http://www.independent.co.uk/incoming/article2697804.ece
The fight for the world's food
Population is growing. Supply is falling. Prices are rising. What
will be the cost to the planet's poorest?
By Daniel Howden
Published: 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 boom.
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 Policy.
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 of corn.
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 years.
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 food aid.
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 century.
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