Fears of a new global food crisis

Martin Khor

27/08/2012

Opinión

^-A ⁺A

A new world food crisis is being predicted because weather conditions especially in the United States has damaged current food crops, especially corn and soya beans.

The world price index for food commodities jumped an alarming 6% in July (compared to June) while cereal prices jumped an average of 17%, according to the FAO.

Fears are increasing of a repeat later this year or in 2013 of the food price crisis of 2008 that led to riots and demonstrations in over 30 countries. Another concern is that the warnings by scientists that climate change can lead to a decline in food production are already becoming a reality.

Recent extreme weather events include the heat-wave, drought and fires in the US and Europe, and the floods in China, the Philippines and Pakistan, have been linked to climate change. Some of these events are the driving force behind the spike in prices of foods.

The price of corn in the US is expected to go up by up to half as the worst drought in 60 years has severely damaged crops in many parts of the country. The US Department of Agriculture lowered its estimates of this year’s corn output by 2.2 billion bushels to 10.8 billion bushels. It also estimated that the domestic corn price would be US$7.50 to $8.90 per bushel after the harvest. This compares with the June price of about $6.

Corn is used not only as food but also as the main part of animal feed and an ingredient of many foodstuffs. The prices of poultry, red meat, milk and many processed foods, are predicted to go up.

Another crop affected by the US drought is soya beans, and prices have already shot up.

The FAO reported its overall index of world food prices rose 6% in July as compared to June. This was mainly due to a 17% jump in overall cereal prices as well as a 12% jump in the sugar price. The corn price index rose by almost 23% in July, and wheat price quotations also surged by 19% and soya bean prices soared to record levels.

The FAO’s forecast of global rice production for 2012 has been lowered by 7.8 million tonnes, mainly because of the reduced rains in India.

The bleak or uncertain prospects for supplies and prices of some foods has revived the controversy of the increasing use of crops for biofuels. The new head of the FAO called on the US to change its policy by temporarily lifting its present mandate that 40% of its corn is used for making ethanol. This would allow more of the crop to be used for food and feed, said Jose Graziano da Silva.

Many organisations have been critical of the diversion of land to produce crops to be used for bio-fuels, diverting from the use of land for food. This conflict in alternative uses of land is bound to be more acute when food supplies are reduced while the demand for food increases.

The higher prices and uncertain supplies of imported foods will also put pressure on food-importing countries to grow more of their own food.

Many countries that were food self-sufficient or have even been net exporters had experienced an agricultural decline as their governments withdrew their support for farmers and the food sector as a condition for obtaining structural adjustment loans from the World Bank and IMF.

They also had to reduce their agricultural tariffs to very low levels, thus allowing a surge of cheap and often subsidised imports, which damaged local production.

The looming crisis in food prices and supplies is likely to prompt food dependent countries to once again reconsider their definition of food security and give higher priority to local production.

Source: South Bulletin 66 www.southcentre.org

https://www.alainet.org/en/articulo/160592