A New Food Crisis Could Affect Us

There is a new food crisis on our horizon. The price of groceries has increased considerably. This had led to all sorts of problems in the Middle East. Bob Zoellick, who serves as President of the World Bank, is warning people to prepare for an incoming food crisis brought on by extremely high food prices around the globe. The food crisis began in 2007 and was the spark that caused riots in nearly 20 countries. In 2008, food prices were at their highest since 1845, when adjusted for inflation. This information comes from the Economist. That crisis managed to resolve itself, but a new crisis is on its way.

The record for food prices actually broke again recently, as tracking from the UN’s Food and Agriculture Organisation showed. If you look at the prices on corn, soybeans and wheat, you see increases of almost 50 and 30%. Those food price increases have forced millions of people into poverty in a short period of time. Even the rich are starting to feel the impact. Joe Hockey of Australia’s Liberal Party has been warning his fellow citizens that the cost of living is going to increase shortly. Many countries like Ukraine and Russia are actually making it illegal to send food out of the country to sell to ensure that they have enough food for their own people.

This is in response to increasing food prices globally. This action has prompted Caroline Spelman, the environmental minster for Britain, to speak out against export policies of this nature, saying that it should be against the law for any countries to ban exports. In addition, the chief scientific officer for Britain, Sir John Beddington, said that it is now obvious that something needs to be done about the global food system problem. Australia and 19 other countries agreed with his statement, but the G20 meeting in Paris stopped short of anyone actually making any changes to the global food systems. Back in 1798, Thomas Malthus cautioned about the dangers of ever-expanding populations.

The population in his time was only 800 million, and today it’s closer to seven billion. The population is growing at a rate that global food supplies simply cannot keep up with. Are we about to see Malthus proved right after all these years? Perhaps not. The problem with today’s food supplies is that it isn’t being distributed properly. Bhere is actually enough food being produced right now to feed 12 billion people, but prices and distribution don’t allow for that to happen. Malthus’ predictions never came true because of smart production processes and new developments like fertiliser and plant genetics. Countries around the world have stepped up since his predictions to improve the way they produce and transport food. India experienced a Green Revolution around the mid-1900s. They created rice varieties that produced tons of grains, cutting costs and increasing overall rice production. So, if the available food is not the problem, then what is making the prices go so high? Why are about 16% of all people in the world going to bed hungry each day? The problems are both old and new. A lot of the richer counters have protectionist policies that keep food exports out and help to support farmers that aren’t producing very much.

This happens all throughout Europe, as well as the US and Japan. Many countries actually outlaw those kinds of policies, and the rich countries that could be producing a lot of food for everyone very cheaply are making it hard to do so. The World Trade Organization is not doing anything to stop these kinds of practices, unfortunately. Poverty is another factor here, and about a billion people survive on $1 a day. One of the newer problems is called financialisaton. This simply means that food is being treated like a tradeable commodity among many investors. That creates speculation where there should be far more reasonable prices. In 2008, food markets had been invested in to the tune of $137 billion. According to the UN’s Commission on Trade and Development, prices for food trading were very rarely determined by supply and demand and instead worked on a speculative system. Food staples have been compared by experts that contrast how traded staples measured up against untraded staples. Foods that were not part of future trading were shown to increase at a rate that was a fraction of what traded staples did. Biofuels create another problem. About 40% of the US fuel crop goes to be used as car fuel.

That’s enough food to take care of 350 million people. One problem that’s not so easy to solve is extreme weather. This could just be cyclical and pass in time. Or it could be the result of permanent climate change that will only get worse in time. Most of the problems we have listed do have solutions, but that doesn’t mean they are easy to change. The World Trade Organization has farm protectionism on its menu. If the intermittent talks come to some real conclusion, there could be some major changes on the way for global food market. Many rich countries have pledged to assist poorer countries in dealing with food shortages, and if they meet those pledges, then that could help with the problem of starvation for a while.

The amount of food produced by poor countries could be increased. Food speculation could be stopped or changed if financialization were ever addressed. Some of the G20’s leaders have said that if this problem is not dealt with using regulations, then we will all suffer under a jungle law type of system. The biofuels industry could be completely dismantled if many countries were actually concerned about the kind of impact they are having on food supplies. A lot of the problems we have listed here are manmade problems.

That means that they could have manmade solutions, but that kind of change ultimately rests on the shoulders of politicians.