Almost 40 countries are facing critical food shortages
as world food prices soar to record levels.
The world's food supplies are rapidly dwindling
due to crop failures caused by weather, wars, and
a trend away from farming food crops
to growing bio-fuels.


The UN's Special Rapporteur on the Right to Food,
denounced bio-fuels as
"a crime against humanity".

Forget oil, the new global crisis is food
by Alia McMullen, Financial Post, Jan 4, 2007

A new crisis is emerging, a global food catastrophe that will reach further and be more crippling than anything the world has ever seen. The credit crunch and the reverberations of soaring oil prices around the world will pale in comparison to what is about to transpire, Donald Coxe, global portfolio strategist at BMO Financial Group said at the Empire Club's 14th annual investment outlook in Toronto on Thursday. "It's not a matter of if, but when," he warned investors. "It's going to hit this year hard."

Mr. Coxe said the sharp rise in raw food prices in the past year will intensify in the next few years amid increased demand for meat and dairy products from the growing middle classes of countries such as China and India as well as heavy demand from the biofuels industry. "The greatest challenge to the world is not US$100 oil; it's getting enough food so that the new middle class can eat the way our middle class does, and that means we've got to expand food output dramatically," he said.

The impact of tighter food supply is already evident in raw food prices, which have risen 22% in the past year. Mr. Coxe said in an interview that this surge would begin to show in the prices of consumer foods in the next six months. Consumers already paid 6.5% more for food in the past year. Wheat prices alone have risen 92% in the past year, and yesterday closed at US$9.45 a bushel on the Chicago Board of Trade. At the centre of the imminent food catastrophe is corn - the main staple of the ethanol industry. The price of corn has risen about 44% over the past 15 months, closing at US$4.66 a bushel on the CBOT yesterday - its best finish since June 1996. This not only impacts the price of food products made using grains, but also the price of meat, with feed prices for livestock also increasing.

"You're going to have real problems in countries that are food short, because we're already getting embargoes on food exports from countries, who were trying desperately to sell their stuff before, but now they're embargoing exports," he said, citing Russia and India as examples. "Those who have food are going to have a big edge."

With 54% of the world's corn supply grown in America's mid-west, the U.S. is one of those countries with an edge. But Mr. Coxe warned U.S. corn exports were in danger of seizing up in about three years if the country continues to subsidize ethanol production. Biofuels are expected to eat up about a third of America's grain harvest in 2007.

The amount of U.S. grain currently stored for following seasons was the lowest on record, relative to consumption, he said. "You should be there for it fully-hedged by having access to those stocks that benefit from rising food prices." He said there are about two dozen stocks in the world that are going to redefine the world's food supplies, and "those stocks will have a precious value as we move forward."

Mr. Coxe said crop yields around the world need to increase to something close to what is achieved in the state of Illinois, which produces over 200 corn bushes an acre compared with an average 30 bushes an acre in the rest of the world. "That will be done with more fertilizer, with genetically modified seeds, and with advanced machinery and technology," he said.

UN warns of critical food shortages
Rosslyn Beeby, Canberra Times, Dec 26, 2007

Almost 40 countries are facing critical food shortages as world food prices soar to record levels, the United Nations warns. The world's food supplies are rapidly dwindling due to crop failures caused by global warming, natural disasters, wars, and a trend away from farming food crops to growing biofuels and grain to feed cattle, the agency says. The UN Food and Agriculture Organisation's global food price index reached its highest level this year, rising by more than 40 per cent, compared with 9 per cent last year. "There is a very serious risk that there will be less people able to get access to food because of prices," FAO head Jacques Diouf said. The cost of imported food for the world's poorest countries has risen by 25 per cent this year to about $US107 billion the highest on record. Countries facing critical food shortages include 20 African countries as well as Iraq, Afghanistan, Nepal and Pakistan. Food riots caused by shortages and rising prices have also occurred in Mexico, Morocco, Uzbekistan, Yemen and Senegal.

In its monthly analysis of global food prices, the FAO said there had been an unprecedented "hike in world prices of, not just a selected few, but of nearly all, major food and feed commodities". Rarely had the world felt such "a widespread and commonly shared concern about food price inflation," the FAO analysis said. In Australia, food prices have increased by 12 percent over the past two years, chiefly because of drought and crop shortages linked to global climate change. Australian Bureau of Statistics data shows prices for bread and eggs have increased by 17 per cent since 2005, vegetables by 33 per cent, honey by 100 per cent, dairy products by 11 percent and fruit by 43 per cent. A recent report by economist John Quiggin for the Australian Conservation Foundation concluded "price shocks similar to those being experienced by Australian consumers during the currently severe drought may start to occur every two to four years, rather than once a decade, unless strong action is taken to reduce global emissions".

Quiggin said some practices proposed as strategies to mitigate the impact of climate change such as growing corn and sugar cane for biofuels and the use of forestry plantations as carbon sinks would inevitably contribute to "upward pressure on food prices". The impact of biofuels on world food production will be reviewed at a UN conference on food security next year. It was essential biofuel policies were "coordinated at an international level taking into consideration the objective of fighting hunger," Diouf said.

Higher meat consumption in emerging market nations across Asia are also driving food price increases. In 1985, China's average consumption of meat was of 20kg, but per capita meat consumption had now increased to 50kg, Diouf said. This reduced the amount of grain available because 1kg of beef could take as much as 8kg of grain to produce.

The British medical journal The Lancet recently published a study suggesting a 10 per cent cut in global meat consumption by 2050 would reduce greenhouse emissions from agriculture and also improve health for rich and poor nations. Agricultural experts have also warned global warming will result in shorter growing seasons and smaller crop yields across most of the developing world, affecting the lives of billions of people. A report by the Consultative Group on International Agricultural Research estimates wheat production in India could drop by 50 per cent within 40 years, putting as many as 200 million people at risk of worsening food shortages. Growing seasons in many parts of Africa will decrease by 20 per cent, with some of the world's poorest farming communities in east and central Africa including Rwanda, Burundi, Ethiopia and Eritrea among the worst affected. "The livelihoods of billions of people in developing countries, particularly those in the tropics, will be severely challenged as crop yields decline due to shorter growing seasons," International Rice Research Institute director Dr Robert Zeigler said.

The FAO said soaring petroleum prices had contributed to price increases for agricultural crops by raising farm production costs and boosting demand for biofuels. "The combination of high petroleum prices and the desire to address environmental issues is currently at the forefront of the rapid expansion of the biofuel sector: this is likely to boost demand for feedstocks, most notably, sugar, maize, rapeseed, soybean, palm oil and other oil crops as well as wheat for many more years to come." According to the FAO, the amount of corn used for biofuel production in the US will double to 110 million tonnes by 2016. In Europe, the amount of wheat devoted to biofuel will rise twelvefold to 18 million tonnes by the same date. Earlier this year, Jean Ziegler, the UN's Special Rapporteur on the Right to Food, denounced biofuels as "a crime against humanity" and called for a five-year moratorium on their production.

Grain prices gobble food supply globally (disasters-biofuels gobble grain). USAToday, Feb 13, 2008


Commodity boom continues to roll (low inventories, poor harvests & growing demand for biofuels). BBC, Jan 16, 2008

Panic Buying As Global Grain Record Lows The Market Oracle, Jan 7, 2008

Bio-fuelling world's hunger. Hindu Business, Jan 4, 2008

Forget oil, the new global crisis is food. Financial Post, Jan 4, 2008

UN warns of critical food shortages. Canberra Times, Dec 26, 2007

Spectre of shortages (results in rise in wheat price). The Times, Dec 18, 2007



Jackie Jura
~ an independent researcher monitoring local, national and international events ~