Fight For The World's Food
By Daniel Howden
23 June, 2007
Most people in Britain won't
have noticed. On the supermarket shelves the signs are still subtle.
But the onset of a major change will be sitting in front of many people
this morning in their breakfast bowl. The price of cereals in this country
has jumped by 12 per cent in the past year. And the cost of milk on
the global market has leapt by nearly 60 per cent. In short we may be
reaching the end of cheap food.
For those of us who have
grown up in post-war Britain food prices have gone only one way, and
that is down. Sixty years ago an average British family spent more than
one-third of its income on food. Today, that figure has dropped to one-tenth.
But for the first time in generations agricultural commodity prices
are surging with what analysts warn will be unpredictable consequences.
Like any other self-respecting
trend this one now has its own name: agflation. Beneath this harmless-sounding
piece of jargon - the conflation of agriculture and inflation - lie
two main drivers that suggest that cheap food is about to become a thing
of the past. Agflation, to those that believe that it is really happening,
is an increase in the price of food that occurs as a result of increased
demand from human consumption and the diversion of crops into usage
as an alternative energy resource.
On the one hand the growing
affluence of millions of people in China and India is creating a surge
in demand for food - the rising populations are not content with their
parents' diet and demand more meat. On the other, is the use of food
crops as a source of energy in place of oil, the so-called bio-fuels
As these two forces combine
they are setting off warning bells around the world.
Rice prices are climbing
worldwide. Butter prices in Europe have spiked by 40 per cent in the
past year. Wheat futures are trading at their highest level for a decade.
Global soybean prices have risen by a half. Pork prices in China are
up 20 per cent on last year and the food price index in India was up
by 11 per cent year on year. In Mexico there have been riots in response
to a 60 per cent rise in the cost of tortillas.
It has even revived discussion
of the work of the 18th-century British thinker Robert Malthus. He predicted
that the growth of the world's population would outstrip its ability
to produce food, leading to mass starvation.
So far in Britain we have
been insulated from the early effects of these price rises by the competitive
nature of our retail system. But the supermarkets cannot shield us for
long. The European Commission no longer has reserves to help cushion
its citizens. Its mountains of unsold butter and meat and its lake of
powdered milk have disappeared after reforms to the Common Agricultural
Then there is corn. While
relatively little corn is eaten directly it is of pivotal importance
to the food economy as so much of it is consumed indirectly. The milk,
eggs, cheese, butter, chicken, beef, ice cream and yoghurt in the average
fridge is all produced using corn and the price of every one of these
is influenced by the price of corn. In effect, our fridges are full
In the past 12 months the
global corn price has doubled. The constant aim of agriculture is to
produce enough food to carry us over to the next harvest. In six of
the past seven years, we have used more grain worldwide than we have
produced. As a result world grain reserves - or carryover stocks - have
dwindled to 57 days. This is the lowest level of grain reserves in 34
The reason for the price
surge is the wholesale diversion of grain crops into the production
of ethanol. Thirty per cent of next year's grain harvest in the US will
go straight to an ethanol distillery. As the US supplies more than two-thirds
of the world's grain imports this unprecedented move will affect food
prices everywhere. In Europe farmers are switching en masse to fuel
crops to meet the EU requirement that bio-fuels account for 20 per cent
of the energy mix.
Ethanol is almost universally
popular with politicians as it allows them to tell voters to keep on
motoring, while bio-fuels will fix the problem of harmful greenhouse
gas emissions. But bio-fuels are not a green panacea, as the influential
economist Lester Brown from the Earth Policy Institute explained in
a briefing to the US Senate last week. He said: "The stage is now
set for direct competition for grain between the 800 million people
who own automobiles, and the world's 2 billion poorest people."
Already there are signs that
the food economy is merging with the fuel economy. The ethanol boom
has seen sugar prices track oil prices and now the same is set to happen
with grain, Mr Brown argues. "As the price of oil climbs so will
the price of food," he says. "If oil jumps from $60 a barrel
to $80, you can bet that your supermarket bills will also go up."
In the developed world this
could mean a change of lifestyle. Elsewhere it could cost lives. Soaring
food prices have already sparked riots in poor countries that depend
on grain imports. More will follow. After decades of decline in the
number of starving people worldwide the numbers are starting to rise.
The UN lists 34 countries as needing food aid. Since feeding programmes
tend to have fixed budgets, a doubling in the price of grain halves
Anger boiled over this week
as Jean Ziegler, the UN special rapporteur on the right to food, accused
the US and EU of "total hypocrisy" for promoting ethanol production
in order to reduce their dependence on imported oil. He said producing
ethanol instead of food would condemn hundreds of thousands of people
to death from hunger.
Population and starvation
* Robert Thomas Malthus was
a political economist who shot to prominence in late 18th century Britain.
His Essay on the Principle of Population influenced generations of thinkers
with its prediction that the world's population would outgrow its food
supply, prompting starvation on an epic scale. "The power of population
is so superior to the power of the earth to produce subsistence for
man, that premature death must in some shape or other visit the human
race," he wrote. "Gigantic inevitable famine stalks in the
rear." But Malthus predicted disaster to strike in the mid-19th
© 2007 Independent News and Media Limited
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