News & Politics - The World's Growing Food Price Crisis

ceilirose · 04-27-2008, 12:57 PM

The World's Growing Food-Price Crisis - TIME

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Add this to the list of items that could seriously threaten world peace: food.

Rocketing food prices — some of which have more than doubled in two years — have sparked riots in numerous countries recently. Millions are reeling from sticker shock and governments are scrambling to staunch a fast-moving crisis before it spins out of control. From Mexico to Pakistan, protests have turned violent. Rioters tore through three cities in the West African nation of Burkina Faso last month, burning government buildings and looting stores. Days later in Cameroon, a taxi drivers' strike over fuel prices mutated into a massive protest about food prices, leaving around 20 people dead. Similar protests exploded in Senegal and Mauritania late last year. And Indian protesters burned hundreds of food-ration stores in West Bengal last October, accusing the owners of selling government-subsidized food on the lucrative black market. "This is a serious security issue," says Joachim von Braun, director-general of the International Food Policy Research Institute (IFPRI), in Washington. In recent weeks, he notes, he has been bombarded by calls from officials around the world, all asking one question: How long will the crisis last?

The forecast is grim. Governments might quell the protests, but bringing down food prices could take at least a decade, food analysts say. One reason: billions of people are buying ever-greater quantities of food — especially in booming China and India, where many have stopped growing their own food and now have the cash to buy a lot more of it. Increasing meat consumption, for example, has helped drive up demand for grain, and with it the price.

There are other problems too. The spike in oil prices, which hit $103 per barrel in recent days, has pushed up fertilizer prices, as well as the cost of trucking food from farms to local markets and shipping it abroad. Then there is climate change. Harvests have been seriously disrupted by freak weather, including prolonged droughts in Australia and southern Africa, floods in West Africa, and this past winter's deep frost in China and record-breaking warmth in northern Europe.

The push to produce biofuels as an alternative to hydrocarbons is further straining food supplies, especially in the U.S., where generous subsidies for ethanol have lured thousands of farmers away from growing crops for food. "The area used for biofuels is increasing each year," says Nik Bienkowski, head of research at ETF Securities, a commodities-trading firm in London. To make matters worse, global stockpiles of some basics have dwindled to their lowest point in decades. Rice — a staple for billions of Asians — has soared to its highest price in 20 years, while supplies are at their lowest level since the early 1980s, according to the U.S. Department of Agriculture. Meanwhile, the global supply of wheat is lower than it's been in about 50 years — just five weeks' worth of world consumption is on hand, according to the U.N. Food and Agricultural Organization.

As always in a crisis, there are winners. The creeping fear that the world might actually run short of food — no longer simply the stuff of sci-fi movies — has led speculators to pour billions into commodities, further accelerating price rises. In a single day in February, global wheat prices jumped 25% after Kazakhstan's government announced plans to restrict exports of its giant wheat crop for fear that its own citizens might go hungry. Jittery officials in India and Egypt are also restricting food exports. "Prices have risen at a much faster rate in the last few months," says Fazlul Kader in Dhaka, Bangladesh, where he coordinates rural projects for the U.N.'s International Fund for Agricultural Development; there, soybean oil alone has shot up 60% in a year.

For the world's poorest people, the price spikes are disastrous. AID officials say that millions who previously eked out enough to feed their families can no longer afford the food in their local stores, and are seeking help from relief organizations. "We are seeing a new face of hunger," says Josette Sheeran, executive director of the U.N.'s World Food Program (WFP). "People who were not in the urgent category are now moving into that category." Last month she bluntly told Western donors that WFP will trim its aid programs this year unless it can raise an extra $500 million to cover the rising cost of the food that it now provides to about 73 million people, including many who survive on just 50 cents a day. The U.S. Agency for International Development (AID) — the WFP's biggest donor — said last month it had been forced to cut about $120 million from future aid programs to pay for current commitments. "That money is gone," says Jonathan Dworken, deputy director of AID's Food for Peace program. He says its commodity expenses have soared by 41% in six months.

Yet despite the widespread demonstrations, the food crisis has been largely ignored until recently by U.S. and European officials — who pay for much of the world's food aid — partly, says von Braun, "because no one is starving in rich countries." Last October, shortly before food riots began exploding across West Africa, the WFP's director in Mauritania, Gian Carlo Cirri, flew to a donors' meeting in Senegal and warned Western aid officials that "2008 will be a very dangerous year," with rising food prices increasingly liable to hurt middle-class city dwellers, "who are prone to demonstrating." Similarly, von Braun says he has felt "like a Cassandra" in Washington in recent years, as he tried to warn U.S. officials numerous times that a global food crisis was looming. Even now, he says, "the specialists share our sense of urgency, but it hasn't broken out of that circle yet."

That could change if food riots begin to threaten the survival of governments. In many poor countries, the protests have been fueled by pent-up anger against authoritarian or corrupt officials, some of whom have earned fortunes from oil and minerals while locals are struggling to buy food. "It's a bad combination," says Alioune Tine, head of a human-rights organization in Senegal. Voters in Pakistan trounced President Pervez Musharraf's party in crucial parliamentary elections last month, in part because many could no longer afford staple foods — and blamed the government. "We are worried about terrorism and those other things, but first we are worried about basic needs," said a 24-year-old nurse in Islamabad, shopping in the capital's busy Aab Para market during election season last month. "People want a person who can fix this problem."

Any fix will take time. Several African countries have begun planting high-protein, pest-resistant rice crops, and aid organizations are beginning to hire locals for new job programs to help people pay their food bills. In the poorest parts of Asia and Africa, officials hope that sky-high food prices might lift out of poverty small farmers who have barely scraped by on low crop prices — a hope that would get a big boost if the rich world agreed to cut agricultural subsidies in the current round of trade talks. In parts of Bangladesh, farm workers' wages have doubled in a year, says Kader, the project coordinator in Dhaka. But they too need to buy food. And for most people, food prices are rising faster than earnings. With shelves in Pakistan, Burkina Faso, Senegal and elsewhere stocked with unaffordable food, people might still opt to burn government buildings and attack stores. That, at least, is free.

With reporting by David Lewis/Dakar and Simon Robinson/Islamabad

This is pretty sobering. I know here in the U.S. we have been faced with rising food costs. A lot of stores are limiting the amount of rice you can buy. Not sure what's next.

Lain · 04-27-2008, 03:25 PM

Yeah, I heard about the rice issue. I think Sam's Club and (I believe) Wal-Mart is now limiting it's rice purchase to four bags.

vc318 · 04-28-2008, 07:08 AM

^ Kris, I heard this as well. And the rise in food prices is really getting out of control. Like the other day I was a Target, and I usually pick up a 1/2 gallon of organic milk for $3. Well, yesterday I tried to buy another one but it shot up like 45 cents! I guess it'll be dry cereal for a while.

**sunnykerr** · 04-28-2008, 05:54 PM

I heard about the minimums on rice purchases and I'm really confused. I get that they're trying to help the food shortages over there... but how does that work? Does rice get imported less if people are limited to three bags apiece (or however many)?

Not trying to be callous. I honestly don't get it.

ceilirose · 04-29-2008, 07:53 AM

Quote:

Originally Posted by sunnykerr (View Post)

I heard about the minimums on rice purchases and I'm really confused. I get that they're trying to help the food shortages over there... but how does that work? Does rice get imported less if people are limited to three bags apiece (or however many)?

Not trying to be callous. I honestly don't get it.

I think it's just not being produced enough and rather than having a run on it they're trying to control who gets what? Where I live rice is a staple and people buy 20 lbs bags of it like it's nothing to feed a family.

Here's another article about the rising price of food and some of the reasons why it's happening:

washingtonpost.com - nation, world, technology and Washington area news and headlines

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By Dan Morgan
Special to The Washington Post
Tuesday, April 29, 2008; Page A01

At Stephen Fleishman's busy Bethesda shop, the era of the 95-cent bagel is coming to an end.

Breaking the dollar barrier "scares me," said the Bronx-born owner of Bethesda Bagels. But with 100-pound bags of North Dakota flour now above $50 -- more than double what they were a few months ago -- he sees no alternative to a hefty increase in the price of his signature product, a bagel made by hand in the back of the store.

"I've never seen anything like this in 20 years," he said. "It's a nightmare."

Fleishman and his customers are hardly alone. Across America, turmoil in the world wheat markets has sent prices of bread, pasta, noodles, pizza, pastry and bagels skittering upward, bringing protests from consumers.

But underlying this food inflation are changes that are transforming U.S. agriculture and making a return to the long era of cheap wheat products doubtful at best.

Half a continent away, in the North Dakota country that grows the high-quality wheats used in Fleishman's bagels, many farmers are cutting back on growing wheat in favor of more profitable, less disease-prone corn and soybeans for ethanol refineries and Asian consumers.

"Wheat was king once," said David Braaten, whose Norwegian immigrant grandparents built their Kindred, N.D., farm around wheat a century ago. "Now I just don't want to grow it. It's not a consistent crop."

In the 1980s, more than half the farm's acres were wheat. This year only one in 10 will be, and 40 percent will go to soybeans. Braaten and other farmers are considering investing in a $180 million plant to turn the beans into animal feed and cooking oil, both now in strong demand in China. And to stress his hopes for ethanol, his business card shows a sketch of a fuel pump.

Across the Red River and farther north, in Euclid, Minn., Don Strickler, 63, describes wheat as "a necessary evil." Most years, he explained, farmers lose money on it. Still, it provides conservation benefits and can block diseases in soybeans and sugar beets when rotated with those crops.

Wheat's fall from favor, little noticed when it was cheap, has been long coming. Though still an iconic symbol of American abundance -- engraved on currency and praised in song -- the nation's amber waves of wheat have been increasingly shoved aside by other crops. The "breadbasket of the world," which had alleviated hunger and famine since World War I, now generally supplies only a quarter of world wheat exports.

U.S. farmers are expected to plant about 64 million acres of wheat this year, down from a high of 88 million in 1981. In Kansas, wheat acreage has declined by a third since the mid-1980s, and nationwide, there is now less wheat in grain bins than at any time since World War II -- only about enough to supply the world for four days. This occurs as developing countries with some of the poorest populations are rapidly increasing their wheat imports.

Driving south from Grand Forks, N.D., on a freezing spring day, a motorist travels through a landscape that looks like a scene from the movie "Fargo." Mile after mile, fence posts rise from the snowy fields on each side of the ruler-straight highway. It looks like classic wheat country. But come summer, much of it will turn green from corn and beans.

**sunnykerr** · 04-29-2008, 04:03 PM

Hm, good news for my step-mother (who has celiac disease) and bad news for me (who is allergic to soy).

Papri · 04-30-2008, 05:32 AM

I'm a student and my budget is tighter than it ever has been. My grocery shopping comes to a lot more even though I'm buying the same amount of food as I was this time last year. Not complaining though - at least I can afford to eat two meals a day which is a hell of a lot more than the countries mentioned in the article.

I know this is an "uncool" thing to say but our greediness in the West - credit, borrowing, waste, using resources - is just abhorrant. We bitch and moan when rice or gas prices raise by a few cents or whatever but very few people actually stop and think about the people who can't afford even that in other countries. Our governments created that situation and we're contributing to it. The innocent victims had no part to play - I'm not preaching at all, it's just a horrible, sobering thought.

ceilirose · 04-30-2008, 08:41 AM

If I'm understanding the problem though it's rising food prices corresponding with a shortage of food - in some places.

The western countries are feeling it in their pocketbooks now and yes overall our problems aren't as grave as other countries. But rising food costs, rising energy costs are causing problems for some western countries. I know people who have to choose between food and medicine. Or medicine and paying the rent. Some have it worse but I can't really diminish other people's pain either. Overall it's just a bad, bad situation.

**sunnykerr** · 05-01-2008, 05:21 PM

I just don't really understand where it all starts, though.

Again, this isn't me trying to be callous or a brat. I genuinely am not great at political economy and all that...

Because, surely to God we're not saying that, like, the people of... I don't know, wherever rice actually comes from, are the ones driving up the price. I mean, there's a reason all Western conglomerates (or, if not, just about all of them) are closing their shops all over Northern America and moving to Bangladesh and China and wherever else.

Food shortages, I understand... And I understand how wheat being an unreliable crop leads to wheat costing more...

But how does rice become a hot-ticket item all of a sudden?

mh67511 · 05-01-2008, 10:25 PM

I think limiting rice has to do with preventing restaurant owners from going in and buying up all the rice...the price is only expect to go up. I believe that's why the warehouse clubs started limiting purchases. But I've known Walmart to limit the sale of anything, at least mine doesn't seem to worry when things are out of stock

ceilirose · 05-01-2008, 10:31 PM

I believe that droughts in areas that have generally produced rice are causing the shortage. Also Asian countries are limiting their exports so they can meet their own demand. The price of what's left is also going up. It's such a staple for a good part of the world limiting it's exports seems to be one way to go.

**sunnykerr** · 05-06-2008, 05:41 PM

But, surely, this can't be the first drought?

I know I'm probably being thick at this point. I just can't seem to wrap my brain around why it's such a big deal now. Droughts happen. Even if certain rice-producing regions are being affected, surely not all of them have the exact same climate conditions/climate disasters...

~Unfaithful~ · 05-06-2008, 05:56 PM

It's not just the rising food costs either. My husband, who works at Walmart, has noticed that yes the prices are going up, but the quantities are also dropping as well, by as much as 4 oz. So you are paying more for less.

**sunnykerr** · 05-06-2008, 06:08 PM

Ah, yes, the great McDonalds-ization of the world.

People don't realize that bigger portions (which appeared whenever they appeared) never actually gave you more for your money. They cost more, and you got more. But (bear with me here, I suck at math) instead of paying 2 bucks for a 200 oz hamburger, we're now paying 5 bucks for 350 oz hamburger.

~Unfaithful~ · 05-07-2008, 09:40 AM

yes, but they aren't evenly blatantly trying to fool us like that. Let's say a 5.4 lb bag of cat food was $5.49, now a 4.9 lb bag of cat food is $5.79...or something along those lines.


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