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Global Food Supply System Could Collapse,
2013 Could Experience A Major Hunger Crisis

By Countercurrents.org

14 October, 2012

World grain reserves are so dangerously low that severe weather in the US or other food-exporting countries could trigger a major hunger crisis next year, said a report by John Vidal in The Observer [1] on October 13, 2012. John cited a UN warning. The food crisis is growing in the Middle East and Africa.

The report said:

Failing harvests in the US, Ukraine and other countries this year have eroded reserves to their lowest level since 1974. The US now holds in reserve a historically low 6.5% of the maize that it expects to consume in the next year.

"We've not been producing as much as we are consuming. That is why stocks are being run down. Supplies are now very tight across the world and reserves are at a very low level, leaving no room for unexpected events next year," said Abdolreza Abbassian, a senior economist with the FAO. With food consumption exceeding the amount grown for six of the past 11 years, countries have run down reserves from an average of 107 days of consumption 10 years ago to under 74 days recently.

Prices of main food crops such as wheat and maize are now close to those that sparked riots in 25 countries in 2008. FAO figures released this week suggest that 870 million people are malnourished and the food crisis is growing in the Middle East and Africa. Wheat production this year is expected to be 5.2% below 2011, with yields of most other crops, except rice, also falling.

The figures come as one of the world's leading environmentalists issued a warning that the global food supply system could collapse at any point, leaving hundreds of millions more people hungry, sparking widespread riots and bringing down governments. In a shocking new assessment of the prospects of meeting food needs, Lester Brown, president of the Earth policy research centre in Washington, says that the climate is no longer reliable and the demands for food are growing so fast that a breakdown is inevitable, unless urgent action is taken.

"Food shortages undermined earlier civilizations. We are on the same path. Each country is now fending for itself. The world is living one year to the next," he writes in a new book.

According to Brown, we are seeing the start of a food supply breakdown with a dash by speculators to "grab" millions of square miles of cheap farmland, the doubling of international food prices in a decade, and the dramatic rundown of countries' food reserves.

This year, for the sixth time in 11 years, the world will consume more food than it produces, largely because of extreme weather in the US and other major food-exporting countries.

Oxfam last week said that the price of key staples, including wheat and rice, may double in the next 20 years, threatening disastrous consequences for poor people who spend a large proportion of their income on food.

In 2012, according to the FAO, food prices are already at close to record levels, having risen 1.4% in September following an increase of 6% in July.

"We are entering a new era of rising food prices and spreading hunger. Food supplies are tightening everywhere and land is becoming the most sought-after commodity as the world shifts from an age of food abundance to one of scarcity," says Brown. "The geopolitics of food is fast overshadowing the geopolitics of oil."

His warnings come as the UN and world governments reported that extreme heat and drought in the US and other major food-exporting countries had hit harvests badly and sent prices spiraling.

"The situation we are in is not temporary. These things will happen all the time. Climate is in a state of flux and there is no normal any more.

"We are beginning a new chapter. We will see food unrest in many more places.

"Armed aggression is no longer the principal threat to our future. The overriding threats to this century are climate change, population growth, spreading water shortages and rising food prices," Brown says.

Another report [2] on global wheat and corn stocks said:

World wheat stocks will drop by 13% next year and corn stocks will also be lower than expected until well into 2013, the US government predicted on October 11, 2012, prior to farm ministers from across the globe meeting to discuss high food prices.

It was the second time in two weeks that the US agriculture department (USDA) delivered low estimates of crop stocks to the markets. This time, the USDA said unrelenting demand would drag down US corn and soybean stocks to the lowest levels in years – 17 years for corn and eight for soybeans.

Agriculture ministers are due to meet next week in Rome amid renewed fears of a crisis in food supplies exacerbated by the worst US drought in more than 50 years, and drought in Australia, the world's leading wheat exporter.

On the US markets, corn futures soared 5% on the USDA's forecasts, hitting a three-week high. Wheat futures were up 2% near the close of the trading day in Chicago and soybeans were up 1.6%. While at high levels, corn is about 10% lower and soybeans 15% lower than the records set during the summer.

The USDA's estimates of the US corn and soybean crops were slightly larger than traders had expected, although the smallest in recent years. Corn and soybeans are raw ingredients in processed foods, fed to livestock and converted to motor fuel. Livestock feeders say they are being ruined by high corn prices and so the US government should relax a requirement to mix corn ethanol into gasoline.

With US corn production down for the third year in a row, usage will be tightened tremendously. Exports are forecast at 1.15bn bushels in 2012-13, the smallest in 37 years. Five years ago, the figure stood at 2.4bn bushels. Meanwhile, corn imports are forecasted to be 75m bushels, three times larger than average. The USDA also cut its estimate of the EU corn crop by 2.6%.

Drought will reduce Australia's wheat crop to 23m tonnes, down 12% from a month ago, the USDA said. Harsh weather, including summer droughts and early frosts, cut an additional 3% from Russia's wheat crop, it said.

The USDA added that while global wheat stocks would be down 13% next year, world soybean inventories would be up, boosted by huge crops in Brazil and Argentina, which would offset the crash is US.

Rebecca Smithers and Fiona Harvey reported [3] the UK food price scenario that shows hardship of common persons in a developed country:

According to a survey by charity IGD ShopperVista which showed that price is crucial in determining product choice, with 41% of shoppers naming it as the most important factor and 90% listing it within their top five influences.

Affordability is now the key factor in determining what food and drink we buy. Food prices have risen 12% in real terms over the last five years, taking us back to 1997 in terms of the cost of food relative to other goods. This week cash-strapped consumers – already stung by extra financial pressures such as rising petrol costs, inflation-busting rail fares and further hikes in their energy bills – were warned to expect further food price rises as a result of the drought in the US and the washed out UK summer that have affected the supply and quality of crops.

All of this has led to a sharp increase in wheat prices in the UK – from £150 a tonne to more than £205 a tonne. This will almost inevitably mean higher bread prices. It is also bad news for meat prices, as farmers struggle to pay for feed for their livestock.

The combination of a severe drought early in the year, followed by the wettest early summer on record, has produced some of the worst possible conditions for Britain's farmers, decimating yields and leaving crops prone to disease. Wheat was the crop worst hit by the heavy rainfall, with a 14% fall in yields, according to the National Farmers' Union.

Other crops have also suffered severe damage.

The British Growers Association (BGA), representing vegetable farmers, said the pea harvest was down about 45% - a reduction that will mean huge imports to make up the shortfall of one of the UK's most popular vegetables.

The much-anticipated Christmas dinner is likely to be dearer too. Poultry producers have seen their overheads increase dramatically, owing to the poor grain harvest, which has pushed up the price of chicken and turkey feed. Early projections show there will be one-fifth fewer Brussels sprouts this year thanks to the weather. Parsnips have had a poor season and the effects of discolouration on potatoes are still to be fully felt.

Retailers are also helping by agreeing to relax some of their high standards on the size and shape of vegetables and fruit. Mis-shapen or small fruit has traditionally been rejected by supermarkets, for aesthetic reasons, but the poor weather has meant an increase in the proportion of slightly odd-looking produce. Throwing that away at a time of high prices would be deeply unpopular, so the shops have promised to take more of them.

All this has put national food policy under the spotlight. The Department for Environment Food and Rural Affairs (Defra) reported last week in a barely noticed 50-page statistical document - the Food Statistics Pocketbook 2012 - that UK food prices have increased by 32% between 2007 and 2012. As a result, lower income families have cut their consumption of fruit and vegetables by nearly one-third to just over half of the five-a-day portions recommended for a healthy diet. No surprise, then, that internet companies selling food past its "best before" date (but still safe to eat) at knock-down prices – known in the industry as "the grey market" – are enjoying a boom.

The consumer group Which? has been interviewing consumers in video "booths" across the UK for its Future of Food project – due to report next month - which is an in-depth investigation into shopping and spending patterns. Early findings show that the average cost of shopping bill is £76.83 per week, an increase of £5.66 compared to a year ago. Most people (86%) said the reason for an increase in their weekly shopping bill was due to an increase in food prices, with only 2% saying it was because they had more money to spend. And 92% said they'd noticed an increase in the price of food in the past year.

In addition, more people (91% compared to 81% a year ago) are shopping around to get the best price; more (91% compared to 74% a year ago) are buying cheaper groceries and more (77% compared to 59% a year ago) are shopping at discount supermarkets.

Mary Creagh MP, Labour's shadow environment secretary, described the current situation as "a national scandal". She said: "Even though we are the seventh richest nation in the world, we face an epidemic of hidden hunger, particularly in children … Being able to feed yourself properly is fundamental to people yet government figures show that people on lower incomes are buying and consuming less than five years ago as fruit, milk, cheese and egg prices are up by 30%."

Food statistics digested from Food Statistics Pocketbook 2012, published by Defra October:

• Food prices rose by 32% in the UK between 2007 and 2012 compared to 13% in France and Germany.

• Fruit and vegetable consumption is falling. The lowest 10% of households by income reduced purchases of fruit and vegetables by 20% between 2007 and 2010.

• There are 63 million consumers in the UK, who last year (2011) spent a total of £179bn on food, drink and catering services, including £101bn on household expenditure on food and drink.

• Consumer expenditure on food, drink and catering has continued to rise despite the economic downturn: a rise of 3.5% in 2011 to £179 billion.

• Fruit prices are the second highest: by 34% since June 2007, rising steadily each year.


[1] “UN warns of looming worldwide food crisis in 2013”, http://www.guardian.co.uk/global-development/2012/oct/14/un-global-food-crisis-warning?newsfeed=true

[2] Reuters/ guardian.co.uk, “Global wheat and corn stocks to fall in 2013, says US government”, Oct. 12, 2012, http://www.guardian.co.uk/environment/2012/oct/12/wheat-corn-stocks-fall-2013-drought

[3] guardian.co.uk, “Food prices: 'Bread, coffee and fresh fruit have become a bit of a luxury'”, Oct. 12, 2012, http://www.guardian.co.uk/environment/2012/oct/12/food-prices-affordability-ethical?intcmp=239




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