The food crisis

 

As so often happens, the latest crisis, rising food prices and shortages, is due to a convergence of events that are a result of market conditions and poor policy decisions.

In some places, people are marching in the streets or rioting, protesting the high price of food and shortages. According to U.S. News & World Report, rising food prices have “plunged 100 million people deeper into poverty. To stem the misery, relief officials are calling both for emergency aid and for changes in policy worldwide.” (“How to Solve The Global Food Crisis, U.S. News & World Report, May 19, 2008).

 

One of the major reasons for the rise in food prices is the skyrocketing price of oil, which impacts every stage of food production and distribution, “from fertilizers to tractors to transport. At the same time, demand for grain has never been higher, not only to feed the rising affluence of populous China and India but also to fuel cars and trucks as the world turns to ethanol and biodiesel.” In addition, the decline in the value of the U.S. dollar has caused governments around the world to restrict their own food exports, thereby making the shortage worse.

The U.N. is experiencing a 55 percent increase in food aid costs, just as they are attempting to send food to Myanmar in the wake of the deadly cyclone that recently devastated that country.

In addition, in a case of bad timing, the U.S. has invested billions of dollars to increase our supply of ethanol nearly 400 percent since 2001, which is now consuming enough of our corn crops to drive up the price of food, along with oil.

 

“But the corn ethanol lobby makes a key point: ‘The crises the world is facing today – food, economic or environmental – all have a common denominator: the ever tightening world oil market.’” (U.S. News & World Report, May 19, 2008, pg. 37).

“India’s finance minister … said, ‘When millions of people are going hungry, it’s a crime against humanity that food should be diverted into biofuels.’ World Bank President, Robert Zoellick said surging food costs could translate into ‘seven lost years’ in the fight against worldwide poverty. Thirty-three countries are at risk of social upheaval, he warned … Hardest hit by food shortages are what the Rome-based World Food Program lists as the world’s ‘ultra-poor’ (162 million who barely exist on less than 50 U.S. cents a day); and the ‘poor,’ (485 million on between 75 cents and $1 a day) – or almost 1 billion people on $1 a day or less … Most of them have been priced out of buying even subsistence-level rice. More than 25,000 people die from hunger every day across the world.” (Washington Times, April 23, 2008).

 

Following are some of the recommendations that are being made to cope with the food crisis:

• Produce higher-yield crops: better farming techniques; training and empowering poor farmers in other countries.

• Produce better crops using genetic engineering.

• Curb speculators.

• Reduce or eliminate trade barriers (tariffs, quotas, taxes, etc.) that prevent or restrict food imports between countries.

• Eat less meat, which in turn would reduce the amount of grain that is used to feed animals.

• Suspend or curtail the use of corn for ethanol for a period of time, until market conditions improve in the world food market.

Some of these are short-term adjustments, others long-term, but one thing for certain: the fact that prices and distribution are a function of market conditions is inescapable.