Food Shortages, Price Spikes Threaten World Population
food prices have risen sharply and supplies have dropped this year,
according to the latest food outlook of the United Nations Food and
Agriculture Organization. The agency warned December 17 that the changes
represent an “unforeseen and unprecedented” shift in the
global food system, threatening billions with hunger and decreased access
food price index rose by 40 percent this year, on top of the already
high 9 percent increase the year before, and the poorest countries spent
25 percent more this year on imported food. The prices for staple crops,
including wheat, rice, corn and soybeans, all rose drastically in 2007,
pushing up prices for grain-fed meat, eggs and dairy products and spurring
inflation throughout the consumer food market.
increases are a complex range of developments, including rapid urbanization
of populations and growing demand for food stuffs in key developing
countries such as China and India, speculation in the commodities markets,
increased diversion of feedstock crops into the production of biofuels,
and extreme weather conditions and other natural disasters associated
with climate change.
the long-term and compounding nature of all of these factors, the problems
of rising prices and decreasing supplies in the food system are not
temporary or one-time occurrences, and cannot be understood as cyclical
fluctuations in supply and demand.
reserves of cereals are dwindling. In the past year, wheat stores declined
11 percent. The FAO notes that this is the lowest level since the UN
began keeping records in 1980, while the US Department of Agriculture
(USDA) has reported that world wheat stocks may have fallen to 47-year
lows. By FAO figures, the falloff in wheat stores equals about 12 weeks
worth of global consumption.
has cautioned that wheat exporters in the US have already sold more
than 90 percent of what the department had expected to be exported during
the fiscal year ending June 2008. This has dire consequences for the
world’s poor, whose diets consist largely of cereal grains imported
from the United States and other major producers.
850 million people around the world suffer from chronic hunger and other
associated miseries of extreme poverty. According to the FAO, 37 countries—20
in Africa, 9 in Asia, 6 in Latin America, and 2 in Eastern Europe—currently
face exceptional shortfalls in food production and supplies.
affected live in countries dependent on imports. The poorest people,
whose diets consist heavily of cereal grains, are most vulnerable. Already
the poor spend the majority of their income on staple foods—up
to 80 percent in some regions, according to the FAO. Ever-rising prices
will lead to a distinct deterioration in the diets of these sections
of the population.
crisis is intensifying social discontent and raising the likelihood
of social upheavals. The FAO notes that political unrest “directly
linked to food markets” has developed in Morocco, Uzbekistan,
Yemen, Guinea, Mauritania and Senegal. In the past year, cereal prices
have triggered riots in several other countries, including Mexico, where
tortilla prices were pushed up 60 percent. In Italy, the rising cost
of pasta prompted nationwide protests. Unrest in China has also been
linked to cooking oil shortages.
to the cost of imports, war and civil strife, multiple years of drought
and other disasters, and the impact of HIV/AIDS have crippled countries’
food supply mechanisms.
Afghanistan both suffer severe shortfalls because of the US invasion
and ongoing occupation. North African countries are hard hit by the
soaring wheat prices because many staple foods require imported wheat.
of the former Soviet Union are facing wheat shortages. People there
spend upwards of 70 percent of their incomes on food; the price of bread
in Kyrgyzstan has risen by 50 percent this year and the government released
emergency reserves of wheat in the poorest areas to temporarily ease
food prices have spiraled up 11 percent every month since July; rice
prices have risen by nearly 50 percent in the past year.
countries saw a 50 percent increase in the price of that region’s
staple grain, corn. Several countries in South America have also been
impacted by the high international wheat prices, compelling national
governments to dispense with import taxes. The government in Bolivia,
for example, has dispatched the military to operate industrial-scale
governments are keenly aware of the possibility of civil unrest in the
event of severe food shortages or famine, and many have taken minimal
steps to ease the crisis in the short term, such as reducing import
tariffs and erecting export restrictions. On December 20, China did
away with food export rebates in an effort to stave off domestic shortfalls.
Russia, Kazakhstan, and Argentina have also implemented export controls.
policies cannot adequately cope with the crisis in the food system because
they do not address the causes, only the immediate symptoms. Behind
the inflation are the complex inter-linkages of global markets and the
fundamental incompatibility of the capitalist system with the needs
of billions of poor and working people.
of the financial markets, driven by speculation and trading in equity
and debt, intersects with the futures and options markets that have
a direct bearing on agricultural commodity markets. As the housing market
in the United States collapsed, compounding problems in the credit market
and threatening recession, speculation shifted to the commodities markets,
exacerbating inflation in basic goods and materials. The international
food market is particularly prone to volatility because current prices
are greatly influenced by speculation over future commodity prices.
This speculation can then trigger more volatility, encouraging more
prices are a striking example of this disastrous cycle. On December
17, speculation on wheat and rice for delivery in March 2008 forced
prices to historic highs on the Chicago Board of Trade. Wheat jumped
to more than $10 a bushel on projections of worsening shortages and
inflation. This level is double the $5-a-bushel price of wheat at the
beginning of 2007.
largest wheat importer in Asia, announced December 19 that it may raise
wheat prices by 30 percent. The same day, Indian government officials
warned of impending food security problems. These were due, according
to Prime Minister Manmohan Singh, to “clouds on global financial
markets following the sub-prime lending crisis.”
corn prices have also been pushed up to 34-year and 11-year highs, respectively,
on the projected shortages and demand for biofuel. These new trading
levels become the agricultural benchmarks for subsequent trading, and,
as the Financial Times put it December 17, have the consequence of “raising
inflationary pressure and constraining the ability of central banks
to mitigate economic slowdown.”
costs ultimately lead to higher food prices, via higher shipping charges,
particularly for nations that import a large proportion of their staple
foods. Shipping costs for bulk commodities have increased by more than
80 percent in the past year and 57 percent since June, according to
the Baltic Exchange Dry Index.
The FAO report
noted that the enormous increase in freight costs has had the effect
of dis-integrating the world market in certain regions because many
import-heavy countries have opted to purchase from closer suppliers,
resulting in “prices at regional or localized levels falling out
of line with world levels.”
oil price not only affects the costs of transportation and importation.
It also has a direct impact on the costs of farm operation in the working
of agricultural and industrial processing machinery. Moreover, fertilizer,
which takes its key component, nitrogen, from natural gas, is also spiking
in price because of the impact of rising oil prices on the demand and
costs of other fuels. By the same token, as oil prices rise, the demand
for biofuel sources such as corn, sugarcane, and soybeans also rises,
resulting in more and more feedstock crops being devoted to fuel and
In the US,
the use of corn for ethanol production has doubled since 2003, and is
projected by the FAO to increase from 55 million metric tons to 110
million metric tons by 2016. The US government is more ambitious. On
December 19, President Bush signed a new energy bill into law which
contains a mandate for expanding domestic biofuel production five-fold
over the next 15 years, to more than 36 billion gallons a year. Already
a third of the US corn harvest is devoted to ethanol production, surpassing
the amount of corn bound for the world food markets.
As more US
cropland is devoted to ethanol-bound corn, other major agricultural
regions are struggling with weather disasters associated with climate
change. Australia and the Ukraine, both significant exporters of wheat,
have suffered extreme weather that damaged crops. A prolonged drought
in southern Australia has curtailed farming to such a degree that many
farmers have sold their land.
suggests that as temperatures rise over the next fifty years by 1 to
2 degrees Celsius, poor countries may lose 135 million hectares (334
million acres) of arable land because of lost rainfall. In new studies
published earlier this month in the Proceedings of the National Academy
of Sciences, researchers have cautioned that this estimate may be conservative,
and that the impact of climate change on food production has been over-simplified.
to NASA/Goddard Institute of Space Studies researcher Francesco Tubiello,
complications of climate change on the world food supply may be far
worse than previously predicted: “The projections show a smooth
curve, but a smooth curve has never happened in history. Things happen
suddenly, and then you can’t respond to them.”
research focuses on extreme weather events that have devastated entire
crops when they coincided with germination and blossoming periods, as
was the case with Italy’s corn crop in 2003. Tubiello noted that
corn yield in the Po valley growing region fell to 36 percent following
a heat wave that raised Italy’s temperatures 6 degrees over the
to the survival thresholds of plants, researchers have begun studying
the effects of higher temperatures on the physiology and diseases of
livestock, as well as the spread of pests, molds and viruses native
to tropical zones. Goddard Institute research has suggested that bluetongue,
a viral disease of cattle and sheep, will move outward from the tropics
into regions including southern Australia. According to the Earth Institute
at Columbia University, higher temperatures will lead to higher infertility
in livestock and lower dairy yields.
of these studies are that farming adaptations such as hardier crops
and shifts in planting times may initially mitigate anticipated global
warming. Yet over the coming decades, the stress of climate change on
the food supply will also intensify in abrupt and catastrophic ways
for which the capitalist system and its ruling elites are entirely unprepared
and which they are unable to prevent.
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