Global Food Crisis on the Horizon

July 19, 2012

Tucked away half-way down the Guardian’s website is almost certainly the most important story of the day. The paper doesn’t seem too keen at the moment to put it centre stage where it belongs, but I am, so here it is again:

Another global food crisis is looming, only four years after the last one, which almost certainly resulted in thousands of deaths, although no-one has been counting that hard. What is it about human civilization or, to put it more precisely, about its current capitalist phase, which allows food crises to recur? It seems as if there are few safeguards in place to prevent another crisis, which stands as a damning indictment of global institutions and national governments.

The problem is US grain harvests. During the twentieth century, much of the world came to rely upon the US for its wheat and maize. Buoyed by huge subsidies and new technologies such as pesticides, mechanised harvesting, containerisation, fertilisers, hybrid seed-lines and new food processing techniques, a system developed which saw the distribution of American grain to all corners of the world. This included the Warsaw Pact countries and their Soviet hegemon, by the way.

This dependency has led to serious problems. Aside from the impact that artificially low US grain prices has on producers in poorer countries, the food distribution system is dominated by a few (generally) American firms such as Cargill or Archer Daniels Midland, and is highly vulnerable to supply shocks. The intense drought currently ravaging US production is combining with the diversion of grain to biofuels production (and rising demand from China and India etc…) to cause a probable price spike.

This has been exacerbated by changes to the way that food has been traded, produced and stored around the world.

Owing largely to structural adjustment programmes during the 1980s, many poorer nations were advised to dismantle national marketing boards, tariffs, storage systems and indigenous seedstocks/breeding institutes. Instead, the idea was that they should depend on the global market in basic grains, while specialising in the production of high value goods (such as Kenyan flowers or Rwandan coffee). The state should shrink as private enterprise and an efficient market stepped in to provide a reliable supply of food and a means of funding that via lucrative exports. Obviously, this rarely happened. Now, many poorer nations lack adequate granaries and distribution systems, have a low level of agricultural research infrastructure and land ownership patterns which do not encourage productive local agriculture. This is very bad news when the global market fails, as it did in 2008 and seems likely to do now.

This may well be the calm before the storm. The Guardian article quotes analyst Nick Higgins of Rabobank, who notes that “the impact of the weather on corn and soya bean crops is much worse than five years ago but so far traders have not pushed up prices as dramatically” yet “in terms of damage to the actual crops, it’s worse.”

To put things in perspective, the current price per bushel of wheat is quoted as $8.40, yet it peaked at over $13 in 2007-2008. However, with corn supplies dwindling, wheat may be diverted to feed American livestock production (and away from human needs), while Russian production is threatened by wide-spread flooding in the country’s south. Meanwhile, as the FT reports, corn and soybean prices are actually higher than in 2007-2008, while wheat prices have risen more than 50 percent in the past five weeks. This is a very serious situation indeed.

As one unnamed “senior executive at a trading house” put it, “I’ve been in the business more than 30 years and this is by far and away the most serious weather issue and supply and demand problem that I have seen by a mile…It’s not even comparable to 2007-08.”

This is the product of one of the nastiest places on earth: where human-induced climate change collides head on with the global market in food. It’s a place where millions of people stand to lose everything and a very few stand to make a great deal of money. The climate is making food cries much more likely. In this case, it’s an epochal drought in America’s corn-belt.  According to the Department of Agriculture, a state of emergency obtains in over 1,000 counties across 26 states, a stat which Robert Hunziker of Counterpunch reckons is the “biggest such declaration ever.”

Sadly, the leaders of the world seem incapable of dealing with climate change and food insecurity alike. If food price rises lead to political instability (many see the “Arab Spring” as rooted in the cost of living, for example) then there may be a stimulus to put the pieces together and create global institutions to both ensure an adequate supply of food and reduce greenhouse gas emissions. But this is unlikely. Unfortunately, the world is lurching into another in what will surely be a succession of brutal crises, with more wasted human lives, while the prospect of change appears remote. Try finding a reference to the effects of biofuels production and climate change upon the poor in Africa in any of the words of Barack Obama or Mitt Romney (or David Cameron for that matter). It just doesn’t register as an issue. Things have not come together in the official mind, that this is an era of interconnected crises. At least, if they know this, they are not letting on.

 

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