rainforest, which contributes to
greenhouse gas emissions. Partly due to palm, Indonesia's rainforest
will be 98 percent gone by 2022. Many farmers' lands have also
been confiscated by palm oil companies, contributing to poverty.
Climate
Change
In recent years, the changing climate has affected crops all over
the world. In Australia, an ongoing drought has decreased the
rice harvest by a staggering 98 percent. This is an unfortunate
situation because much of the rice grown today grows very close
to sea level and these fields may become flooded as a result of
rising sea levels. Already, floods in China have destroyed many
rice as well as corn crops. In addition to rice, many other crops
will be affected by higher temperatures. By 2020, it is expected
that agricultural yields in the developing world will drop by
20 percent, according to the World Situation Report by the International
Food Policy Research Institute, December 2007.
Next Steps?
The food crisis clearly has many causes. It is not enough to just
tackle one area, but there are some short term steps that can
be taken. Firstly, developed countries have to contribute more
money towards emergency food needed for the World Food Programme,
which is now asking for $755 million because of rising food prices,
according to a United Nations press statement made in April 2008.
Although many countries such
as the U.S. and Canada prefer to give food instead of money, money
is a better asset in this case because it can be used to purchase
food grown locally, which decreases greenhouse gas emissions.
Some countries including Vietnam and India, have begun to ban
exports. However, some countries that are even poorer import much
of their food such as Haiti, Liberia and Zimbabwe which import
40 percent of their food, states Fritschel. If exports continue
to be banned, poor countries will suffer.
In the long term, diets will
have to change. As the developing world becomes richer, their
lifestyles are often modeled on the developed world, which consumes
a large amount of red meat. In the U.S., the average person consumes
41.8 kilograms of beef per year while the Chinese only eat 5.4
kilograms and India just 1.3, according to Lloyd Alter in treehugger,
May 2008. The consumption of beef has many implications; firstly,
it increases greenhouse gas emissions, which the planet cannot
afford. It also increases the price of corn, which people in developing
countries cannot afford. If increasing amounts of corn are diverted
toward biofuels and for feeding cattle, there will be hardly any
left for growing populations in the developing world. And of course,
red meat is very high in cholesterol, and contributes to ever
growing rates of heart disease.
The food crisis is now having
an impact on many countries all over the world, both developed
and developing. The corporate sector has a large role to play
because many large multinational corporations are reaping the
profits of this devastating impact.
Archer Daniels Midland, which
processes soy, corn and wheat, has reported a 42 percent increase
in earnings in just 2008 alone. This money should be fed back
to developing countries that are struggling with food supply.
Many policies in the developed world such as subsidies for biofuels
must end as well so that families can feed themselves first, and
cars second. As the food crisis becomes ever more evident, countries
must work together to find solutions.
References
