Monday, July 16, 2007

The End of Cheap Food
I wanted to pass this along, as I feel we
must start tuning in on the long-term effects of our actions, and not postpone a change in our behavior by absent-mindedly putting up with what doesn't serve everyone. My friend John Petersen, president of The Arlington Institute — which looks at future trends — recently sent out a message saying that he had met with a colleague who has vast experience in the food business and who had been head of the New York Mercantile Exchange. The man proposed that the world was running out of food, that for the first time in decades there was no surplus food in the markets and that his business was searching the world for surplus commodities where in the past they had always operated off of U.S. excesses. His professional opinion was that prices of food would increase substantially (3 to 5 times) in coming years. Within days, John also received this article, "The End of Cheap Food," by Gwynne Dyer, a London-based independent journalist and Global Business Network member. I have taken the liberty of editing a bit and highlighting the important points:

"The era of cheap food is over. The price of corn has doubled in a year, and wheat futures are at their highest in a decade. The food price index in India has risen 11 percent in one year, and in Mexico there were riots after the price of corn flour (used in making tortillas) went up fourfold. Before the WWII, most families in developed countries spent a third or more of their income on food (as the poor majority in developing countries still do). But after the war a series of radical changes, from mechanization to the Green Revolution, raised agricultural productivity and caused a steep fall in the real price of food. For the global middle class, it was the Good Old Days, with food taking only a tenth of their income.

It will probably be back up to a quarter within a decade, and it may go much higher than that, because we are entering a period when three separate factors are converging to drive food prices up. The first is simply demand. Not only is the global population continuing to grow, but more people are starting to eat significant amounts of meat. Animals need a great deal of grain, which means shifting huge amounts of grain-growing land from human to animal consumption. The mania for "bio-fuels" is also shifting land out of food production. One-sixth of all the grain grown in the United States this year will be "industrial corn" destined to be converted into ethanol. The amount of US farmland devoted to bio-fuels grew by 48 percent in the last year alone, and hardly any new land was brought under the plough to replace the lost food production. The food market and the energy market are becoming closely linked, which is bad news for the poor. As economist Lester Brown of the Earth Policy Institute told the US Congress last month: 'The stage is now set for direct competition for grain between the 800 million people who own automobiles, and the world's two billion poorest people.'

Finally, global warming will hit crop yields, but only recently has anybody quantified how hard. The answer, published in "Environmental Research Letters" in March by Christopher Field of the Carnegie Institution in Stanford, California and David Lobell of Lawrence Livermore National Laboratory, is quite simple: for every 0.9F hotter, crop yields fall between 3-5 percent. So 3.6F, the low end of the range of predicted temperature rise in this century, means a 12-20 percent fall in global food production." Ms. Dyer concludes, "The price of food relative to average income is heading for levels that have not been seen since the early 19th century, and it will not come down again in our lifetimes."

(The graphic is from a 1909 postcard entitled "Good Corn Makes Good Hogs")