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After the Oil Crisis, a Food Crisis?
Is the world headed for a food crisis? India, Mexico and Yemen have seen food riots this year. Argentines boycotted tomatoes during the country’s recent presidential elections when the vegetable became more expensive than meat; and in Italy, shoppers
organized a one-day boycott of pasta to protest rising prices. In late October, the Russian government, hoping to ease tensions ahead of parliamentary elections early next year, announced a price freeze for milk, bread and other foods through the end of January.
What’s the cause for these shortages and price hikes? Expensive oil, for the most part.
The United Nations Food and Agricultural Organization (FAO) reported last week that, at nearly $100 a barrel, the price of oil has sent the cost of food imports skyrocketing this year. Add in escalating crop prices, the FAO warned, and a direct consequence could soon be an increase in global hunger — and, as a consequence, increased social unrest. Faced with internal rumblings, “politicians tend to act to protect their own nationals rather than for the good of all,” says Ali Ghurkan, a Rome-based FAO analyst who co-authored the report. Because of the lack of international cooperation, he adds, “Worldwide markets get tighter and the pain only lasts longer.”
What’s more, worldwide food reserves are at their lowest in 35 years, so prices are likely to stay high for the foreseeable future. “Past shocks have quickly dissipated, but that’s not likely to be the case this time,” says Ghurkan. “Supply and demand have become unbalanced, and… can’t be fixed quickly.”
The world’s food import bill will rise in 2007 to $745 billion, up 21% from last year, the FAO estimated in its biannual Food Outlook. In developing countries, costs will go up by a quarter to nearly $233 billion. The FAO says the price increases are a result of record oil prices, farmers switching out of cereals to grow biofuel crops, extreme weather and growing demand from countries like India and China. The year 2008 will likely offer no relief. “The situation could deteriorate further in the coming months,” the FAO report cautioned, “leading to a reduction in imports and consumption in many low-income food-deficit countries.”
Hardest hit will likely be sub-Saharan Africa, where many of the world’s poorest nations depend on both high-cost energy as well as food imports. Cash-poor governments will be forced to choose between the two, the FAO says, and the former has almost always won out in the past. That means more people will go malnourished. Further exacerbating the problem are the current record prices for freight shipping brought on by record fuel prices. An estimated 854 million people, or one in six in the world, already don’t have enough to eat, according to the World Food Programme.
Nearly every region of the world has experienced drastic food price inflation this year. Retail prices are up 18% in China, 17% in Sri Lanka and 10% or more throughout Latin America and Russia. Zimbabwe tops the chart with a more than a 25% increase. That inflation has been driven by double-digit price hikes for almost every basic foodstuff over the past 12 months. Dairy products are as much as 200% more expensive since last year in some countries. Maize prices hit a 10-year high in February. Wheat is up 50%, rice up 16% and poultry nearly 10%.
On the demand side, one of the key issues is biofuels. Biofuels, made from food crops such as corn, sugar cane, and palm oil, are seen as easing the world’s dependence on gasoline or diesel. But when crude oil is expensive, as it is now, these alternative energy sources can also be sold at market-competitive prices, rising steeply in relation to petroleum.
With one-quarter of the U.S. corn harvest in 2007 diverted towards biofuel production, the attendant rise in cereal prices has already had an impact on the cost and availability of food. Critics worry that the gold rush toward biofuels is taking away food from the hungry. Jean Ziegler, the U.N. Special Rapporteur on The Right to Food, recently described it as a “crime against humanity” to convert food crops to fuel, calling for a five-year moratorium on biofuel production.
Leaders in the biofuel industry respond that energy costs are more to blame for high food prices than biofuels. “Energy is the blood of the world, so if oil goes up then other commodities follow,” Claus Sauter, CEO of German bioenergy firm Verbio said following Ziegler’s comments. Others argue that cleaner-burning biofuels could help stem the effects of climate change, another factor identified by the FAO as causing food shortages. Ghurkan notes that scientists believe climate change could be behind recent extreme weather patterns, including catastrophic floods, heat waves and drought. All can diminish food harvests and stockpiles. But so can market forces.
Addressing the world food crisis
Posted: 26 Oct 2008 03:34 AM CDT
Despite growing attention in the world media and expanding aid efforts by many organizations, the world hunger crisis continues to worsen as many of the communities in which we work struggle with daily hunger and starvation. The basic staples that feed the world wheat, rice and corn continue their inexorable rise in cost and scarcity.
In Ethiopia and throughout the Horn of Africa, rising commodity prices, civil war, and imperiled aid operations have pushed many people to the brink of famine. In Zambia and elsewhere in Africa, the scarcity of food is acute and many are simply finding a corner and sleeping until death finds them.
Project Concern International is responding to the world food crisis by addressing the large-scale issues of world hunger and malnutrition through programs that not only provide food aid, but address the underlying causes of food insecurity.
“Now is the time for all of us to act. We at PCI are committed to addressing these humanitarian issues by discovering solutions that empower individuals and communities, assisting them to overcome intransigent and persistent food insecurity. Economic empowerment, family food gardens, and food support, are just some of the ways PCI helps people every day around the world,” said George Guimaraes, President and CEO.
UNDERSTANDING THE CRISIS
Although it is almost impossible to pinpoint the exact cause of soaring food prices, experts have placed the blame on rising fuel costs, lower agricultural production, weather shocks, more meat consumption, and shifts to bio-fuel crops. High prices threaten to increase malnutrition, already an underlying cause of death for over 3.5 million children a year.
What we do know:
* Wheat prices are up 120%
* Rice prices have risen 75%
* Poor families spend up to 80% of their budget on food
* According to the World Bank, an estimated 100 million people have fallen into poverty in the last 2 years
* Prices are expected to stay high through 2015
* 21 of 36 countries in a food security crisis are in Sub-Saharan Africa, according to the United Nations FAO
* West Africa, the Horn of Africa, and fragile states are especially vulnerable
Read the stories of our beneficiaries and learn about programs that are truly changing and saving lives in Africa, Latin America and in Asia.
Land Reform for Chinese Farmers
Posted: 26 Oct 2008 03:41 AM CDT
Eight hundred million peasants in China have never been allowed to own their land. Under new reforms by the Chinese government, farmers can trade, subcontract or lease their land — options they have never had before.
In a rather dramatic policy shift, the government has assigned small plots to farmers in communist China. Proponents say this unprecedented plan will lead to “larger, more efficient farms that could increase output” at a time when China isn’t growing enough food to feed its own people, according to the New York Times.
Along with coping with the global economic crisis, China is trying to appease decades of rural discontent felt by farmers who have protested against their lack of land rights and the burgeoning corruption of collective ownership. Too often, “local officials and developers have illegally seized farmland for urban expansion while paying minimal compensation to farmers.”
However, opponents of this new land reform worry that millions of landless farmers will leave the countryside for better-paying work in cities. If these farmers are unable to find work, they won’t have any land left in the countryside to go back to.
Thirty years ago, economic reforms launched China’s rise. But while cities grew wealthy, the countryside remained poor. Let’s see if these reforms give Chinese farmers the same opportunities for financial gain as their urban counterparts have enjoyed.
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