2007–2008 world food price crisis

Chart of global trade volume in wheat, coarse grain and soybeans 1990 to 2008, and projected to 2016. United States Department of Agriculture, 2008.
Chart of the United States stock to use ratio of soybeans, maize and wheat, from 1977 to 2007, and projected to 2016. United States Department of Agriculture, September 2007.

The years 2007–2008 saw dramatic increases in world food prices, creating a global crisis and causing political and economical instability and social unrest in both poor and developed nations. Systemic causes for the worldwide increases in food prices continue to be the subject of debate.

Initial causes of the late 2006 price spikes included droughts in grain-producing nations and rising oil prices. Oil price increases also caused general escalations in the costs of fertilizers, food transportation, and industrial agriculture. Root causes may be the increasing use of biofuels in developed countries (see also food vs fuel),[1] and an increasing demand for a more varied diet across the expanding middle-class populations of Asia.[2][3]

These factors, coupled with falling world-food stockpiles all contributed to the worldwide rise in food prices.[4] Causes not commonly attributed by mainstream views include structural changes in trade and agricultural production, agricultural price supports and subsidies in developed nations, diversions of food commodities to high input foods and fuel, commodity market speculation, and climate change.

Contents

Drastic price increases

Between 2006 and 2008 average world prices for rice rose by 217%, wheat by 136%, corn by 125% and soybeans by 107%.[5] In late April 2008 rice prices hit 24 cents (U.S.) per U.S. pound, more than doubling the price in just seven months.[6]

World population growth

Growth in food production has been greater than population growth. Food per person increased during the 1961–2005 period.

Although some commentators have argued that this food crisis stems from unprecedented global population growth,[7][8] others point out that world population growth rates have dropped dramatically since the 1980s,[9][10] and grain availability has continued to outpace population. However, despite production gains made in the last decade, world food demand outpaces any production increases.

According to Joachim von Braun, of the IFPRI, total food production increases only about 1 to 2 percent per year, while total world population increases approximately 4%.[11][12] Aggregate cereal grain food production, per capita, had risen yearly from the 1960s to the 1980s but has been in decline since.[13] However, this does not take into account any non-food uses of grain production.

World population has grown from 1.6 billion in 1900 to an estimated 6.8 billion [3].

Increased demand for more resource intensive food

The head of the International Food Policy Research Institute, stated in 2008 that the gradual change in diet among newly prosperous populations is the most important factor underpinning the rise in global food prices.[14] Where food utilization has increased, it has largely been in processed ("value added") foods, sold in developing and developed nations.[15] Total grain utilization growth since 2006 (up three percent, over the 2000–2006 per annum average of two percent) has been greatest in non-food usage, especially in feed and biofuels.[16][17]

One kilogram of beef requires seven kilograms of feed grain.[18] These reports, therefore, conclude that usage in industrial, feed, and input intensive foods, not population growth among poor consumers of simple grains, has contributed to the price increases.

2005/1990 ratios of per capita consumption[19]
India China Brazil Nigeria
Cereals 1.0 0.8 1.2 1.0
Meat 1.2 2.4 1.7 1.0
Milk 1.2 3.0 1.2 1.3
Fish 1.2 2.3 0.9 0.8
Fruits 1.3 3.5 0.8 1.1
Vegetables 1.3 2.9 1.3 1.3

Although the vast majority of the population in Asia remains rural and poor, the growth of the middle class in the region has been dramatic. For comparison, in 1990, the middle class grew by 9.7 percent in India and 8.6 percent in China, but by 2007 the growth rate was nearly 30 percent and 70 percent respectively.[4] The corresponding increase in Asian affluence also brought with it a change in lifestyle and eating habits, particularly a demand for greater variety, leading to increased competition with western nations for already strained agricultural resources.[20][21] This demand exacerbates dramatic increases in commodity prices such as oil.

Another issue was rising affluence in India and China was reducing the 'shock absorber' of poor people who are forced to reduce their resource consumption when food prices rise. This reduced price elasticity and caused a sharp rise in food prices during some shortages. In the media, China is often mentioned as one of the main reasons for the increase in world food prices. However, China has to a large extent been able to meet its own demand for food, and even exports its surpluses in the world market.[22]

Effects of petroleum price increases

The rise in the price of oil has heightened the costs of fertilizers (in some instances doubling the price within the six months before April, 2008[23]), the majority of which require petroleum or natural gas to manufacture.[4] Although the main fossil fuel input for fertilizer comes from natural gas to generate hydrogen for the Haber–Bosch process (see: Ammonia production), natural gas has its own supply problems similar to those for oil. Because natural gas can substitute for petroleum in some uses (for example, natural gas liquids and electricity generation), increasing prices for petroleum lead to increasing prices for natural gas, and thus for fertilizer.

Costs for fertilizer raw materials other than oil, such as potash, have themselves been increasing[24] as increased production of staples increases demand. This is causing a boom (with associated volatility) in agriculture stocks.

Declining world food stockpiles

In the past, nations tended to keep more sizable food stockpiles, but more recently, due to a faster pace of food growth and ease of importation, less emphasis is placed on high stockpiles. For example, in February 2008 wheat stockpiles hit a 60-year low in the United States (see also Rice shortage).[4] Data stocks are often calculated as a residual between Production and Consumption but it becomes difficult to discriminate between a destocking policy choices of individual countries and a deficit between production and consumption.

Financial speculation

Destabilizing influences, including indiscriminate lending and real estate speculation, led to a crisis in January 2008, and eroded investment in food commodities.[4] The United States, specifically, had been facing an economic crisis that eventually lead to recession.[25][26][27]

Financial speculation in commodity futures following the collapse of the financial derivatives markets has contributed to the crisis due to a "commodities super-cycle." Financial speculators seeking quick returns have removed trillions of dollars from equities and mortgage bonds, some of which has been invested into food and raw materials.[28] That American commodities speculation could have a worldwide effect on food prices is reflected in the globalization of food production. It represents the concentration of wealth throughout the world, which Frances Moore Lappé equates to a weakening in fundamental democracy. In a recent article for The Nation, she suggests that there is no food shortage but that "as long as food is merely a commodity in societies that don't protect people's right to participate in the market, and as long as farming is left vulnerable to consolidated power off the farm, many will go hungry, farmers among them—no matter how big the harvests."[29]

Commodity Index Funds

A 2010 article in Harper's by Frederick Kaufman alleged that these Commodity Index funds (invented by Goldman Sachs) were part of the global food crisis in 2008, including riots in 30 countries, a food price rise of 80 percent between 2005 and 2008, and an increased hunger rate. The article claimed that one mechanism involved was a 'demand shock' on wheat futures caused by the index funds, resulting in a 'contango' wheat market on the Chicago Mercantile Exchange. This all caused prices of wheat to rise much higher than normal, defeating the purpose of the exchanges (price stabilization) in the first place.[30]

Effects of trade liberalization

Some theorists, such as Martin Khor of the Third World Network,[31] point out that many developing nations have gone from being food independent to being net food importing economies since the 1970s and 1980s International Monetary Fund (and later the World Trade Organisation's Agreement on Agriculture) free market economics directives to debtor nations. In opening developing countries to developed world food imports subsidised by Western governments, developing nations have become dependent upon food imports that are cheaper than what local smallholders agriculture produces, even in the poorest regions of the world.[31]

While developed countries pressured the developing world to abolish subsidies in the interest of trade liberalization, rich countries largely kept subsidies in place for their own farmers. In recent years United States government subsidies have been added to push production toward biofuel rather than food and vegetables .[4]

Effects of food for fuel

One systemic cause for the price rise is held to be the diversion of food crops (maize in particular) for making first-generation biofuels.[32] An estimated 100 million tons of grain per year are being redirected from food to fuel.[33] (Total worldwide grain production for 2007 was just over 2000 million tonnes.[34]) As farmers devoted larger parts of their crops to fuel production than in previous years, land and resources available for food production were reduced correspondingly.

This has resulted in less food available for human consumption, especially in developing and least developed countries, where a family's daily allowances for food purchases are extremely limited. The crisis can be seen, in a sense, to dichotomize rich and poor nations, since, for example, filling a tank of an average car with biofuel, amounts to as much maize (Africa's principal food staple) as an African person consumes in an entire year.[4]

Brazil, the world's second largest producer of ethanol after the U.S., is considered to have the world's first sustainable biofuels economy[35][36][37] and its government claims Brazil's sugar cane based ethanol industry has not contributed to the 2008 food crises.[37][38] A World Bank policy research working paper released in July 2008[39] concluded that "...large increases in biofuels production in the United States and Europe are the main reason behind the steep rise in global food prices", and also stated that "Brazil's sugar-based ethanol did not push food prices appreciably higher".[40][41] An economic assessment published in July 2008 by the OECD[42] disagrees with the World Bank report regarding the negative effects of subsidies and trade restrictions, finding that the effect of biofuels on food prices are much smaller.[43]

A report released by Oxfam in June 2008[44] criticized biofuel policies of rich countries and concluded that, of all biofuels available in the market, Brazilian sugarcane ethanol is "far from perfect" but it is the most favorable biofuel in the world in term of cost and GHG balance. The report discusses some existing problems and potential risks and asks the Brazilian government for caution to avoid jeopardizing its environmental and social sustainability. The report also says that: "Rich countries spent up to $15 billion last year supporting biofuels while blocking cheaper Brazilian ethanol, which is far less damaging for global food security."[45][46] (See Ethanol fuel in Brazil)

German Chancellor Angela Merkel said the rise in food prices is due to poor agricultural policies and changing eating habits in developing nations, not biofuels as some critics claim.[47] On April 29, 2008, U.S. President George W. Bush declared during a press conference that "85 percent of the world's food prices are caused by weather, increased demand and energy prices", and recognized that "15 percent has been caused by ethanol".[48] On July 4, 2008, The Guardian reported that a leaked World Bank report estimated the rise in food prices caused by biofuels to be 75%.[49] This report was officially released in July 2008.[39]

Since reaching record high prices in June 2008, corn prices fell 50% by October 2008, declining sharply together with other commodities, including oil. As ethanol production from corn has continue at the same levels, some have argued this trend shows the belief that the increased demand for corn to produce ethanol was mistaken. "Analysts, including some in the ethanol sector, say ethanol demand adds about 75 cents to $1.00 per bushel to the price of corn, as a rule of thumb. Other analysts say it adds around 20 percent, or just under 80 cents per bushel at current prices. Those estimates hint that $4 per bushel corn might be priced at only $3 without demand for ethanol fuel."[50] These industry sources consider that a speculative bubble in the commodity markets holding positions in corn futures was the main driver behind the observed hike in corn prices affecting food supply.

Second- and third-generation biofuels (such as cellulosic ethanol and algae fuel, respectively) may someday ease the competition with food crops, as non food energy crops can grow on marginal lands unsuited for food crops, but these advanced biofuels require further development of farming practices and refining technology; in contrast, ethanol from maize uses mature technology and the maize crop can be shifted between food and fuel use quickly.

Biofuel subsidies in the US and the EU

The World Bank lists the effect of biofuels as an important contributor to higher food prices.[51] The FAO/ECMB has reported that world land usage for agriculture has declined since the 1980s, and subsidies outside the United States and EU have dropped since the year 2004, leaving supply, while sufficient to meet 2004 needs, vulnerable when the United States began converting agricultural commodities to biofuels.[52] According to the United States Department of Agriculture, global wheat imports and stocks have decreased, domestic consumption has stagnated, and world wheat production has decreased from 2006 to 2008.[53]

In the United States, government subsidies for ethanol production have prompted many farmers to switch to production for biofuel. Maize is the primary crop used for the production of ethanol, with the United States being the biggest producer of maize ethanol. As a result, 23 percent of United States maize crops were being used for ethanol in 2006–2007 (up from 6 percent in 2005–2006), and the USDA expects the United States to use 81 million tonnes of maize for ethanol production in the 2007–2008 season, up 37 percent.[54] This not only diverts grains from food, but it diverts agricultural land from food production.

Nevertheless, supporters of ethanol claim that using corn for ethanol is not responsible for the worst food riots in the world, many of which have been caused by the price of rice and oil, which are not affected by biofuel use but rather by supply and demand.

However, a World Bank policy research working paper released in July 2008[39] says that biofuels have raised food prices between 70 to 75 percent. The study found that higher oil prices and a weak dollar explain 25–30% of total price rise. The "month-by-month" five year analysis disputes that increases in global grain consumption and droughts were responsible for price increases, reporting that this had had only a marginal effect and instead argues that the EU and US drive for biofuels has had by far the biggest effect on food supply and prices. The paper concludes that increased production of biofuels in the US and EU were supported by subsidies and tariffs on imports, and considers that without these policies, price increases would have been smaller. This research also concluded that Brazil's sugar cane based ethanol has not raised sugar prices significantly, and suggest to remove tariffs on ethanol imports by both the US and EU, to allow more efficient producers such as Brazil and other developing countries to produce ethanol profitably for export to meet the mandates in the EU and the US.[40][41]

The Renewable Fuel Association (RFA) published a rebuttal based on the version leaked before the formal release of the World Bank's paper.[55] The RFA critique considers that the analysis is highly subjective and that the author "estimates the effect of global food prices from the weak dollar and the direct and indirect effect of high petroleum prices and attributes everything else to biofuels."[56]

An economic assessment report also published in July 2008 by the OECD[42] agrees with the World Bank report regarding the negative effects of subsidies and trade restrictions, but found that the effect of biofuels on food prices are much smaller. The OECD study is also critical of the limited reduction of GHG emissions achieved from biofuels produced in Europe and North America, concluding that the current biofuel support policies would reduce greenhouse gas emissions from transport fuel by no more than 0.8 percent by 2015, while Brazilian ethanol from sugar cane reduces greenhouse gas emissions by at least 80 percent compared to fossil fuels. The assessment calls on governments for more open markets in biofuels and feedstocks to improve efficiency and lower costs.[43]

Idled farmland

According to the New York Times on April 9, 2008, the United States government pays farmers to idle their cropland under a conservation program. This policy reached a peak of 36,800,000 acres (149,000 km2) idled in 2007, that is 8% of cropland in United States, representing a total area bigger than the state of New York.[57]

Agricultural subsidies

The global food crisis has renewed calls for removal of distorting agricultural subsidies in developed countries.[58] Support to farmers in OECD countries totals 280 billion USD annually, which compares to official development assistance of just 80 billion USD in 2004, and farm support distorts food prices leading to higher global food prices, according to OECD estimates.[59] The US Farm Bill brought in by the Bush Administration in 2002 increased agricultural subsidies by 80% and cost the US taxpayer 190 billion USD.[60] In 2003, the EU agreed to extend the Common Agricultural Policy until 2013. Former UNDP Administrator Malloch Brown renewed calls for reform of the farm subsidies such as the CAP.[61]

Distorted global rice market

Japan is forced to import more than 767,000 tons of rice annually from the United States, Thailand, and other countries due to WTO rules.[62] This is despite the fact that Japan produces over 100% of domestic rice consumption needs with 11 million tonnes produced in 2005 while 8.7 million tonnes were consumed in 2003–2004 period. Japan is not allowed to re-export this rice to other countries without approval. This rice is generally left to rot and then used for animal feed. Under pressure, the United States and Japan are poised to strike a deal to remove such restrictions. It is expected 1.5 million tonnes of high-grade American rice will enter the market soon.[63]

Crop shortfalls from natural disasters

Several distinct weather- and climate-related incidents have caused disruptions in crop production. Perhaps the most influential is the extended drought in Australia, in particular the fertile Murray-Darling Basin, which produces large amounts of wheat and rice. The drought has caused the annual rice harvest to fall by as much as 98% from pre-drought levels.[64]

Australia is historically the second-largest exporter of wheat after the United States, producing up to 25 million tons in a good year, the vast majority for export. However, the 2006 harvest was 9.8 million.[65] Other events that have negatively affected the price of food include the 2006 heat wave in California's San Joaquin Valley, which killed large numbers of farm animals, and unseasonable 2008 rains in Kerala, India, which destroyed swathes of grain. Scientists have stated that several of these incidents are consistent with the predicted effects of climate change.[66][67]

The effects of Cyclone Nargis on Burma in May 2008 caused a spike in the price of rice. Burma has historically been a rice exporter, though yields have fallen as government price controls have reduced incentives for farmers. The storm surge inundated rice paddies up to 30 miles (48 km) inland in the Irrawaddy Delta, raising concern that the salt could make the fields infertile. The FAO had previously estimated that Burma would export up to 600,000 tons of rice in 2008, but concerns were raised in the cyclone's aftermath that Burma may be forced to import rice for the first time, putting further upward pressure on global rice prices.[6][68]

Stem rust reappeared in 1998[69] in Uganda (and possibly earlier in Kenya)[70] with the particularly virulent UG99 fungus. Unlike other rusts, which only partially affect crop yields, UG99 can bring 100% crop loss. Up to 80% yield losses were recently recorded in Kenya.[71]

As of 2005 stem rust was still believed to be "largely under control worldwide except in Eastern Africa".[70] But by January 2007 an even more virulent strain had gone across the Red Sea into Yemen. FAO first reported on 5 March 2008 that Ug99 had now spread to major wheat-growing areas in Iran.[72]

These countries in North Africa and Middle East consume over 150% of their own wheat production;[69] the failure of this staple crop thus adds a major burden on them. The disease is now expected to spread over China and the Far-East. The strong international collaboration network of research and development that spread disease-resistant strains some 40 years ago and started the Green Revolution, was since slowly starved of research funds because of its own success and is now too atrophied to swiftly react to the new threat.[69]

Soil and productivity losses

Sundquist [73] points out that large areas of croplands are lost year after year, due mainly to soil erosion, water depletion and urbanisation. According to him "60,000 km2/ year of land becomes so severely degraded that it loses its productive capacity and becomes wasteland", and even more are affected to a lesser extent, adding to the crop supply problem.

Additionally, agricultural production is also lost due to water depletion. Northern China in particular has depleted much of its non-renewables aquifers, which now impacts negatively its crop production.[74]

Urbanisation is another, smaller, difficult to estimate cause of annual cropland reduction.[75]

Rising levels of ozone

One possible environmental factor in the food price crisis is rising background levels of ozone in the atmosphere. Plants have been shown to have a high sensitivity to ozone levels, and lower yields of important food crops, such as wheat and soybeans, may have be a result of ozone levels. Ozone levels in the Yangtze Delta were studied for their effect on oilseed rape, a member of the cabbage family that produces one-third of the vegetable oil used in China. Plants grown in chambers that controlled ozone levels exhibited a 10–20 percent reduction in size and weight (biomass) when exposed to elevated ozone. Production of seeds and oil was also reduced.[76]

Rising prices

From the beginning of 2007 to early 2008, the prices of some of the most basic international food commodities increased dramatically on international markets. The international market price of wheat doubled from February 2007 to February 2008 hitting a record high of over USD$10 a bushel.[77] Rice prices also reached ten year highs. In some nations, milk and meat prices more than doubled, while soy (which hit a 34 year high price in December 2007[78]) and maize prices have increased dramatically.

Total food import bills rose by an estimated 25% for developing countries in 2007. Researchers from the Overseas Development Institute have suggested this problem will be worsened by a likely fall in food aid. As food aid is programmed by budget rather than volume, rising food prices mean that the World Food Programme (WFP) needs an extra $500 million just to sustain the current operations.[79]

To ensure that food remains available for their domestic populations and to combat dramatic price inflation, major rice exporters, such as China, Brazil, India, Indonesia, Vietnam, Cambodia and Egypt, have imposed strict export bans on rice.[80] Conversely, several other nations, including Argentina, Ukraine, Russia, and Serbia have, as well, either imposed high tariffs or blocked the export of wheat and other foodstuffs altogether, driving up prices still further for net food importing nations while trying to isolate their internal markets. Finally, North Korea, is also suffering from the food crisis (to such extent that a North Korean official was quoted in June '08 with saying "Life is more than difficult. It seems that everyone is going to die").[81] This nation however is solely relying on food assistance to cope with the crisis.[82]

In developed countries

United States

The global food price crisis has appeared in the U.S.A. as the rice shortage. The retail prices of food in the U.S. increased four percent according to the Consumer Price Index in 2007, the largest increase in 17 years. The USDA Economic Research Service predicted that prices would increase another three to four percentage points throughout 2008.[83]

In April 2008 Sam's Club instituted a limit on how much long-grain white rice that restaurant and retail customers could purchase due to shortages. Purchases of other types of rice were not restricted.[84][85] A May 2008 national survey found that food banks and pantries across the U.S. were being forced to cut back on food distribution as 99 percent of respondents reported an increase in the number of people requesting services. Rising food and fuel prices, inadequate food stamp benefits, unemployment, underemployment, and rent or mortgage costs were factors reported as forcing an average of 15-20 percent more people.[86] Compounding this issue, USDA bonus foods have declined by $200 million and local food donations were down nationally about 9 percent over the same period. According to the California Association of Food Banks, which is an umbrella organization of nearly all food banks in the state, food banks are at the "beginning of a crisis."[87]

Effects on farmers

If global price movements are transmitted to local markets, farmers in the developing world could benefit from the rising price of food. According to researchers from the Overseas Development Institute, this may depend on farmers’ capacity to respond to changing market conditions. Experience suggests that farmers lack the credit and inputs needed to respond in the short term. In the medium or long term, however, they could benefit, as seen in the Asian green revolution or in many African countries in the recent past.[79]

Unrest and government actions in individual countries and regions

The price rises affected parts of Asia and Africa particularly severely with Burkina Faso,[88] Cameroon, Senegal, Mauritania, Côte d'Ivoire,[89] Egypt[90] and Morocco seeing protests and riots in late 2007 and early 2008 over the unavailability of basic food staples. Other countries that have seen food riots or are facing related unrest are: Mexico, Bolivia, Yemen, Uzbekistan, Bangladesh,[91] Pakistan,[92] Sri Lanka,[93] and South Africa.[94]

Bangladesh

10,000 workers rioted close to the Bangladeshi capital Dhaka, smashing cars and buses and vandalising factories in anger at high food prices and low wages. Dozens of people, including at least 20 police officials, were injured in the violence. Ironically, the country achieved food self-sufficiency in 2002, but food prices increased drastically due to the reliance of agriculture on oil and fossil fuels.[95]

Economists estimate 30 million of the country's 150 million people could go hungry.[96]

Brazil

In April 2008, the Brazilian government announced a temporary ban on the export of rice. The ban is intended to protect domestic consumers.[97][98]

Burkina Faso

One of the earlier food riots took place in Burkina Faso, on February 22, when rioting broke in the country's second and third largest cities over soaring food prices (up to 65 percent increase), sparing however the capital, Ouagadougou, where soldiers were mobilized throughout strategic points. The government promised to lower taxes on food and to release food stocks. Over 100 people were arrested in one of the towns.[99] Related policy actions of Burkinabe government included the removal of customs duty on rice, salt, dairy-based products and baby foods; removal of value added tax on durum wheat, baby foods, soap and edible oils; establishing negotiated with wholesalers prices for sugar, oil and rice; release of food stock; strengthening of community grain banks; food distribution in-kind; reduction of electricity cost, partial payment of utility bills for the poor; enacting special programs for school and hospital feeding, fertilizer distribution and production support. Also, an ban was imposed on exportation of cereals.[100]

Cameroon

Cameroon, the world's fourth largest cocoa producer, saw large scale rioting in late February 2008, in protest against inflating food and fuel prices, as well as the attempt by President Paul Biya to extend his 25-year rule. At least seven people were killed in the worst unrest seen in the country in over fifteen years.[101] This figure was later increased to 24.[81] Part of the government response to the protests was a reduction in import taxes on foods including rice, flour, and fish. The government reached an agreement with retailers by which prices would be lowered in exchange for the reduced import taxes. As of late April 2008, however, reports suggested that prices had not eased and in some cases had even increased.[102]

On April 24, 2008, the government of Cameroon announced a two-year emergency program designed to double Cameroon's food production and achieve food self-sufficiency.[103]

Côte d'Ivoire

On March 31, Côte d'Ivoire's capital Abidjan saw police use tear gas and a dozen protesters injured following food riots that gripped the city. The riots followed dramatic hikes in the price of food and fuel, with the price of beef rising from US$1.68 to $2.16 per kilogram, and the price of gasoline rising from $1.44 to $2.04 per liter, in only three days.[104]

Egypt

In Egypt, a boy was killed from a gunshot to the head after Egyptian police intervened in violent demonstrations over rising food prices that gripped the industrial city of Mahalla on April 8. Large swathes of the population have been hit as food prices, and particularly the price of bread, have doubled over the last several months as a result of producers exploiting a shortage that has existed since 2006.[105][106]

Ethiopia

Drought and the food price crisis are threatening thousands in Ethiopia.[107]

Haiti

On April 12, 2008, the Haitian Senate voted to dismiss Prime Minister Jacques-Édouard Alexis after violent food riots hit the country.[108] The food riots caused the death of 5 people.[81] Prices for food items such as rice, beans, fruit and condensed milk have gone up 50 percent in Haiti since late 2007 while the price of fuel has tripled in only two months.[109] Riots broke out in April due to the high prices, and the government had been attempting to restore order by subsidizing a 15 percent reduction in the price of rice.[110] As of February 2010, post-earthquake Port-au-Prince is almost entirely reliant on foreign food aid, some of which ends up in the black markets.[111]

India

Food riots were reported in the Indian state of West Bengal in 2007 over shortages of food. India has banned the export of rice except for Basmati types of rice, which attract a premium price.[112]

Indonesia

Street protests over the price of food took place in Indonesia[113] where food staples and gasoline have nearly doubled in price since January 2008.[114]

Latin America

In April 2008, the Latin American members of the United Nations' Food and Agriculture Organization (FAO) met in Brasília to confront the issues of high food prices, scarcities and violence that affect the region. [115]

Mexico

The President of Mexico, Felipe Calderón, with industry representatives and members of the Confederation of Industrial Chambers (Concamin), agreed to freeze prices of more than 150 consumer staples, such as coffee, sardines, tuna, oil, soup or tea, among others, until the end of December 2008. The measure was carried out in an attempt to control inflation, which stood at an annual rate of 4.95%, the highest increase since December 2004.

Mexican baking company Grupo Bimbo, agreed to maintain stable prices of their products, despite of the 20% raise of the production costs.[116] Daniel Servitje, CEO of this company, announced in the 19th Plenary Meeting of the Mexico–China Business Committee. Bimbo is one of the most important baking companies worldwide, with the recent expansion to China. Bimbo also recently has acquired five bakeries in the United States and Canada.[117] Servitje also said that their investment plans of this year will be done, but the long term projects, can be changed.

Mozambique

In mid February, rioting that started in the Mozambican rural town of Chokwe and then spread to the capital, Maputo, has resulted in at least four deaths. The riots were reported in the media to have been, at least in part, over food prices and were termed "food riots." A biofuel advocacy publication, however, claimed that these were, in fact, "fuel riots", limited to the rise in the cost of diesel, and argued that the "food riot" characterization worked to fan "anti-biofuels sentiment."[118]

Pakistan

The Pakistan Army has been deployed to avoid the seizure of food from fields and warehouses. This hasn't stopped the food prices from increasing. The new government has been blamed for not managing the countries food stockpiles properly.[119]

Myanmar

Once the world's top rice producer, Myanmar has produced enough rice to feed itself until now. Rice exports dropped over four decades from nearly 4 million tons to only about 40,000 tons last year, mostly due to neglect by Myanmar's ruling generals of infrastructure, including irrigation and warehousing. On 3 May 2008 Cyclone Nargis stripped Myanmar's rice-growing districts, ruining large areas with salt water. U.N. Food and Agriculture Organization estimates that these areas produce 65 percent of the Southeast Asian country's rice. Worries of long-term food shortages and rationing are rife. The military regime says nothing about the rice crisis, but continues to export rice at the same rate. "...at least the next two harvests are going to be greatly affected and there’ll be virtually no output from those areas during that time. So we’re likely to see considerable food and rice shortages for the next couple of years. The damage to the economy is going to be profound." said economist and Myanmar expert Sean Turnell, of Australia's Macquarie University. (interviewed in "The Irriwaddy", Tuesday, May 27, 2008)

Panama

In Panama, in response to higher rice prices the government began buying rice at the high market price and selling rice to the public at a lower subsidized price at food kiosks.

Philippines

In the Philippines, the Arroyo government insisted on April 13 that there would be no food riots in the country and that there could be no comparison with Haiti's situation.[120] Chief Presidential Legal Counsel, Sergio Apostol stated that: "Haiti is not trying to solve the problem, while we are doing something to address the issue. We don't have a food shortage. So, no comparison..."[121] Comments by the Justice Secretary, Raul Gonzalez, the following day, that food riots are not far fetched, were quickly rebuked by the rest of the government.[122]

On April 15, the Philippines, the world's largest rice importer, urged China, Japan, and other key Asian nations, to convene an emergency meeting, especially taking issue with those countries' rice export bans. "Free trade should be flowing", Philippine Agriculture Secretary Arthur Yap stated.[123] In late April 2008, the Philippines government requested that the World Bank exert pressure on rice exporting countries to end export restrictions.[124]

Russia

The Russian government pressured retailers to freeze food prices before key elections for fear of a public backlash against the rising cost of food in October 2007.[125] The freeze ended on May 1, 2008.[126]

Senegal

On 31 March 2008, Senegal had riots in response to the rise in the price of food and fuel. Twenty-four people were arrested and detained in a response that one local human rights group claimed included "torture" and other "unspeakable acts" on the part of the security forces.[127] Further protests took place in Dakar on 26 April 2008.[128]

Somalia

Witnesses and officials in Somalia said thousands of angry Somalis rioted on May 5, 2008 over rising food prices and the collapse of the nation's currency, culminating in clashes with government troops and armed shopkeepers that killed at least five protesters.[129] The protests occurred amid a serious humanitarian emergency due to the Ethiopian war in Somalia.

Tajikistan

The Christian Science Monitor, neweurasia, and other media observers are predicting that a nascent hunger crisis will erupt into a full famine as a consequence of the energy shortages.[130] UN experts announced on 10 October that almost one-third of Tajikistan's 6.7 million inhabitants may not have enough to eat for the winter of 2008-09.[131]

Yemen

Food riots in southern Yemen that began in late March and continued through early April, saw police stations torched, and roadblocks were set up by armed protesters. The army has deployed tanks and other military vehicles. Although the riots involved thousands of demonstrators over several days and over 100 arrests, officials claimed no fatalities; residents, however, claimed that at least one of the fourteen wounded people has died.[132]

Projections

The UN (FAO) released a study in December 2007 projecting a 49 percent increase in African cereal prices, and 53 percent in European prices, through July 2008.[133] In April 2008, the World Bank, in combination with the International Monetary Fund, announced a series of measures aimed at mitigating the crisis, including increased loans to African farmers and emergency monetary aid to badly affected areas such as Haiti.[134] According to FAO director Jacques Diouf, however, the World Food Programme needs an immediate cash injection of at least $1700 million,[4] far more than the tens of million-worth in measures already pledged. On 28 April 2008, the United Nations Secretary-General Ban Ki-moon established a Task Force on the Global Food Security Crisis [4] under his chairmanship and composed of the heads of the United Nations specialized agencies, funds and programmes, Bretton Woods institutions and relevant parts of the UN Secretariat to co-ordinate efforts to alleviate the crisis.[135]

Actions by governments

IFAD is making up to US$200 million available to support poor farmers boost food production in face of the global food crisis.[136]

On May 2, 2008 U.S. President George W. Bush said he was asking Congress to approve an extra $770 million funding for international food aid.[137] On October 16, 2008, former US president Bill Clinton scolded the bipartisan coalition in Congress that killed the idea of making some aid donations in cash rather than in food.[138]

The release of Japan's rice reserves onto the market may bring the rice price down significantly. As of May 16, anticipation of the move had already lowered prices by 14% in a single week.[139]

On April 30, 2008 Thailand announced the creation of the Organization of Rice Exporting Countries (OREC) with the potential to develop a price-fixing cartel for rice.[140][141] This is seen by some as an action to capitalise on the crisis.

In June 2008 the Food and Agriculture Organization hosted a High-Level Conference on World Food Security, in which $1.2 billion in food aid was committed for the 75 million people in 60 countries hardest hit by rising food prices.[142]

In June 2008, a sustained commitment from the G8 was called for by some humanitarian organizations.[143]

On October 23, 2008, Associated Press reported the following:

"Former President Clinton told a U.N. gathering Thursday [Oct 16, 2008] that the global food crisis shows "we all blew it, including me", by treating food crops "like color TVs" instead of as a vital commodity for the world's poor.... Clinton criticized decades of policymaking by the World Bank, the International Monetary Fund and others, encouraged by the U.S., that pressured Africans in particular into dropping government subsidies for fertilizer, improved seed and other farm inputs as a requirement to get aid. Africa's food self-sufficiency declined and food imports rose. Now skyrocketing prices in the international grain trade — on average more than doubling between 2006 and early 2008 — have pushed many in poor countries deeper into poverty."[138]

We need the World Bank, the IMF, all the big foundations, and all the governments to admit that, for 30 years, we all blew it, including me when I was President. We were wrong to believe that food was like some other product in international trade, and we all have to go back to a more responsible and sustainable form of agriculture.

– Former US President Bill Clinton, Speech at United Nations World Food Day, October 16, 2008 [144]

Food price decreases

In December 2008, the global economic slowdown, decreasing oil prices, and speculation of decreased demand for commodities worldwide brought about sharp decreases in the price of staple crops from their earlier highs. Corn prices on the Chicago Board of Trade dropped from US $7.99 per bushel in June to US $3.74 per bushel in mid-December; wheat and rice prices experienced similar decreases.[145] The UN's Food and Agriculture Organization, however, warned against "a false sense of security", noting that the credit crisis could cause farmers to reduce plantings.[146] FAO has convened a World Summit on Food Security at its headquarters in Rome in November, noting that food prices remain high in developing countries and that the global food security situation has worsened.

See also

  • Famine
  • Food vs fuel
  • Food security
  • Food waste in the United Kingdom
  • In vitro meat
  • Malthusian catastrophe
  • Overpopulation
  • Population dynamics
  • Slow food
  • Societal collapse
  • Sustainable agriculture
  • Survivalism
  • World Food Day
  • World population

References

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  2. ↑ The cost of food: facts and figures
  3. ↑ Fear of rice riots as surge in demand hits nations across the Far East
  4. ↑ 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 "How the cupboard went bare", Globe & Mail, April 12, 2008
  5. ↑ Financial speculators reap profits from global hunger
  6. ↑ 6.0 6.1 "Cyclone fuels rice price increase", BBC News, May 7, 2008
  7. ↑ World in grip of food crisis. IANS, Thaindian News. 2008-04-07.
  8. ↑ Burgonio, TJ. Runaway population growth factor in rice crisis—solon. Philippine Daily Inquirer, 2008-03-30.
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  10. ↑ Population annual growth rate, 229 countries 1955–2050 (UN Population Division's quinquennial estimates and projections). United Nations. Last updated on 2007-07-17.
  11. ↑ Population increase vs food production increase
  12. ↑ +100% in 25 years makes +4% each year
  13. ↑ UN-USDA figures quoted by: 'Earth-Policy' http://www.earth-policy.org/Indicators/Grain/2006_data.htm#fig1
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    Two die after clashes in Egypt industrial town Gamal: Reuters, April 8, 2008.
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  119. ↑ zawya.com (need to be login first)
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  126. ↑ St. Petersburg Times
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  129. ↑ http://www.somalinet.com/news/world/Somalia/15416
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  131. ↑ Tajikistan: Almost One-Third of the Population Is in Danger of Going Hungry This Winter, EurasiaNet
  132. ↑ "Food riots rock Yemen", The Intelligence Daily, April 4, 2008.
  133. ↑ Cereal prices hit poor countries, BBC, February 14, 2008.
    UN warns on soaring food prices, 17 December 2007.
  134. ↑ World Bank tackles food emergency, BBC, April 14, 2008.
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  139. ↑ Leo Lewis, Asia Business Correspondent (May 16, 2008). "Rice price dives as US and Japan set to unlock grain pact - Times Online". London: Business.timesonline.co.uk. http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article3943779.ece. Retrieved 2008-10-03. 
  140. ↑ Australia|April 30, 2008|Mekong nations to form rice price-fixing cartel
  141. ↑ Post|May 1, 2008|PM floats idea of five-nation rice cartel
  142. ↑ "UN increases food aid by $1.2bn", BBC News, June 4, 2008
  143. ↑ "Center for Global Development : Food Crisis Requires Sustained Commitment from the G8". Cgdev.org. http://www.cgdev.org/content/general/detail/16244. Retrieved 2008-10-03. 
  144. ↑ Bill Clinton, "Speech: United Nations World Food Day", October 13, 2008
  145. ↑ "Corn Caps Record Week, Soybeans Drop on Shifts in U.S. Planting". Bloomberg. 2008-12-12. http://www.bloomberg.com/apps/news?pid=20601012&sid=aFEkJtgBWsSA. Retrieved 2008-12-14. 
  146. ↑ "Another food crisis year looms, says FAO". Financial Times. 2008-11-06. http://www.ft.com/cms/s/0/d125dbf2-ac2c-11dd-aa46-000077b07658,dwp_uuid=a955630e-3603-11dc-ad42-0000779fd2ac.html?nclick_check=1. Retrieved 2008-12-14. 

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