Food Price Crisis: the world won’t starve just yet

Prices have leapt due to growing demand, but we can feed the world if we refuse to allow irrational ideas – like environmentalism – to get in the way.

Rob Lyons
Columnist

13th March 2008

On Monday 25 February, the price of high-protein spring wheat went up on the Minneapolis Grain Exchange by 25 per cent in one day. The price of wheat has doubled in the past year, and the prices of other commodity items like corn (31 per cent) and soya (87 per cent) have leapt, too. Since these products are the basis of many other foods, providing flour for bread and feed for meat production, the effect has been a rise in food prices across the board.

Britain’s newly appointed chief scientific adviser, Professor John Beddington, told a conference in London last week: ‘It is very hard to imagine how we can see a world growing enough crops to produce renewable energy and at the same time meet the enormous increase in the demand for food which is quite properly going to happen as we alleviate poverty.’ (1) One letter writer to the Guardian went further. ‘We either reduce our [population] numbers voluntarily, or let nature and resource wars kill us instead’, he said, noting that to do nothing about population would mean ‘stealing the future from those already aboard lifeboat Earth’. So, are rising prices a portent of a much bigger food crisis to come? (2)

It never rains, or it pours

After a long period in which food prices have either been steady or have tended to drift downwards, the current price hikes represent an abrupt change. One of the main factors has been the rising world population. But it is not simply the number of people to be fed that matters. Economic growth, particularly in the ’emerging economies’ of Brazil, Russia, India and China – the so-called ‘BRICs’ – has meant that more and more of the population can afford to go beyond the bare maintenance of life and eat a ‘richer’ diet. In particular, that means eating more meat and dairy products. For example, meat consumption per capita in China has risen from 20kg per year in 1980 to 50kg per year in 2007 (3). In India, meat consumption has risen 40 per cent in the past 15 years, despite the fact that almost half the households in the country are vegetarian (4).

The price of some dairy products has shot up by over 200 per cent. India is the world’s biggest producer of milk, and Nestlé, which buys a lot of milk from India to produce milk powder, believes Indian dairy consumption could treble in the next four years. The Indian government temporarily banned exports in 2007 because of concerns about meeting domestic demand (5).

This illustrates another problem that has arisen in the past 12 months – restrictions on exports by some countries concerned about rising prices at home. That one-day leap on the Minneapolis market, for example, was triggered by restrictions on wheat exports by the Kazakhstan government, following similar moves by Russia and Argentina.

Another factor has been the pretty terrible weather in the past year or so. In the UK, floods destroyed many crops of vegetables. In Australia and northern China, droughts have seriously affected yields, while heatwaves in southern Europe have hit food production. Meanwhile in Ukraine, production was down due to unusually cold weather.

Shooting ourselves in the foot

Some of these factors are the downside of good news – people getting wealthier. Fuel prices, too, have been rising for the same reason, and these have a knock-on effect in terms of both energy use for transport and the production of chemical fertilisers, which uses natural gas. Other problems may be temporary: for example, some of the weather problems experienced in the past 12 months may be exceptional. Research published this week by the Centre for Ecology and Hydrology (CEH) suggests that last year’s floods in the UK were not related to climate change, and rather were ‘a very singular episode, which does not form part of any clear historical trend’ (6). Even if the world does warm as a result of climate change, the UK’s Hadley Centre model suggests that food production will probably go up overall (7). So, some of the bad news on food may only be temporary.

One factor which does seem to be thoroughly self-inflicted is the rising production of bio-fuels. In the USA, President George W Bush has set a target of providing 35 billion gallons of ethanol – mainly produced from corn – by 2017. This is a big problem for the rest of the world because America is the biggest exporter of food. As the head of the UN Food and Agriculture Organisation, Jacques Diouf, points out, meeting the target could turn America into a net importer of corn (8). Growing crops for oil – especially a relatively inefficient crop for the purpose, like corn – seems irrational when there are mass demonstrations across the border in Mexico over the high price of flour.

As it happens, many greens have been as critical of the irrationality of this policy as anyone else. It is doubtful whether growing corn for fuel has any benefit except as a way of justifying agricultural subsidies and bolstering American fuel security. Other crops, like the sugar cane produced in Brazil, seem to be far more efficient ways of producing fuel, but the US government isn’t too keen on allowing such imports. But once the climate change genie is out of the bottle, and all policies must find some justification in environmental terms, who knows where the irrationality will end?

Other barriers to improving agricultural production are rather more old-fashioned. Restricting trade, by plying farmers in the West with subsidies while putting up barriers to agricultural products from the developing world, means that the market for food isn’t as big or as global as it ought to be. Until now, at least, there has been little incentive or money for the modernisation of agriculture in the developing world. Rising demand from fast-growing economies like China and India may well change that.

The green ‘solution’

In the short term, then, rising food prices will have a serious impact on poor people around the world. Afghanistan, for example, is now receiving emergency food aid from the United Nations because of a harsh winter and the inability of its people to afford astronomical grain prices (9). Many other poor countries, where buying food takes up the majority of incomes, will also suffer considerable hardship while prices remain so high.

Some green campaigners seem to be positively licking their lips at the prospect of a big food crisis. ‘The death of food as we know it’, declares the cover of the current issue of the Ecologist. The magazine exploits the (hopefully) short-term problems with meeting the demand for food in a wealthier world to promote its formula for local, seasonal and organic food production. ‘[W]hat will we eat when the crises of climate change and peak oil converge? Those who make the weekly trek to the supermarket are rarely encouraged to make the link between these globally significant events and the end of our globalised food supply.’

Thankfully, the world seen through green-tinted glasses by the Ecologist isn’t with us just yet. When large chunks of farmland in Britain were under water last summer, we could turn to the world market to meet the shortfall. The green vision of a localised society would deprive us of this important insurance. If organic methods were the only ones available to us, substantially lower yields would make it even harder to feed people. The last thing we need is a return to a ‘local and organic food economy’. Too many poor people around the world have to tolerate precisely such a way of life right now – why would anyone choose to go down the precarious road to such a difficult existence?

What we need is greater development, not a retreat from development. To put the current situation another way: the problem is not too much demand but a failure to put in place the necessary changes to, and expansion of, production. Too much agricultural production is small-scale and hopelessly inefficient. By applying the best science to the problem of food and, perhaps more importantly, spreading the advances in large-scale production we’ve already made, we can feed the world and free people from the toil of subsistence farming. It is far too early to talk about ‘peak oil’, and even if new supplies fail to keep up with demand, this only means that other sources of energy will become economically viable. There are plenty of more appetising options than a future of environmentalist parochialism.

Some of these changes would be technical, like the further development of genetically modified foods. But we should also use situations, like the current rise in food prices, to ask why so many people live and die in dire poverty in the first place. Why is it that so much of the world lacks the financial and social resources to cope with these problems? A more fundamental questioning of how the world works – not just a hysterical rejection of industrial society – is in order. That would be real food for thought.

Rob Lyons is deputy editor at spiked.

Previously on spiked

Rob Lyons criticised the food snobs’ outraged reactions to Tesco’s cheaper chickens. Neil Davenport attacked the current trend for supermarket bashing. Rob Johnston argued in favour of cloned meat. Justine Brian celebrated the freedom provided by mass food production and called for an end to pressurising restaurant diners into becoming charity givers. Or read more at spiked issue Food.