Posts Tagged ‘Food prices’
Veteran world watcher Lester Brown sounds dire warning of spreading political unrest, conflicts, and deepening division between rich and poor as food prices soar and supply falls further and further behind rising demand, but does not point to obvious solution Dr. Mae-Wan Ho
June 14, 2011 The Institute of Science in Society
Soaring food prices and political unrest
Soaring food prices were a major trigger for the riots that has destabilized North Africa and the Middle East beginning December 2010 in Tunisia. Political unrest has since engulfed Algeria, Egypt, Jordon, Libya, Syria, Yemen, and spread to Burkina Faso, Niger, Nigeria, Cameroon, Uganda, and beyond [1-4]. Latin America is said to be at risk , and even Britain, if food prices continue to rise . The UN Food Price Index has been hovering above 231 points since the start of 2011, and hit its all-time high of 238 points in February. The May 2011 average was 232 points, 37 percent higher than a year ago .
Richard Ferguson, global head of agriculture at Renaissance Capital, an investment bank specializing in emerging markets, told The Guardian newspaper in the UK  that the problems were likely to spread. “Food prices are absolutely core to a lot of these disturbances. If you are 25 years old, with no access to education, no income and live in a politically repressed environment, you are going to be pretty angry when the price of food goes up the way it is.” It acted “as a catalyst” for political unrest, when added to other ills such as a lack of democracy.
“Scarcity is the new norm”
Food has quickly become the hidden driver of world politics , says Lester Brown, venerated veteran world-watcher, who also predicts that crises like these are going to become increasingly common. “Scarcity is the new norm.”
Historically, price spikes tended to be almost exclusively due to bad weather such as monsoon failure, drought, heat wave, etc., but today, they are driven by trends of both increasing demand and decreasing ability to supply. With a rapidly expanding global population demanding to be fed, crop-withering temperatures and exhausted aquifers are making it difficult to increase production. Moreover, the world is losing its ability to soften the blow of shortages. USA, the world’s largest grain producer, was able to rescue shortages with its grain surpluses in the past, or bring idle croplands into cultivation. “We can’t do that anymore; the safety cushion is gone.”
That’s why “the food crisis of 2011 is for real”, Brown warns, and why it may bring yet more bread riots and political revolutions. Tunisia, Egypt, Libya, may not be the end, but the beginning.
Brown does not mention the huge speculation on agricultural commodities in the world financial markets that not only drives up prices but increases volatility, making it much more difficult for farmers and consumers to cope (see  Financing World Hunger, SiS 46). Olivier de Shutter, the United Nations special rapporteur on the right to food, has referred to the 2007-2008 crisis as a “price-crisis” not a “food-crisis”, precipitated by speculation and not linked to insufficient food being produced, at least not yet, as Brown elaborates.
Updated: new links below
By Chris Arsenault *
DOHA, May 10, 2011 (IPS/Al Jazeera) – The rapid rise in prices for food, fuel and commodities has been disastrous for the world’s poor, including Indonesian market vendor Lia Romi. But it’s a bonanza for multinational trading firms such as Glencore.
While Romi has trouble feeding her family, Glencore – the world’s largest diversified commodities trader – is planning a $11 billion dollar share sale, likely the largest market debut ever seen on the London Stock Exchange.
“The price for our daily food has at least doubled in the past two years,” Lia Romi told Al Jazeera through a translator. “Food costs 100 per cent of my family’s daily income [of about $3]. I have nothing saved and I owe [money] from my [market stall] business.”
While Romi, and millions like her, worry about feeding their families, the initial public offering from the commodity speculating giant will create at least four billionaires, dozens worth more than 100 million dollars and several hundred old fashioned millionaires. Chief Executive Ivan Glasenberg is set to make more than nine billion from the share sale. And speculating on food prices is an important part of his wealth.
Valued at about 60 billion dollars, Glencore controls 50 percent of the global copper market, 60 per cent of zinc, 38 per cent in alumina, 28 per cent of thermal coal, 45 per cent of lead and almost 10 per cent of the world’s wheat – according to information the firm disclosed prior to its share sale. It also controls about one quarter of the world market in barley, sunflower and rape seed.
“They are possibly one of very few mining companies that are price makers, rather than price takers,” said Chris Hinde, editorial director of Mining Journal magazine. “They are the stockbrokers of the commodities business [operating] in a fairly secretive world. They are effectively setting the price for some very important commodities,” he told Al Jazeera.
The firm employs about 57,000 people, generated a turnover of 145 billion dollars in the past year and has assets worth more than 79 billion. Glencore’s media department refused interview requests from Al Jazeera.
Based in Baar, Switzerland, where regulation is minimal, the company’s sprawling interests span Bolivian tin mines, Angolan oil, zinc producers in Kazakhstan, Zambian copper mines and Russian wheat operations.
“Glencore’s vertical integration really is unprecedented,” said Devlin Kuyek, a researcher with GRAIN, a non-profit international organisation working on food security.
“Glencore owns almost 300,000 hectares of farm land and it is one of the largest farm operators in the world. They are engaging in speculation on the grain trade and have immense market power,” he told Al Jazeera.
Global food prices have climbed recently, returning close to their 2008 peak, when bread riots swept parts of the Middle East, Africa and the Caribbean.
“A disturbing amount of price increases, I fear, is being driven by speculative activity,” Marcus Miller, a professor of international economics at the University of Warwick, told Al Jazeera. “Bets [on future price rises or declines] can become self-fulfilling if you are big enough to affect the market.”
“The reality is that the same speculators that caused the global economic meltdown through their illustrious trade in sub-prime mortgages, are betting on our food system now too.”
Soaring food prices threaten more unrest and must prompt a global rethink about agriculture and investment
The year started grimly with news of the food prices rising to the highest point since 1990, according to the Food and Agriculture Organisation. They have surpassed the 2008 prices that led to widespread rioting and unrest across the developing world; immediately, bloggers such as Duncan Green and Alex Evans were asking why there had been no riots. And just as they were posting, riots flared up in Algeria, with two killed and hundreds injured in the protests against soaring food prices. Across the border in Tunisia 14 were killed in clashes with the police. As the unrest spreads across northern Africa, Egypt is nervously trying to put measures in place to prevent any comparable violence, with extra supplies of meat being flown in from Kenya. An occupational hazard of blogging; no sooner have you posted, than somewhere in the world you have been outstripped by events.
California and Texas – America’s main food growing states – have experienced severe, ongoing drought. California is suffering through a 4th straight year of horrendous water shortages, which has impacted every single crop it produces. See California’s Vital Role in Food Production for an eye-opener of what this states brings to your table.
Parts of Texas are experiencing the worst drought ever and fears are surfacing that it may be here to stay. Extreme drought is impacting everything that Texas produces. Marketing economist Dr. Mark Welch expects drought to cut Texas’ corn crops by 45%, sorghum by 69%, and wheat 62%. Cotton fields are so dry they’re being abandoned. These aren’t the only foods in trouble. Vegetables, horticulture plants, peaches and their world famous pecans have also taken severe hits. April freezes wiped out some Texas grapes leaving wineries in tough shape.