2 June 2008
By Gwynne Dyer
When they started planning the food summit in Rome a year ago, it was going to be about the impact of climate change and bio-fuels on the world’s food supply. It turned out to be mainly about the runaway price of food, which is having a big impact on the world’s poor — and that’s a pity, because there’s not a lot that an international conference can do about a short-term problem like that.
The conference, sponsored by the UN’s Food and Agriculture Organisation, attracted forty heads of state and government — far more than it would have a year ago — because they have to be seen to be doing something about prices. But the immediate need to find the money to feed the very poor, who simply cannot buy food at current prices, has been met by a donation of $500 million from Saudi Arabia that covers two-thirds of the World Food Programme’s $755 million emergency appeal.
There’s not much more to be done about the short-term problem, because the huge rise in the prices of basic foods over the past year — rice tripled in price and wheat more than doubled — has been driven mainly by the market over-reacting to relatively minor mismatches of supply and demand. A five percent shortfall in world wheat supply, caused partly by the Australian drought, led to a 130 percent rise in price, but the price is already coming down again on the expectation of a much bigger crop this year.
In rice, there was no shortfall at all, but supply was so tight that prices started going up, whereupon some of the biggest producers like India, Pakistan and Vietnam imposed export bans to protect their domestic markets from shortages. Since only about 7 percent of the world’s rice is traded internationally, that immediately led to panic buying by big importers like the Philippines and Indonesia, and in mid-May the price hit $1,000 a tonne. (It was $327 a year ago.)
Maize (corn, mealies) was a different case, with a huge and ever-growing share of the crop in the United States being diverted into the black hole of bio-fuel, and absolute scarcities in some other countries as a result. Maybe the conference could do something about that, although since the Bush administration (which created this folly with its subsidies) is still in office in the United States, it seems unlikely.
The current spike in food prices will ease, but the long-term problem is real, because the 200-year trend of falling food prices is probably at an end. The cost of food as a share of total income has been falling since the settlement of the US Midwest, the Argentine pampas and Australia brought huge new areas of land into cultivation during 19th century. The human population has grown sixfold since 1800, but until recently food production has grown even faster most of the time, so prices fell.
That era is now over. More land could be brought under the plough, especially in Africa, but it would barely balance the amount that is going out of production worldwide because of urbanisation and salination.
The huge rise in crop yields of the latter 20th century cannot be repeated, because putting even more fertiliser on the land will not raise yields further in most places, and besides water availability is now a huge constraint. Indeed, much of the land now under irrigation will go back to dryland farming when the fossil aquifers that provide the water are pumped dry, mostly in the next fifty years.
And all this before we even get to the problem the FAO conference was actually supposed to deal with: climate change. The first and worst impact of global warming will be to reduce the rainfall over some of the world’s main crop-growing areas, so the future may be one of growing population (9 billion by 2050, up from 6.5 billion now?) and declining global food production.
Moreover, demand is growing even faster than population because rising prosperity, in Asian countries in particular, is leading to huge rises in meat consumption (up about 150 percent in China since the 1980s). Turning grain into meat involves an input-to-output ratio of between three-to-one and eight-to-one, depending on what kind of meat is being produced, so huge amounts of grain production are being withdrawn from human consumption as meat production rises.
The right priorities, in this situation, are to work on banning the most harmful forms of bio-fuel in the medium term — “diverting around 100 million tonnes of cereals to bio-fuel has had an impact on food prices,” as FAO head Jacques Diouf tactfully put it — and to concentrate on measures that help agriculture to adapt to climate change for the longer term. (Plus, of course, measures to mitigate how much climate change we actually cause with our greenhouse gas emissions.)
The current food price crisis, though mainly a market phenomenon, has pushed all that aside. All we are going to see for a while from the politicians is short-term fire-fighting in an area where there is actually little that they can usefully do. A pity, though not exactly a surprise.
To shorten to 725 words, omit paragraphs 4 and 10. (“In rice…ago”; and “Moreover…rises”)
The Rome summit runs from 4-6 June, but this article can be used after its end without modification unless you receive an update from me.