Reprinted with permission by Peter Montague
Global food prices have risen 83% in the last 3 years. This spring, as prices rose steeply, food riots broke out in Haiti, Egypt, Cameroon, Ivory Coast, Mauritania, Ethiopia, Uzbekistan, Yemen, the Philippines, Thailand, Indonesia and Italy, among other places. Because U.S. energy policy subsidizes farmers to grow corn to make ethanol (alcohol that can supplement gasoline), the U.S. is being accused of feeding its sport utility vehicles (SUVs) instead of feeding people. There is some truth to this charge, but it’s more complicated than that.
The global food crisis has been created by a combination of things (MW: also see Foto Galery by Time Magazine from which the foto above is reproduced), among them:
** Climate changes, perhaps related to global warming, such as the recent large tornado in Myanmar, the epic drought going on now in Australia, floods last year in North Korea, and years of low rainfall in the western U.S., among other costly weather changes. Australia used to export enough rice to feed 20 million people, but six years of drought have cut their rice yield by 98%. Australia used to be the world’s second-largest exporter of wheat, but the drought has changed that, too. “A big reason for higher wheat prices… is the multi-year drought in Australia, something scientists say may become persistent because of global warming,” according to the Washington Post.
** U.S. farmers have been growing less wheat since the mid-1990s in favor of more-reliable soybeans and better-subsidized corn. “Wheat’s biggest problem is its susceptibility to disease, which has turned many farmers against it,” explains Dan Morgan in the Washington Post.
** Rising oil prices, caused partly by rising demand for oil in China and India (and in U.S. SUVs), and partly by diminished supply caused by the Iraq war. Because of rising oil prices, the cost of transporting food has doubled in the last year alone. Furthermore, the price of fertilizer is tightly linked to the price of oil and has been rising for about five years. Use of fertilizer in the third world increased 56% between 1996 and 2008.
Increasingly it is looking as though the “peak oil” moment has arrived – the moment when half the Earth’s available oil has been extracted. After that “peak oil” moment, oil prices are expected to zig-zag upward more or less steadily.
** The demand for meat is growing in the third world as our own meat-heavy diet is increasingly adopted world-wide. It takes about 700 calories of animal feed to produce a 100-calorie piece of red meat, so a shift to a meat-rich diet requires large increases in grains, which in turn requires greater use of expensive fertilizers, which in turn raises the demand for oil.
** As the soaring price of oil has increased the cost of tansporting food, economies as diverse as Argentina, Brazil, Egypt, India, Vietnam and the Ukraine (among others) have been feeling inflationary pressures, and have restricted food exports in an attempt to hold down domestic food prices. This has reduced food available on the global market.
** So-called “free trade” policies have caused some previously self-sufficient nations to become food importers. This occurs in several ways. First, the World Bank and the International Monetary Fund require loan recipients to make “structural adjustments” in the way they do business. For example, they must open their grain markets to competition from U.S. farmers, who are subsidized by Uncle Sam to the tune of $300 billion per year). Competition from cheap, subsidized U.S. crops tends to drive small local farmers out of business and off their land. Second, “structural adjustment” often demands a reduction of social safety nets, so when a food crisis hits the remaining infrastructure can’t manage. Third, stockpiling food is officially discouraged (a mountain of available food interferes with the “free market”). Thus an important cushion against hunger has been eliminated. A classic case is Haiti, which used to be self-sufficient for its main staple crop — rice — but now is a rice importer, increasingly subject to the whims of commodity speculators and agribusiness corporations.
** Commodity speculators. Food has become “the new gold.” “Investors fleeing Wall Street’s mortgage-related strife plowed hundreds of millions of dollars into grain futures, driving prices up even more,” the Washington Post reported April 27. Rising food prices have attracted hedge fund speculators, who have helped create a “bubble” in food prices. “As financial markets have tumbled, food prices have soared,” acknowledges Robert Zoellick, president of the World Bank.
** The U.S. Department of Agriculture’s land conservation program pays farmers to not grow crops on some of their land. About 8% of U.S. cropland — some 37 million acres, larger than the state of New York – lies fallow as a result of this program. This is good for ducks and pheasant and it reduces soil srosion, but it also reduces available crops, holding crop prices higher than they might otherwise be (which is one purpose of the program).
** And lastly, in the U.S. at least, we spend huge amounts of money feeding our pets. I know I am touching the third rail here, but someone has got to mention this 900-pound gorilla in the room.
The American Pet Products Manufacturers Association expects Americans to spend about $43.4 billion on their pets in 2008, up from $41.2 billion in 2007. About $16.9 billion of that will be spent on pet food.
Meanwhile President Bush has proposed that Congress should dedicate $770 million for food aid to a hungry world. “The American people are generous people, and they’re compassionate people,” Mr. Bush said, announcing his new food aid plan. “We believe in a timeless truth: to whom much is given, much is expected.”
The President’s gift of $770 million to the world’s 100 million hungriest people represents 4.6% of what we spend each year feeding Fido and Kitty. (And, by the way, we are spending $770 million every 42 hours in Iraq.)
But maybe our pet food priorities are not as skewed as they may first appear. Take a look at this ad, which I noticed recently in a local Supermarket.
Ad for Purina beef stew dog food — for dogs or humans?
If it weren’t for the little dog in the picture, and if it weren’t a Purina ad, you might think this was an ad for human food. Just look at that lucious heaping plate — a white dinner plate — of red meat and vegetables. Who would turn that down?
Personally, I feel certain that this Purina ad is aiming to sell dog food not only to Fido’s master, but also to those impoverished U.S. citizens who must seek food aid each year to alleviate their hunger – 25 million people in 2006 and rising. So maybe we’re not spending $16.9 billion merely to feed our pets. Maybe we’re actually spending part of $16.9 billion providing dog food to some of the tens of millions of U.S. citizens who otherwise could not afford a meal. Perhaps this is a thinly-veiled free-market answer to hunger in America.
============== The U.S. is currently putting 20 to 25% of its corn acreage into ethanol production, producing roughly 8 billion gallons of ethanol in 2007, but the entire U.S. ethanol industry is still small, valued at only $40 billion total — equivalent to one years’s net profits of a large oil company like Exxon, which reported netting $40.6
billion in 2007. The United Nations Food and Agriculture Organization estimates that ethanol from corn (in the U.S. and Europe) is responsible for 10 to 15% of the rise in global commodity prices. The International Food Policy Research Institute in Washington, D.C. says 25% to 33% of the rise in global food prices can be explained by ethanol production from corn.
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