Cars come first, not human beings. But, for us, how important is life and how important are cars? So I say life first and cars second." - Bolivian president, Evo Morales
The news is everywhere - from the remote corners of Burkina Faso, via America's economically struggling Haiti, all the way to the Pacific archipelago of the Philippines. The number of people worldwide facing starvation has risen by 100 million in the last six months and around 40 states are on the brink of crisis due to the soaring price of edible commodities. Impoverished families and nations dependent on imported food are clearly the biggest losers in this global pandemic. According to the UN Food and Agricultural Organization, consumers in developing countries spend 60-80% of their income on food, compared with about 10-20% in industrialized nations. What is behind this alarming phenomenon? Who is to blame? And what can be done to combat the crisis?
A Glimpse of What Has Happened
Are the events of the past half a year really the sudden blow they seem? Or have most of us just been ignoring the possible consequences of our actions? Let's take a look back at recent events from around the globe.
- the price of wheat reaches its highest peak in 10 years at 220 USD per ton
- Panic breaks out in the wheat market
- India starts importing wheat sequentially
- The price of maize is 21% higher compared to June 2006
- The Price of pasta goes up by almost 20%
- Within just two months the price of durum flour rises from 0.26 Euros per kg to 0.45 Euros per kg.
- The main exporters of grain to Italy, Canada and Syria, announce a ban on exports, thus exasperating the situation.
- People queue daily for rationed bread.
- Skyrocketing prices of wheat forces the Egyptian government to increase the subsidy by 52% within one year.
- Egypt, the world's largest importer of wheat, now has 40% of its population below the poverty line.
- The food costs in the country climb up 23% after blizzards in 10 provinces of southern China destroy crops and block transport links.
- Prices for pork increase by 63% in a year.
- Vegetable prices soar up by 46 per cent and edible oil prices by 41%.
- Kenya: faces acute food shortages. The global cereal crisis is likely to hit the country the hardest because farmers growing maize, the staple crop of Kenya, have been displaced following post-poll violence.
- Namibia, Zimbabwe, Burkina Faso, Senegal, Cameroon and Morocco: countries all completely dependent on grain import. Civil disturbances take place due to rising food prices.
- Mozambique: faces a shortage of 1.25 million tons of grain.
- The price of rice tops the 500 USD per ton mark, the highest in the past 20 years.
- In Thailand, rice and wheat prices have risen by 30-40% in the previous three months. Exporters within the country begin hoarding rice and wheat in anticipation of a further hike in prices.
- Pakistan sees a 60% increase in the price of rice.
- The Argentinian Government's announcement of a tax of up to 45% on meat and grain exports triggers extensive protests from farmers, who barricade the streets. The aim of the tax is to keep domestic prices artificially low and ensure national supplies.
- Due to skyrocketing food prices, riots and acts of violence explode in the streets of Central America's poorest country. Already 6 people have lost their lives and numerous others are injured.
- * Shortly afterwards, the World Bank releases a credit of 10 million USD as emergency aid for the crisis.
- Brazilian president Luiz da Silva discounts criticism that his country's production of bio-fuels has created a surge in global food prices and is detrimental to the environment. Instead, he blames the continuing rise in oil prices, and the overwhelming increase in demand from China, India and the merging countries of Latin America. He also accuses his critics of being driven merely by their economic and political interests.
- Thousands of South Africans protest on the streets of Johannesburg against high food prices.
- Josette Sheeran, the U.N. World Food Program chief, calls for major emergency and long-term action against the global food crisis, amongst the consequences of which she considers the 2004 Asian tsunami to be most significant.
- The presidents of Bolivia, Nicaragua and Venezuela, and Cuba's vice-president, meet in Caracas to discuss measures to combat surging food prices, and co-operation on agricultural development programs.
- In London, British Prime Minister Gordon Brown offers 900 million USD to combat the global food crisis. He gathers food experts to discuss possible solutions, and calls for a global review of bio-fuel policies.
The crisis affects every part of the planet. These are some of the most obvious factors contributing to this complex, many-sided, problem.
- Rising demand from a growing world population, and the changing consumption habits of emerging countries like China and India
- Demand is greater than supply: in 2007, 2102 million tons of grain were produced. According to the FAO, an estimated 2120 million tons were consumed.
- High oil and gas prices have made the production, processing and transport of food commodities more expensive.
- The area of cultivable land worldwide is continually shrinking, while urban populations, who are dependent on externally produced goods, keep growing.
- Many governments are offering incentives for the production of bio-fuel, in order to make their countries more independent from imported oil. More and more land is being used for cultivation of energy plants, instead of food crops.
- Increasingly devastating natural calamities and changing weather patterns have contributed to massive crop failure. Kofi Annan emphasized recently, while presenting his Global Humanitarian Forum in Geneva, that climate change is a main factor contributing to the current global food crisis. "We might already be seeing the beginning of major hunger disasters", Annan said.
- Many nations have used up their grain stocks. This makes them entirely dependent on imported goods.
- Commodity speculation spread long ago from traditional products, like oil and gold, to tradable foodstuffs. Futures contracts provide farmers and grain wholesalers a measure of protection, since they can sell their harvests ahead of time, and help them estimate how large a crop to produce annually. In the current climate, speculators can reap opulent profits. If they purchase future contracts for rice, for example, at a low price, in anticipation of a coming price-hike, they stand to profit if prices are indeed higher by the agreed delivery date.
- At the turn of the century, the world opened up for trade. Many formerly closed countries opened up their markets and with better technology came improved transportation systems. However, persisting agricultural subsidies and diverse barriers has caused the global food trade to never become as liberalized as that of other commodities. "We can see now that the world has largely failed in its attempt to create an integrated food market," Richard Feltes, senior vice president of MF Global, a futures brokerage, pointed out.
- Australia, the world's second largest supplier of wheat, has suffered under extreme droughts. It was able to produce only 9.8 million tones instead of the average 25 million tones.
- Exports from other wheat suppliers like Canada, the E.U., Turkey and Syria also dipped due to unfavorable climatic conditions.
- High demand for bio-fuel and animal feed further depleted the global wheat supply. Only about half of the current worldwide grain production ends up as food.
- Strong demand from the Philippines and African countries
- Shortages in rice-producing Pakistan
- India and China introduce export bans
- Worldwide hoarding, in anticipation of continued rise of prices
- Strong demand for bio-fuels. The US, having the largest market for ethanol, supplies more than 60% of world maize exports. But in 2007-08, a quarter of the US maize (11% of the global maize crop) was used for bio-fuel production. The FAO estimates a consumption of 81.3 million tons of maize in 2007-08.
- A steady growth in the demand for animal feed, particularly in Europe. The production of 1 kg of pork requires 3 kg of feed grain.
- Bio-fuels accounted for almost half the increase in the worldwide demand for vegetable oils last year, according to Oil World, a forecasting service in Hamburg, Germany.
- There is a rising consumer demand in China and India.
- Floods in Malaysia, one of the major producers of palm oil, caused a supply shortage.
- Palm oil is being accepted as a healthier alternative to saturated fats.
- Twice as much meat is consumed today compared with 25 years ago.
The needs of the world's exponentially booming population, and the increasingly sophisticated dietary demands of nations with emerging economies, are pushing agricultural production to its limits. In addition, the strong financial support for the burgeoning bio-fuels market has caused a shift from the cultivation of food crops to those that can be used as fuel. Take for example the wheat-farmers of the USA, the most productive in the world. The pressure of increased demand has led them, for the first time in 28 years, to convert ecological buffer areas into arable land. Moreover, planting wheat as an energy crop is considerably more profitable than food production, given the additional subsidies available. The rapid spread of the mass cultivation of soya beans is causing small-scale farmers to be evicted from their plantations in several Latin American countries, most alarmingly in Paraguay and Brazil. Soya production has increased drastically worldwide in the past few years. Latin America has outrun the USA as the world's primary soya-exporter. Around 80% of the soya harvest is used as animal feed. It is also increasingly used for the production of bio-fuels. The increasing use of land for the sole purpose of soya plantation has a negative impact on food production and biodiversity. To create additional farmland, forest areas and savannas are cleared. Extensive fertilization poses a major threat to the environment and the general health of local inhabitants. On the Indonesian islands of Sumatra and Borneo, known for their rich biodiversity, 5 Million hectares of tropical rainforest have been cleared for the purpose of bio-fuel production.
The Prospect of a Remedy
What do the experts say? What is the call to action?
- A UN body called on world leaders to urgently reform farming rules in order to boost global agriculture and prevent a food crisis that could threaten international security and the fight against poverty. The International Assessment of Agricultural Science and Technology for Development (IAASTD) points out, in a report put together by around 400 experts, the following areas of focus: poverty and livelihood, food security, environmental sustainability, human health and nutrition, equity and investments. The report states that "The main challenge of AKST (agriculture, knowledge, science and technology) is to increase the productivity of agriculture in a sustainable manner. AKST must address the needs of small-scale farms in diverse ecosystems and create realistic opportunities for their development where the potential for improved area productivity is low and where climate change may have its most adverse consequences".
- The Conservative MEP Neil Parish, the chairman of the European parliament's agriculture committee, has said, "Europe needs to produce her fair share of food. There is a morality in food production now. Europe won't starve if high prices remain, but other parts of the world may do. Europe can only address this through a market-led agricultural policy."
- Policymakers realize the urgency of long-term sustainability goals for agriculture. However, with the current unrest in starving countries, governments of developed countries are urged to act immediately with emergency food aid.
- Campaigners and policymakers stress the importance of a better exchange of information among experts and indigenous people, as well as improved definitions of property rights. Trade laws are to be reformed to foster food security, sustainability and help combat poverty.
- Robert Zoellick, president of the World Bank, has said that there is an urgent need to develop new strategies that focus not only on hunger, malnutrition and access to food, but also on the interrelationship of energy, crop yields, climate change and other factors.
- Kofi Annan, former UN secretary-general, points out the need for more investment in agriculture, cheaper fertilizers, and transportation and improved agricultural know-how for farmers in developing countries.
- "We must develop agriculture less dependent on fossil fuels, that favors the use of locally available resources," Guilhem Calvo, an Unesco expert, told a news conference in Paris.
- The World Bank intends to supplement the credit for agricultural programs in southern Africa with 350 million USD.
- A market-oriented, long-run policy has to encourage producers to boost output and increase the incomes of the poor.
It is deplorable that, once again, it has taken suffering and disaster to alert us to issues that deeply impact the world community. The continuing price-hike has been a latent issue, waiting to be addressed. Let us remain optimistic that the movement towards fair, sustainable agricultural and trade policies will be both swift and thorough.