Biofuel Mania
Ends Days Of Cheap Food
By Gwynne Dyer
07/16/07 "NZHerald"
--The era of cheap food is over. The price of maize has
doubled in a year, and wheat futures are at their highest in
a decade. The food price index in India has risen 11 per
cent in one year, and in Mexico in January there were riots
after the price of corn flour - used in making the staple
food of the poor, tortillas - went up fourfold.
The era of cheap food is over. The price of maize has
doubled in a year, and wheat futures are at their highest in
a decade. The food price index in India has risen 11 per
cent in one year, and in Mexico in January there were riots
after the price of corn flour - used in making the staple
food of the poor, tortillas - went up fourfold.
Even in the developed countries food prices are going up,
and they are not going to come down again. Cheap food lasted
for only 50 years.
Before World War II, 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 mechanisation to the
green revolution, raised agricultural productivity hugely
and caused a long, 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 - about an extra Turkey or
Vietnam every year - but as Asian economies race ahead, more
people in those populous countries are starting to eat more
meat.
Early this month, in its annual assessment of farming
trends, the United Nations predicted that by 2016, less than
10 years from now, people in the developing countries will
be eating 30 per cent more beef, 50 per cent more pig meat
and 25 per cent more poultry.
The animals will need a great deal of grain, and meeting
that demand will require shifting huge amounts of
grain-growing land from human to animal consumption - so the
price of grain and of meat will both go up.
The global poor don't care about the price of meat because
they can't afford it even now. But if the price of grain
goes up, some of them will starve. And maybe they won't have
to wait until 2016, because the mania for bio-fuels is
shifting huge amounts of land out of food production.
A sixth of all the grain grown in the United States this
year will be "industrial corn" destined to be converted into
ethanol and burned in cars, and Europe, Brazil and China are
all heading in the same direction.
The attraction of biofuels for politicians is obvious: they
can claim that they are doing something useful to combat
emissions and global warming - although the claims are
deeply suspect - without demanding any sacrifices from
business or the voters.
The amount of United States farmland devoted to biofuels
grew by 48 per cent in the past year alone, and hardly any
new land was brought under the plough to replace the lost
food production.
In other big biofuel countries, such as China and Brazil,
it's the same straight switch from food to fuel. In fact,
the food market and the energy market are becoming closely
linked, which is bad news for the poor.
As oil prices rise - and the rapid economic growth in Asia
guarantees that they will - they pull up the price of
biofuels as well, and it gets even more attractive for
farmers to switch from food to fuel.
Nor will politics save the day. As economist Lester Brown of
the Earth Policy Institute says: "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." Guess who wins.
Soaring Asian demand and biofuels mean expensive food now
and in the near future, but then it gets worse.
Global warming hits 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 0.5C hotter, crop yields fall
between 3 and 5 per cent.
So 2C hotter, which is the lower end of the range of
predicted temperature rise this century, means a 12 to 20
per cent fall in global food production.
This is science, so that answer could be wrong - but it
could be wrong by being too conservative. Last year in New
Delhi, I interviewed the director of a think tank who had
just completed a contract to estimate the impact on Indian
food production of a rise of just 2C in global temperature.
The answer, at least for India, was 25 per cent. That would
mean mass starvation, for if India were in that situation
then every other major food-producing country would be too,
and there would be no imports available at any price.
In the early stages of this process, higher food prices will
help millions of farmers who have been scraping along on
very poor returns for their effort because political power
lies in the cities.
But later it gets uglier. 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.
* Gwynne Dyer's book The Mess They Made: The Middle East is
published in New Zealand this week.
Copyright ©2007, APN Holdings NZ Limited
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