30 Eylül 2012 Pazar

How Rising Food Prices are Impacting the World

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From the Christian Science Monitor.  This article is 6 pages long, so here's the Cliff's Notes version. It amounts to a very long, global version of the Ant and the Grasshopper tale.  If people stocked up when times were good, the suffering wouldn't be so bad today...as the tale goes.  This works on a global scale, and not just a local one.

In an era where you have not only linked food systems, but linked currencies as well, it's like dominoes.  When the first one falls, they all fall eventually.

"Our story begins near Prairie City, Iowa, in the fields of Gordon Wassenaar, who has been coaxing food out of some of the world's richest earth for 57 years. Normally, Mr. Wassenaar is able to harvest about 200 bushels of corn per acre from his land – bin-bursting crops that are sent off to feed people in places as disparate as Michigan and Malawi.

Not this year.

As he walks the 1,500 acres that he farms, Wassenaar occasionally pauses to finger a stalk and peel back the husk, revealing corn that is shriveled and stunted. He figures that the headstrong drought of 2012 will cost him about 40 percent of his harvest."


"The effects are being exacerbated by churlish weather in other parts of the world – notably in the big wheat-producing areas of Russia, Ukraine, and other countries that hug the Black Sea, where a more moderate drought has hit, as well as in Australia, the globe's No. 2 wheat exporter, where below-average rainfall is expected to reduce the November harvest by more than 10 percent.

As the impact of the droughts works through the global food system, an urgent question looms: How hard are people being squeezed – and will it lead to possible social unrest?"


"From Russia, to Panama, to the Philippines, almost everywhere really, governments did precisely the wrong thing. They panicked, rushing into grain markets to stockpile supplies or banning exports. Speculators poured in after them, like lions harassing a herd of antelope, raising prices even further beyond the rational laws of supply and demand."


"Nations around the world have learned some valuable lessons since 2008. More of them have been stocking their larders and preparing for a new global reality driven by increasingly erratic weather and growing demand."


"Long gone are the days when the world's population was subject solely to the whims of local crops and climate. The green revolution of the 20th century, which generated spectacular increases in grain yields, and the advent of cheap shipping created a global food market that's transformed the lives of hundreds of millions of people.

But it also means that a bad year for farmers in the United States or Russia or Australia can ripple out quickly and become a disastrous year for consumers in Egypt or Indonesia."


"John Burkel, a farmer in Badger, Minn., is already taking action. He's canceled an order for 12,000 young turkeys. He says taking on a larger flock doesn't make sense economically unless he can raise selling prices. And he repeats an enduring lament of ranchers and poultry farmers who believe they're at a disadvantage without any government protection.

"They have insurance," he says of crop growers. "The livestock guys – we're the ones that gotta feed these animals."


"Two years ago, Guatemalans could buy five tortillas for a quetzal (about 13 cents). Today, a quetzal only buys three tortillas, on average, and other food prices have been surging as well. The government estimates that it costs about 85 quetzales ($10.70) a day to feed a family of four, far more than the minimum daily wage of most people here.

And Guatemala and many of its neighbors in Central and South America are linked to US agricultural production and policy more tightly than ever. "These are countries that are net food importers and overwhelmingly dependent on products coming from the United States," says Fernando Soto Baquero, the senior policy officer for the UN Food and Agriculture Organization's Latin America office."


"If the drought were the only factor driving prices, Guatemala and similar governments might have been able to blunt the effects. In theory, they could have bought corn to stockpile when supplies were abundant and prices were cheap, and then released some of the reserves this year, in a time of need.

But they haven't been able to do that because prices were inflated even before the drought struck. That's in part because of something else that happened in 2005: the passage of a law requiring ethanol, made from corn and other grains, to be added in ever increasing amounts to commercial gasoline. Under current law, the US wants to inject 36 billion gallons of ethanol into the fuel supply by 2022.

This year, roughly 40 percent of the US corn crop will go toward the production of ethanol, about 15 percent of the global corn supply. A recent study by researchers at Iowa State University found that the expansion of ethanol production accounted for 36 percent of the increase in the price of corn from 2006 to 2009."


"While rising grain prices have hit many poorer countries across the globe, much of Asia has escaped the bulk of the food crisis – because of shrewd planning. Countries like Indonesia, India, the Philippines, and China have used rice reserves – stored up since the last commodity spike four years ago – to curb speculators and head off a price bubble. While wheat, corn, and soybeans have seen price jumps of about 20 percent over the summer, rice has been fairly stable – cushioning the impact for Asian consumers at the grocery store.

"What we learned back in 2008, when we had the blowout in rice prices, was that we could prick that speculative bubble, that hoarding bubble across the system," says Peter Timmer, a professor emeritus of agricultural economics and development at Harvard University in Cambridge, Mass. "Suddenly, we discovered that the Japanese had 1.5 tons that they were just sitting on, and when it became clear that that could be put into the market, it just stopped [the speculation] dead ... it became clear that just having some kind of reserves to draw on in times of panic can stop the panic itself."


"Soy processed into tofu and tempeh (a fermented soy-based cake) is a basic protein for most of Indonesia's 240 million people. And prices have soared, particularly as speculators have poured into the market late in the summer. About 84 percent of Indonesia's soybeans are imported, almost all from the US."


"Indonesia is now rich enough that they can screw up the management of the food economy in a way that they couldn't afford to years ago," says Timmer."


"The (Indonesian) government is also seeking to revive the role of the Bureau of Logistics (Bulog), a government agency tasked with managing food prices that was a hive of corruption and mismanagement under Mr. Suharto. Most of its functions were phased out in the past decade in favor of market-oriented policies.

In early September, the government announced that Bulog would build 28 new food warehouses, and President Bambang Susilo Yudhoyono has been pushing for the agency to regain its control over the prices of rice, sugar, soybeans, and corn.

While that's alarmed international economists who view price controls as doomed to failure and prone to creating market distortion, it's a signal of how urgently Indonesia, like other countries, is looking for answers to the new era of punishing food prices."


"One region analysts will be watching particularly closely for any signs of new upheaval is the Middle East. A recent study by the New England Complex Systems Institute, a Cambridge, Mass.-based think tank, concluded that food prices are a key indicator of political unrest in the region – as evidenced by the Arab Spring, which was triggered in part by widespread frustration over escalating food costs. The authors worry that continuing upward pressures on foodstuffs will unleash a new round of unrest."


"In more prosperous countries, high grain prices pose risks of a different sort. China, for instance, is home to 1 billion people but just 10 percent of the world's arable land.

Food imports there have surged in recent years. In the first half of 2012, Chinese grain imports grew by 40 percent, to 41 million metric tons. Though the vast majority of China's food is still produced at home, the recent jump in demand adds to the growing competition for global grain supplies and makes Beijing more vulnerable to price shocks.

That has raised concerns among outside analysts that it could lead to an increase in inflation in China, forcing Beijing to further cut economic growth, a move that would ripple around the world. So far Chinese inflation is well under control, with consumer prices rising by just 1.8 percent in July, even as economic growth hummed along at 7 to 8 percent. But there are signs of concern. Farmers in China have dramatically thinned their herds of pigs, the source of the country's most popular meat, as the cost of fattening the animals has surged."


Remember these?
"Back in Iowa, in Wassenaar's flint-dry fields, the farmer is lamenting the fickleness of the weather. He hasn't suffered as much as the tofu producer in Indonesia or the tortilla vendor in Guatemala. But he nonetheless thinks there is a better way to offset the impact of natural disasters on American farmers. He wonders if the US should set up its own strategic grain reserve."

One thing people can do to circumvent this is to GET OFF THE STARCH-BASED BANDWAGON!  Go back to feeding our animals the old-fashioned way, as well as going back to eating the old-fashioned way.  End this inter-dependence once and for all, because the weight of the world is just too heavy for a fortunate few to lift any more.  Besides, the sun is doing it's best to ensure there will soon be no more fortunate few.

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