About half of the wheat grown on American farms is exported. "Wheat prices have doubled in the last six months. Corn is on a tear. Barley, sunflower seeds, canola and soybeans are all up sharply.
"Many factors are contributing to the rise, but the biggest is runaway demand. In recent years, the world’s developing countries have been growing about 7 percent a year, an unusually rapid rate by historical standards.
The high growth rate means hundreds of millions of people are, for the first time, getting access to the basics of life, including a better diet. That jump in demand is helping to drive up the prices of agricultural commodities.
Farmers the world over are producing flat-out. American agricultural exports are expected to increase 23 percent this year to $101 billion, a record. In seven of the last eight years, world wheat consumption has outpaced production. Stockpiles are at their lowest point in decades.
“Everyone wants to eat like an American on this globe,” said Daniel W. Basse of the AgResource Company, a Chicago consultancy. “But if they do, we’re going to need another two or three globes to grow it all.”
As the newly urbanized and newly affluent seek more protein and more calories, a phenomenon called “diet globalization” is playing out around the world. Demand is growing for pork in Russia, beef in Indonesia and dairy products in Mexico. Rice is giving way to noodles, home-cooked food to fast food.Though wracked with upheaval for years and with many millions still rooted in poverty, Nigeria has a growing middle class. Median income per person doubled in the first half of this decade, to $560 in 2005. Much of this increase is being spent on food.
Nigeria grows little wheat, but its people have developed a taste for bread, in part because of marketing by American exporters. Between 1995 and 2005, per capita wheat consumption in Nigeria more than tripled, to 44 pounds a year. Bread has been displacing traditional foods like eba, dumplings made from cassava root.
“The moment you develop a taste, you are hooked,” said the director of an American wheat-marketing office in Lagos.“I must eat bread and tea in the morning. Otherwise, I can’t be happy,” said a tailor in Lagos, Mukala Sule, as he sat on a bench at a roadside cafe a few weeks ago. For a breakfast that includes a small loaf, he pays about $1 a day, twice what the traditional eba would have cost him.
To save a few pennies, he decided to skip butter. The bread was the important thing.
“Even if the price goes up,” Mr. Sule said, “if I have the money, I’ll still buy it.”
15April, I'm adding an addendum from accuracy.org:
Behind the Food Crisis
Author of the just-released book "Stuffed and Starved: The
Hidden Battle for the World Food System," Patel said today: "What's
happening in Haiti is an augury to the rest of the developing world.
Haiti is the poster child of an economy that liberalized its
agricultural economy and removed the social safety nets for the poor,
despite the protests of the majority of its people. Food riots
throughout history have happened when two conditions have been
fulfilled. First, there has always been a sudden and rapid discrepancy
between what people expect to be able to eat, and what they can actually
feed their families. The price shocks around the world have introduced
this discrepancy, and the politics that might have dampened them --
grain reserves, tariffs, support for sustainable farmers -- have been
eroded by modern development policies.
"But the second feature of food riots in history is that riots
happen when there are no other ways of making powerful people listen.
Like many other countries in the developing world, Haiti has been forced
to liberalize its economy despite popular opposition -- in other words,
modern development policy has been forced to be anti-democratic. And
since there has been no effective way for the people to hold their
leaders accountable, we're seeing riots not just in Haiti, but in places
as diverse as Mexico, India, Egypt, Senegal and even Italy. It's
something to expect to see with increasing frequency, until governments
realize that food isn't a mere commodity, it's a human right."
also,
KATARINA WAHLBERG,
http://www.globalpolicy.org/socecon/hunger/general/2008/0303foodcrisis.htm
Social and economic policy program coordinator for the Global Policy
Forum, Wahlberg in early March wrote a policy brief titled "Are We
Approaching a Global Food Crisis?" which stated: "The most important
factor behind the sudden spike in food prices ... is the rapidly growing
demand for biofuels, particularly in the EU and the U.S. ... Until
recently, few voices critical of biofuels were heard, but now an
increasing number of policy makers and analysts strongly oppose
converting food into fuel. In addition to directly threatening food
security, there are alarming examples of how biofuel production causes
environmental harm and speeds up global warming. U.S. ethanol production
uses large amounts of fuel, fertilizer, pesticides and water and most
analysts consider its environmental impact quite negative. And in
Indonesia, Malaysia and Brazil, companies have slashed thousands of
hectares of rain forests to cultivate palm oil or sugarcane for biofuel
production. ...
"[I]n past decades, international trade liberalization has
transformed most developing countries from net-exporters into
net-importers of food. Caving to pressure from the World Trade
Organization, the International Monetary Fund and the World Bank, poor
countries dismantled tariffs and other barriers to trade, enabling large
agribusiness and subsidized goods from rich countries to undermine local
agricultural production. To some degree, food aid -- in the form of
dumped subsidized goods produced in rich countries -- also played a role
in diminishing farming in poor countries."
Wahlberg added today: "Another major factor is the changing diet in
the fast-growing economies of China and India. As their middle class
eats more meat and dairy, which take more resources than grains, that
pushes food prices up."
Update 12August, 2008:
Index investors in our commodity markets could be causing continued inflation. "The growing presence of buy-and-hold investors in commodity markets has prompted heated debate among commodity traders, economists, and politicians over other possible causes of higher commodity prices apart from supply and demand shifts."
