Monday, March 31, 2008

Calling Malthus


Plundered by severe weather in producing countries and by a boom in demand from fast-developing nations, the world's wheat stocks are at 30-year lows. Grain prices have been on the rise for five years, ending decades of cheap food.

Drought, a declining dollar, a shift of investment money into commodities and use of farm land to grow fuel have all contributed to food woes. But population growth and the growing wealth of China and other emerging countries are likely to be more enduring factors.

World population is set to hit 9 billion by 2050, and most of the extra 2.5 billion people will live in the developing world. It is in these countries that the population is demanding dairy and meat, which require more land to produce.

"This is an additional setback for the world economy, at a time when we are already going through major turbulence. But the biggest drama is the impact of higher food prices on the poor," Angel Gurria, head of the Organization for Economic Cooperation and Development, or OECD, told Reuters.

In Gurria's native Mexico, tens of thousands took to the streets last year over the cost of tortillas, a national staple whose price rocketed in tandem with the price of corn (maize).

Global food prices, based on United Nations records, rose 35 percent in the year to the end of January, markedly accelerating an upturn that began, gently at first, in 2002. Since then, prices have risen 65 percent.


This is where neoliberal economics meet reality, especially in the West. Societies historically stored a surplus of the harvest for lean years. There was no guarantee of bountiful crops from year to year, and access to distant food sources was limited. Food production and consumption were intensely localised. In today's globalised world, food production and consumption is highly decentralised with wealthy countries absorbing much of the global supply. While on the surface this may look a like a resilient system as declines in one region's production (say Aussie wheat) mean the impacts should be spread between others, it falls apart when the whole system is stressed and there's limited alternatives. Further, globalised markets treat food as just another commodity like plastic toys, and not as a public good like defence. What this means is that food sourcing and pricing is left to market mechanisms and the system does not tolerate surpluses. Efficient, just-in-time delivery is the name of the game, designed to keep grain and food profitable for pesticide companies and farming corporations. You don't see it, but your city's supermarkets would empty in a matter of days should there be a supply interruption. If you think the Canadian government maintains a strategic food reserve, to release to the market to keep prices affordable, as the US does with oil, dream on.

There is a slow-brewing storm here, especially if the worst predictions of the subprime crisis pan out. Poor countries and poor people have long understood the problem of food-scarcity and that is why places like Vietnam and China are beginning to take counter-measures. We in the rich states, do not.

Periods of uncertainty are also fertile ground for people with penchant for consolidating power.

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