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Food prices are going to stay high for years to come, both in the U.S. and abroad, exacerbating world hunger and political unrest. The upsurge in international support for global food aid programs won't solve the underlying problem: Worldwide demand is racing ahead of supply.
Bringing supplies in line with needs will take time. A projected 3% increase in global grain output this year will be a start. Longer-term improvement will require policy changes and technological breakthroughs that will reduce demand for food stocks being used to make fuels. A greater willingness by many countries to grow and import genetically modified foods is sure to help. And the U.S. will have to reverse a trend over the past several years of dramatically cutting its foreign aid budgets for agricultural research and development. "Unless we invest in agricultural development in the third world, no amount of food aid is going to solve this problem," says Andrew S. Natsios, formerly President Bush's administrator of the U.S. Agency for International Development.
Mid- to long-term solutions won't be much consolation to U.S. consumers, who'll see prices of eggs, cereal and other staples climb higher before gradually moderating over the next several years. Overall grocery food prices will go up 5% in 2008.
And they certainly won't ease the misery being felt by millions of people throughout the developing world today. Malnourishment leads to increased infant and child mortality as well as to increased vulnerability to infectious diseases among adults. The worst examples will occur in countries in which food or medical infrastructure has already broken down or in countries hit by additional shocks from severe weather or war. Myanmar is likely to provide a grim example in the wake of last week's devastating cyclone.
Peter Timmer, an economist with the Center for Global Development, puts the situation in stark terms. In an interview on the center's Web site, he says, "If current rice prices in world markets are actually transmitted into most Asian countries -- and this is not yet a reality, but it becomes more likely every day the world price stays this high -- then even conservative calculations suggest that upwards of 10 million people will die prematurely." Much of Africa is at equally high risk.
Robert Zoellick, president of the World Bank Group, says that food inflation will push 100 million people deeper into poverty, wiping out worldwide gains in reducing poverty over the past seven years. In Latin America alone, about 16 million people face destitution. That will almost certainly boost illegal immigration to the U.S.
Will the rush to increase global food supplies stem inflation? No. At best, the aid will alleviate some immediate suffering. The U.S. and other developed nations aim to raise up to $2 billion soon for the United Nations' World Food Program (WFP) to cover the most urgent needs. The key challenge is getting food to where it's needed most. High fuel prices hike transportation costs, leaving less money for aid agencies to spend on food. Aggravating the problem, two dozen countries have imposed export bans on various food products. Such measures help hold down food costs within such countries by increasing local supplies, but they restrict food supplies and push up prices everywhere else. Even where official export bans aren't in effect, fear of inflation-driven shortages can prompt individuals to hoard food, with similar effect. The WFP strives to buy food from nations near distribution areas in order to control transport costs. Short supplies in Kenya are greatly complicating the organization's ability to obtain food for neighboring Somalia, for example.
The threat of increased food rioting is a major security worry in many countries, a big reason why food aid will be stepped up. Of special concern to U.S. officials: Food insecurity in nations that have large armies significantly raises the risk of armed conflicts. There's historical precedent for such concern -- for example, the French Revolution and Japanese imperial expansion in the 1930s.
Ironically, much of the problem stems from recent success stories of the world economy. Rapid growth in China, India and other large emerging markets is creating middle classes throughout the developing world. These new middle-class consumers have more to spend on nutrition. Increasingly, they're spending on protein, rather than just on the grains that have long dominated their diets. The combination of this new customer base with the strong demand from the developed world is pushing up global meat prices. Worse, because it takes several pounds of grain to produce a single pound of beef, chicken or pork, livestock farmers have to purchase ever larger amounts of cereal crops for feed. That, in turn, drives up the price of corn, wheat, rice, soybeans and sorghum.
Soaring energy prices constitute another major factor. Again, the greater thirst for oil in emerging markets, added to existing demand from the developed world, provides much of the explanation. Higher oil costs translate to higher costs for chemical fertilizers and pesticides, for electricity to run pumps and irrigation systems and for fuel for everything from tractors and trucks to containerships. All of that adds to the cost of the food itself. Using grain to make ethanol as a way of supplementing fuel supplies further reduces the supply of grain for the table and pushes food inflation higher still.
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POSTED BY: Alan McRae (May 14, 2008 06:04 PM)
GMO's as a solution to world hunger? Well, now we know where your investments are positioned. The healthiest people I know are shunning GMO's and non-organic produce in favor of organic foods grown near where they live. Some would rather invest in more costly healthy organic foods than buy health insurance because staying well is a better strategy than working yourself sick by eating modern chemically altered over-processed fast food while dashing after the income to pay your MBA-run health insurance company that will only dodge your medical claims when your modern diet & lifestyle produce the inevitable: cancer, heart disease, stroke and/or chronic depression - the diseases of the modern rich. Poor people have been eating organically from their own gardens for millenia, until modern technology & corporate agribusiness made their poisonous deal and made sustainable living uneconomical & increasingly elusive. IMHO many people are starving because market globalism has fueled the move from small scale subsistence organic farming to corporate green technology monoculture cash crop farming and millions have been forced out of a poor but sustainable relationship with their land into a landless dependency on the empty promises of globalism. How empty are the promises of globalism? Look at the American middleclass & blue collar class BEFORE globalism, and look at them today. From single wage earner family stability to multiple wage earner instability. From economic prosperity, substantial savings, and modest debt to declining real wages, minimal savings and ruinous indebtedness. How did we turn the wealthiest creditor nation in the world into one of the largest debtor nations in less than two generations? Globalism! And what is the green revolution and industrial agriculture doing to mankind's relationship with food and the natural resources of healthly organic soil, clean water and fresh air? Destroying it! Should we trust the same technologically-driven market forces to genetically engineer our food as well? Not my family! Buy Locally. Buy Organic. Support Small Farmers Everywhere. Invest in Sustainability. Choose Fair Trade. Just Say No to The System - it's killing our planet, it's killing our communities, it's killing our families and it's killing our souls. We created The System and now we need to change it before the rest of the world copies it and seals our collective fate. Global warming, climate change, pollution, starvation vs. obesity: don't you get it?
POSTED BY: jdh (May 14, 2008 07:46 PM)
If you really want to see a movie that will change your outlook on food, watch "The Future of Food". I watched it on instant view on Netflix. It will change your perception of who will be running the world in years to come. Buy Monsanto Stock now.
POSTED BY: Andrew C. Schneider (May 16, 2008 05:23 PM)
Andrew Schneider of Kiplinger here. Regarding Alan McRae's comment, there are certainly long-standing concerns about GMO's associated with possible health and safety issues. There are also environmental concerns, with GMOs potentially acting as invasive species and driving out their natural cousins when introduced to new region. For these reasons, Europe and many developing nations have been reluctant to make use of them. Nevertheless, it is likely that more developing nations will turn to GMO's as solutions to the problem of food shortages. Countries that have been greatly affected by drought will gradually become more open to using crop strains that are capable of surviving with less water. Countries that have been inundated by salt water from tidal waves or have had the salt content of their water table increase are more likely to turn to saline-resistant crops. It's worth noting as well that genetic modification of crops is not a new development. It has been going on virtually as long as humankind has engaged in agriculture. Farmers have long crossbred strains of cereal crops, vegetables, fruit trees and vines, as well as livestock, for specific traits. None of the species grown by farmers or raised by ranchers today remotely resembles their original, wild state. The difference between the genetic modification of a few thousand years ago--or even a century ago, when Luther Burbank was breeding dozens of new species--are the mechanisms by which such modification is accomplished and the speed with which such modifications take place.
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