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Asia In Focus - Number 22 : The Global Food Crisis
April 16, 2008 | Editor Al Santoli

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On April 3, 2008, World Bank President Robert Zoellick alerted the international community that global food shortages and rising cost of staple foods could cause widespread instability. Food shortages combined with rising fuel prices, global climate changes, the international financial meltdown epitomized by the US sub-prime mortgage crisis, and the cost of wars and local armed conflicts pose a multi-faceted threat to international stability. The World Bank estimates that 33 countries around the world face potential political and social unrest because of the acute hike in food and energy prices.

In the World Economic Outlook released this month, the International Monetary Fund explained why food has become more scarce and costly:

• A decade of rapid economic growth in China, India and other developing countries has lifted the constraints of poverty, thus allowing people to attain better food. Even if supply increased to meet this rapid growth in demand, some price rises would have been inevitable because of the shrunken supply.
• The West's push to develop subsidized biofuels to reduce its dependence on oil imports has diverted crops from food supply. In effect, the US and other governments are paying subsidies to create food shortages.
• Extreme weather has reduced food supply not just in Australia. Bangladesh, which is flood prone, had two major floods and a big cyclone last year, wiping out 2 million tons of rice. Rising sea levels have increased salinity in coastal areas.
• Urbanization and other competing land uses have reduced the area available for growing food. In Bangladesh, it is estimated the area under crop has shrunk by as much as a third since independence in 1971.
• Food stockpiles have been allowed to run down, mostly to save money, leaving the world less able to deal with shortages.
• Speculators have moved in for the kill, hoarding food on the expectation of still higher prices.

Added to these effects is the egregious affects of widespread corruption and mismanagement that permeate every region of the world. This is especially detrimental in rice producing countries such as the Philippines, Cambodia, Thailand and Vietnam.

On April 15, 2008, the Australian newspaper, The Age, published a concise article entitled "A World of Hunger" by David Blair and Ambrose Evans-Pritchard. The article is condensed here:

From the villages of Bangladesh to the slums of Haiti, millions of the world's poorest people have been cast into even greater penury by sharply rising food prices. At a stroke, this swift and devastating change in the global economy - which has gone almost unnoticed in the rich world - has inflicted immense suffering. Rice is the staple diet in these countries and its price has doubled in a year. Riots and demonstrations have been the result in these countries and more than a dozen others in the past month.

Haiti's government fell at the weekend after rice and bean riots. Five died. "The reality is that people are dying already," says Jacques Diouf, of the UN's Food and Agriculture Organisation (FAO). "Naturally people won't be sitting dying of starvation, they will react."

Why has this happened? Rising food prices stem from crucial structural changes in the world economy. Over the past year, global demand for foodstuffs has risen sharply, [in substantial part] caused largely by the rapid emergence of middle-class consumers in China and India.

Taken together, these giant countries have a new middle class of about 600 million - a figure approaching the combined populations of the US and Western Europe. Then there is the surge in Western demand for biofuels as alarm at climate change has driven policy to cut fossil fuel emissions.

The consequences for the world's poor are brutal: we drive, they starve. The mass diversion of grain harvests into ethanol plants for fuel is reaching its political and moral limits. The UN says it takes 232 kilograms of corn to fill a 50-litre car tank with ethanol. That is enough to feed a child for a year. Last week, the UN predicted "massacres" unless the biofuel policy is halted. Soaring demand has coincided with new constraints on food supply. Fertile land that once grew food is now being used to produce biofuels or grain for livestock feed. Freak weather conditions in some major food-producing countries - notably Australia, the world's second-largest grain exporter - have substantially cut their output... Diouf says world grain stocks have fallen to a quarter-century low of 5 million tonnes, rations for eight to 12 weeks.

All this means that, across the board, the global food bill has risen 57% in the past year. The UN World Food Program needs another $530 million to pay for the essential supplies it gives to those in greatest need."The world food situation is very serious: we have seen riots in Egypt, Cameroon, Haiti and Burkina Faso," says Diouf. "There is a risk that this unrest will spread in countries where 50% to 60% of income goes to food."

Soaring freight rates make it worse. The cost of food "on the table" has jumped by 74% in poor countries that rely on imports, according to the FAO. Roughly 100 million people are tipping over the survival line... In addition, [the world] is adding 73 million mouths a year. The global population will grow from 6.5 billion to 9.5 billion before peaking near mid-century.

The central question is whether this hugely damaging change in the global economy is a permanent or temporary phenomenon... Is there any more land for greater crop production? Yes, in Russia, Ukraine and Kazakhstan, where the planted crop area has fallen 12% since Soviet days. Existing grain yields are 2.4 tonnes per hectare in Ukraine, 1.8 in Russia and 1.11 in Kazakhstan, compared with 6.39 in the US. Investment would do wonders here. But the structure is chaotic.

Brazil has the world's biggest reserves of "potential arable land" with 483 million hectares (it currently cultivates 67 million), and Colombia has 62 million - both offering biannual harvests. The catch is obvious."The idea that you cut down rainforest to actually grow biofuels seems profoundly stupid," says Professor John Beddington, Britain's chief scientific adviser.

The politics of short-term self-interest is dominant. Food export controls have been imposed by Russia, China, India, Vietnam, Argentina and Serbia. We are disturbingly close to a chain reaction that could shatter our assumptions about food security.

The Philippines - a country with ample foreign reserves of $39 billion - last week had to enlist its embassies to hunt for grain supplies after China withheld shipments. Washington stepped in, pledging "absolutely" to cover Philippine grain needs.

[Editor: However, the promise may not be backed up by substantial planning or strategic allocation of limited grain stockpiles that must be shared with at least 70 other countries that face political instability and potential starvation.]

A new Cold War is taking shape, around energy and food. The world intelligentsia has been asleep at the wheel. While we rage over global warming, global hunger has swept in under the radar.