By Santhosh Shyamsundar
The future is literally in our hands to mould as we like. But we cannot wait until tomorrow. Tomorrow is now. – Eleanor Roosevelt.
The world has been slow to wake up and smell the coffee. Global food grain stocks have now touched a 25-year low. Rice, the staple diet of many third world countries, has seen its price double in the last two months. The price of wheat has jumped by a whopping 120%, vegetables, fruits, dairy products, you name it – food prices have touched the sky.
Government officials, bankers, economists, market analysts, social scientists, are all coming up with various theories. Somehow the language and slant of the opinions that has appeared in mainstream media seems to appropriate the blame on the rising population, eating choices of the burgeoning middle class in China and India, and on farmers switching crops from food to biofuel.
It is not a surprise any more that these modern day gurus can’t see beyond their own conventional wisdom. The high oil price, weakening US dollar and the rampant inflation driven by market economics could all be possible factors. Big global institutions like World Bank, IMF, WTO, have all more or less given up on finding an immediate solution for the food crisis. Even the first world and third world governments are showing a distinct indifference towards the food crisis – forcing us to consider whether we are on a tailspin towards total anarchy in the third world. When bureaucrats start using the market expressions of ‘supply and demand’ – it means they are clueless.
Four people were killed in food riots in Haiti; violent protests have been reported from Indonesia, Pakistan, Uzbekistan, to Bolivia. The World Food Programme has hit a road block. World Bank estimates more than 100 million people live under the real threat of starvation. For people in parts of Africa already suffering through poverty and famine, the current food disaster is a death sentence.
The war in Iraq, which has already cost the American taxpayers well over USD500 billion, is one of the prime reasons for the rise in oil price. When the US and UK were explaining about the WMDs in Iraq, the world oil price was at USD18 a barrel. As of now, crude price is about to break the USD120 barrier for a barrel, and no WMDs found. Has the demand for oil grown almost six times in six years? Or has the supply fallen to such small quantities? The answer to both questions is: NO.
The rising price of rice in the third world cannot be attributed to biofuel crops in the western hemisphere. The biofuel industry is an easy target, given the history of food vs. fuel debate. The world population did not double in the last 12 months, nor has the eating habit of people in China and India undergone a major change – in fact, in recent months, thanks to the Avian flu, consumption of poultry has gone down. What has been conveniently ignored by the market pundits is that dreadful thing called the Credit Crunch.
The truth is painful: the financial derivatives market has collapsed; trillions of dollars’ worth of equities and mortgage bonds are now being pumped into commodity trading, including rice and wheat. The speculators are betting on the price to go up to make a killing. The ongoing food price hike is a direct result of the speculation in commodity futures. It’s a big Las Vegas out there, literally gambling with lives of more than a billion people who live on an income of one dollar a day. Those who earn less than a dollar a day are living on the edge – on the periphery of our society – ready to disappear from our conscience. The fund managers who hedge their bets on food, energy, and other essential supplies – have helped manufacture a food bubble.
World Bank president, Robert Zoellick confirms, “One needs to recognise that energy and food are now part of commodity prices, so people will shift to commodity price as an asset class.” As was the case with the boom in the US real estate sector, inflation tends to feed itself – commodity price is no exception. As the food price hits new high, profit gets bigger and bigger.
It has been argued that the continued fall of the US dollar is due to the low interest rate policy of the Federal Reserve. A few weeks back, with the inflation still soaring, interest rates were again cut. It is common sense economics – when interest rates are below that of inflation, investors will seek new areas where their funds can get higher returns.
The financial market has tasted the loot – the food bubble provides them a great deal of windfall. Hedge funds, sovereign funds, and commodity futures trading will try their best to keep the bubble growing. As the bubble grows more and more people will find it difficult to have access to food – causing widespread famine, social unrests and deaths.
In such a scenario, how long can governments, farmers, and consumers say no to genetically modified crops? With the enormous pressure to find food for the hungry, third world countries will have to open their agricultural farms to the likes of Monsanto, Cargill, and ADM. Already there are reports that the resistance to GM crops is wavering in Japan and Korea!
Steve Mercer, a spokesman for U.S. Wheat Associates, has been quoted in the press: “I think it’s pretty clear that price and supply concerns have people thinking a little bit differently today.” Wheat Associates, which once cautioned farmers about growing biotech wheat, is working to get seed companies to resume development of genetically modified wheat. Meanwhile, in Europe, the chairman of the agriculture committee in the European Parliament, Neil Parish, said that as prices rise, Europeans “may be more realistic” about the issue of genetically modified crops, “their hearts may be on the left, but their pockets are on the right.”
So, here is the bad news: genetically modified crops and food are about to make a strong comeback. This, by all means, is real bad news to farmers in the third world. If we really need to fight back the soaring price, increase in agricultural – especially food grain – production is the only answer. When there is abundant supply in the real market where food grains gets bought and sold in physical terms, the speculators from the financial markets will go elsewhere looking for their new bounty.
All it takes is one good harvest. Farmers in the third world have to prove that they are the miracle makers; windfall from a bullish stock market is never a miracle. World Bank president, Zoellick, says, “We must make agriculture a priority.” It is bad news if he meant corporate agriculture; we are going to see more riots and unrest similar to what the entry of Monsanto to India created.
It is true that our civilisation is now being threatened by global warming, high energy price, corporate and political corruption, the food bubble – which all leads us to the Malthusian Dilemma. A Machiavellian approach that ends justify means is not going to save us from the Malthusian threat. Genetically modified crop business, controlled by a corporate culture is not the solution to the current food crisis.
The food bubble is destined to have the same fate as the dotcom and real estate bubbles. All bubbles have to burst one day – what we have come to know as ‘market correction’. When the food bubble bursts, billions of dollars are going to be wiped out.
The moral compass of our vast human society is warped – so warped that we have lost our sense of direction. On one hand we have a severe food crisis threatening the lives of many million people; on the other hand we have people converting this extremely sad situation into a food bubble – through speculation.
If we aren’t already worried, we better start worrying now. If we don’t fight this food bubble, we will have to pay dearly through famine, poverty and riots of epic proportions. The time is now, now, and now.
The Cattle Conundrum
1000-2000 litres of
• water is needed to produce 1kg of wheat
• 10000-13000 litres of water is needed to produce 1kg of beef
More than two-thirds of the corn and soybeans grown in the US are used to feed animals, primarily beef cattle, which are the least efficient at converting animal feed into human food. According to David Pimentel, professor of entomology in Cornell University’s College of Agriculture and Life Sciences, based on US statistics, “Chicken meat production consumes energy in a 4:1 ratio to protein output; beef cattle production requires an energy input to protein output ratio of 54:1. Lamb meat production is nearly as inefficient at 50:1. Other ratios range from 13:1 for turkey meat, 14:1 for milk protein, and 26:1 for eggs.” Cattle alone produce 3.7 billion kg of manure a day, which works out to 1.34 trillion kg a year. The United States Department of Agriculture (USDA) reports that animals in the U.S. meat industry produce 61 million tonnes of waste each year, which is 130 times the volume of human waste produced, or five tonnes for every U.S. citizen. In addition to its impact on climate, hog, chicken and cow waste has polluted some 35,000 miles of rivers in 22 states and contaminated groundwater in 17 states, says the US Environmental Protection Agency.
