Sunday, January 16, 2011

Rising food prices point to a looming global food crisis

Bali news -- Shown below is further proof that my prediction of a shortage of food around the world leading to much higher prices and possibly riots and overthrow of week governments that happens subsidizing food and fuel for their citizens.

I do not believe there will be a problem in Indonesia because its economy is doing so well.

Saturday, 15 January 2011 10:21

By Lester Brown
London. As the New Year begins, the price of wheat is setting an all-time high in the United Kingdom. Food riots are spreading across Algeria. Russia is importing grain to sustain its cattle herds until spring grazing begins. India is wrestling with an 18-per cent annual food inflation rate, sparking protests.

China is looking abroad for potentially massive quantities of wheat and corn. The Mexican government is buying corn futures to avoid unmanageable tortilla price rises. And on January 5, the UN Food and Agricultural organization announced that its food price index for December hit an all-time high.

When prices of staples soar, the poor bear the brunt. Without global action, people in poor countries will be deprived of adequate and nutritious food, with tragic consequences for individuals and for the future prosperity of their countries says Robert Zoellick the President of the World Bank group.

“The overarching goal should be to ensure that the most vulnerable people and countries are no longer denied access to nutritious food,” Mr Zoellick says.

But whereas in years past, it’s been weather that has caused a spike in commodities prices, now it’s trends on both sides of the food supply/demand equation that are driving up prices. On the demand side, the culprits are population growth, rising affluence, and the use of grain to fuel cars.

On the supply side: soil erosion, aquifer depletion, the loss of cropland to nonfarm uses, the diversion of irrigation water to cities, the plateauing of crop yields in agriculturally advanced countries, and -- due to climate change -- crop-withering heat waves and melting mountain glaciers and ice sheets. These climate-related trends seem destined to take a far greater toll in the future.

There’s at least a glimmer of good news on the demand side: World population growth, which peaked at two per cent per year around 1970, dropped below 1.2 per cent per year in 2010. But because the world population has nearly doubled since 1970, we are still adding 80 million people each year.

Tonight, there will be 219,000 additional mouths to feed at the dinner table, and many of them will be greeted with empty plates. Another 219,000 will join us tomorrow night. At some point, this relentless growth begins to tax both the skills of farmers and the limits of the earth’s land and water resources.

Beyond population growth, there are now some 3 billion people moving up the food chain, eating greater quantities of grain-intensive livestock and poultry products. The rise in meat, milk, and egg consumption in fast-growing developing countries has no precedent. Total meat consumption in China today is already nearly double that in the United States.

The third major source of demand growth is the use of crops to produce fuel for cars. In the United States, which harvested 416 million tonnes of grain in 2009, 119 million tonnes went to ethanol distilleries to produce fuel for cars. That’s enough to feed 350 million people for a year.

The massive US investment in ethanol distilleries sets the stage for direct competition between cars and people for the world grain harvest. In Europe, where much of the auto fleet runs on diesel fuel, there is growing demand for plant-based diesel oil, principally from rapeseed and palm oil.

This demand for oil-bearing crops is not only reducing the land available to produce food crops in Europe, it is also driving the clearing of rainforests in Indonesia and Malaysia for palm oil plantations.

The combined effect of these three growing demands is stunning: a doubling in the annual growth in world grain consumption from an average of 21 million tonnes per year in 1990-2005 to 41 million tonnes per year in 2005-2010. Most of this huge jump is attributable to the orgy of investment in ethanol distilleries in the United States in 2006-2008.

While the annual demand growth for grain was doubling, new constraints were emerging on the supply side, even as longstanding ones such as soil erosion intensified. An estimated one third of the world’s cropland is losing topsoil faster than new soil is forming through natural processes -- and thus is losing its inherent productivity. Two huge dust bowls are forming, one across northwest China, western Mongolia, and central Asia; the other in central Africa. Each of these dwarfs the US dust bowl of the 1930s.

Satellite images show a steady flow of dust storms leaving these regions, each one typically carrying millions of tons of precious topsoil. In North China, some 24,000 rural villages have been abandoned or partly depopulated as grasslands have been destroyed by overgrazing and as croplands have been inundated by migrating sand dunes.

In countries with severe soil erosion, such as Mongolia and Lesotho, grain harvests are shrinking as erosion lowers yields and eventually leads to cropland abandonment. The result is spreading hunger and growing dependence on imports. Haiti and North Korea, two countries with severely eroded soils, are chronically dependent on food aid from abroad.

Meanwhile aquifer depletion is fast shrinking the amount of irrigated area in many parts of the world; this relatively recent phenomenon is driven by the large-scale use of mechanical pumps to exploit underground water. Today, half the world’s people live in countries where water tables are falling as overpumping depletes aquifers. Once an aquifer is depleted, pumping is necessarily reduced to the rate of recharge unless it is a fossil (nonreplenishable) aquifer, in which case pumping ends altogether. But sooner or later, falling water tables translate into rising food prices.

Irrigated area is shrinking in the Middle East, notably in Saudi Arabia, Syria, Iraq, and possibly Yemen. In Saudi Arabia, which was totally dependent on a now-depleted fossil aquifer for its wheat self-sufficiency, production is in a freefall. From 2007 to 2010, Saudi wheat production fell by more than two thirds. By 2012, wheat production will likely end entirely, leaving the country totally dependent on imported grain.

The Arab Middle East is the first geographic region where spreading water shortages are shrinking the grain harvest. But the really big water deficits are in India, where the World Bank numbers indicate that 175 million people are being fed with grain that is produced by overpumping. In China, overpumping provides food for some 130 million people. In the United States, the world’s other leading grain producer, irrigated area is shrinking in key agricultural states such as California and Texas. Source: FP Website

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