Could the global food crisis impact America?
By Saeed Shabazz
Updated Apr 30, 2008 - 1:24:00 PM
NEW YORK (FinalCall.com) - United Nations Secretary-General Ban Ki-Moon, in a recent meeting here with Bretton Woods Institution organizations, called for immediate and long-term measures to tackle a growing global food crisis.
“The rapidly escalating crisis of food availability has reached emergency proportions,” Secretary-General Ban said April 14. He was referring to food riots taking place in different parts of the world, from Italy to Yemen and Mexico to the Philippines. Tanks were deployed in parts of Yemen April 4 after five days of protests by 1,000 people, mostly youth, angry about the rising price of food. Wheat prices have doubled since February, while rice and vegetable oil jumped 20 percent.
A few days before in Cote d’Ivoire, some 1,500 protesters chanting “we are hungry” clashed with police for several hours. At least a dozen people were wounded. Protestors were demanding that the government curb food prices. Egypt saw food riots.
Food riots in Haiti resulted in at least seven deaths in Port-Au-Prince and the resignation of the country’s prime minister. Anger over rising food costs in the poor nation, a nation where millions live on less than $2 a day, resulted in protests and rioting. Peaceful protests against the rising cost of fuel and staples began in early April.
The United Nations says it will distribute 8,000 tons of food and other aid in the next two months. Venezuelan President Hugo Chavez has pledged more than 350 tons of food. And U.S. President George W. Bush has ordered the release of $200 million in emergency aid to nations hit hardest by surging food prices — though it was not immediately clear how much Haiti would get.
Bio-fuels impact food production
High food prices are threatening recent gains in overcoming poverty and malnutrition, and are likely to persist over the medium term, according to a World Bank Group policy note released April 9.
“Poor people are suffering daily from the impact of high food prices, especially in urban areas and in low income countries,” said World Bank Group President Robert B. Zoellick. “In some countries, hard-won gains in overcoming poverty may now be reversed. As an international community we must rally not only to offer immediate support, but to help countries identify actions and policies to reduce the impact on the world’s most vulnerable.”
According to “Rising Food Prices: Policy Options and World Bank Response,” increases in global wheat prices reached 181 percent over the 36 months leading up to February 2008, and overall global food prices increased by 83 percent. Food crop prices are expected to remain high in 2008 and 2009 and then begin to decline, but they are likely to remain well above the 2004 levels through 2015 for most food crops.
As the policy note points out, while households that are net producers may benefit from higher prices, price increases for staple foods will increase poverty in several countries. For example, in the case of Yemen, estimates show that the doubling of wheat prices over the last year could reverse all gains in poverty reduction achieved between 1998 and 2005, said the World Bank.
“The poor are not just facing higher food prices but also higher energy costs, which is a worrying combination,” said Danny Leipziger, World Bank Group vice president for poverty reduction and economic management. “Policy responses to protect the poor from food price rises are urgent, and need to be designed in a way that is conducive to stimulating greater agricultural production in the long run.”
Increased bio-fuel production has contributed to the rise in food prices, according to the report. Concerns over oil prices, energy security and climate change have prompted governments to increase bio-fuel production and use leading to greater demand for raw materials including: wheat, soy, maize and palm oil, it noted. Food price hikes are also linked to higher energy and fertilizer prices, a weak dollar and export bans, the report said.
The report notes that many governments are already taking action. Some are expanding targeted safety nets, such as cash transfer programs to vulnerable groups, food-for-work programs, or emergency food aid distribution. Several countries have lowered tariffs and other taxes on key staples, in order to provide some relief to consumers. In contrast, other countries have put in place export bans, which are detrimental to food importers and reduce incentives for production, the report concluded.
In early March, the United Nations Food and Agriculture Organization reported that rice prices had hit a 20-year high, sparking concerns in Asia and countries where rice is a staple in diets. The price for Thai rice went above $500 a ton weeks ago, passing a price mark not seen since 1989, the agency noted.
Globally, food prices have risen 40 percent since mid-2007 and predictions of food riots, violence and chaos in least 40 nations have been made.
“People are dying because of their reaction to the situation,” said Jacques Diouf, director-general of the UN Food and Agriculture Organization, during an April 13 meeting in the World Bank’s Washington, D.C. headquarters. The UN agency warned the food crisis was not going to end quickly.
The UN World Food Program said high fuel prices coupled with an escalated demand for food in wealthier Asian and Latin American markets and increased demand for bio-fuel are behind rising food prices around the world. Corn, wheat, soy beans and sugar cane are used to create the cleaner-burning fuel, instead of providing food.
“Food prices have soared because agricultural production has not kept up with the rising demand for bio-fuel production,” said Katrina Wahlberg, social and economic policy programmer for the New York-based Global Policy Forum and author of the policy brief “Are We Approaching a Global Food Crisis?”
“Food riots are becoming more common, as more land and crops are being divided from the food chain by the world bio-fuel industry,” she told The Final Call.
U.S. hit by rising food prices
While international leaders gathered to find solutions to the world food crisis, analysts in the United States braced for the April 16 Consumer Price Index Report. Analysts say the U.S. is wrestling with the worst food inflation in 17 years because of sharply higher costs for wheat, corn, soybeans and milk as well as higher energy and transportation costs.
Deborah Khaliq of Atlanta, doesn’t understand all of the technical talk. She does know the price of everything she buys at the grocery store is going up. “Extremely high, and I’m telling you it is going up higher before it goes lower again,” Ms. Khaliq said.
“A half-dozen eggs; a half a stick of butter, a loaf of bread and a half-gallon of milk costs $25,” she said.
Ms. Khaliq noted that living in Atlanta, you can hear truckers complain about the rising cost of fuel. “We know firsthand that the droughts and the fuel costs are why our grocery bills are so high,” Ms. Khaliq said.
USDA says American households still spend a smaller portion of their incomes for food than in other nations such as Poland where 22 percent of income goes to food, or 40 percent of income spent on food in Egypt and Vietnam.
Still the cost of eggs alone jumped 25 percent, milk 13 percent and chicken nearly 7 percent in February, according to USDA.
Other products showing steep increases: Bananas in 1991 cost .49 cents a pound, today the cost is .99 cents a pound, coffee was $2.93 per pound in 1991, now it’s $6.51 per pound; apples cost $1.69 per pound in 2008, up from .59 a pound in 1991; potatoes in 1991 were .86 per pound and hit $1.29 a pound in 2008, said USDA.
The Agriculture Department said there is reason for concern about the U.S. food supply. In January, USDA reported that the “hard wheat crop” was much smaller than anticipated and U.S. stockpiles hit a 60-year low. The result has been an increase in prices for other commodities, which have tripled over the last two years.
Officials at the commodity trading house, Bower Trading say the USDA report sets the stage for a wild ride in the marketplace for the rest of 2008. “Our stockpiles are down so low here in the United States, we really don’t have much room for error,” a trading official said.
“It’s hard for most Americans to even conceive of the idea that food could become scarce in this country,” said Raj Patel, a writer, activist and former policy analyst with the advocacy group Food First and analyst for the World Bank, World Trade Organization and the United Nations. “Few of us are paying attention to the close relationship between bio-fuel, grain crops and price inflation,” Mr. Patel told Democracy Now’s Amy Goodman. He was appearing on her Pacifica Radio show, to push his new book, “Stuffed & Starved: The Hidden Battle for the World Food System.” The book is due out April 25. Competition between corn and other crops for planting acres has driven up the price of food in the U.S., as the government mandates more acreage for corn, wheat and soybeans, ingredients needed for ethanol production.
Other things that could threaten the U.S. food supply include a highly concentrated meat processing industry that generated millions of pounds of recalled meat and the outbreaks of e-coli and other foodborne pathogens, said Mr. Patel. “Exports of corn have set record highs as the weak dollar has made it cheaper overseas. That’s lowered the supply of corn available for sale in the U.S.,” he said.
Critics argue only one percent of the U.S. population grows all of America’s food and complain that the country no longer has a buildup of stored grain and no contingency plan in case of a serious food disaster.
A Food Crisis Management Conference is scheduled for Sydney, Australia in June. Prof. Robert Chandler, chairman of the communications division at Pepperdine University will be among participants. In a Final Call interview, Dr. Chandler was asked if the conference had been called because of concern food riots were possible inside U.S. borders.
He did not answer the question directly, but said experts were headed to Australia to discuss research by agencies about crisis communication. “One of our topics will be, how do you plan to communicate a variety of issues? For instance, how did we communicate the problem with the spinach some years ago and the impact on the food supply from famine or crop blight?” Dr. Chandler said.
“We are studying ways to communicate to people in the U.S. that they have to change their behavior. Americans are too complacent, believing there never would be a food shortage, which could be caused by a drought,” he said. “From my academic position, I can say that people are having a hard time finding food in America, so we have to change our thinking.”