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Food Prices Skyrocket Amidst Growing Shortages

By Matthew Little
Epoch Times Winnipeg Staff
Apr 11, 2008

A biofuel pump at a gas station in Germany. The growing use of biofuels is one of a number of factors blamed for causing food shortages and driving up food prices. (Sean Gallup/Getty Images)


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With the first symptoms of a global food shortage being felt, some experts are sounding the alarm, saying changes need to be made now if the world is to avoid potential disaster.

And the day-to-day choices of Canadians and other people in developed countries could play a deciding role.

The growing food crisis is not hard to spot. A quick look at West Africa shows skyrocketing prices for corn and soy—despite a good harvest last year. Around the world the price of corn has doubled since 2007.

In wealthier countries the problem is less severe. However, Canada has seen a jump in bread prices, with flour almost doubling in value from a summer ago. The price of rice also doubled in the last year in Canada, and pasta jumped 25 per cent.

In Italy rising pasta prices brought angry Italians to the streets to demonstrate. Nearly 70,000 people took to the streets in Mexico to protest the price of tortillas which sky rocketed in the month of January.

In some poorer countries, food shortages and rising prices have led to riots.

The United Nations World Food Program recently called on donor countries to increase their contributions, warning that a global surge in food prices could lead to unrest.

Food riots in Haiti killed four people in early April, said the U.N. In recent weeks unrest was also seen in Burkina Faso, Cameroon, Egypt, Indonesia, Cote d'Ivoire, Mauritania, Mozambique and Senegal.

The world's supply of grain has now fallen to 40-year lows. World grain stocks are down to an estimated 53 days, meaning if grain production stopped today, there wouldn't be enough to last even two months.

"In North America the first thing that is being felt is [higher] food prices," said Laura Carlsen, currently based in Mexico City for the Americas Program Center for International Policy.

Carlsen has been researching the tortilla crisis that gripped Mexico City after the cost of the staple food went up 50 per cent in the month of January.

"That's a really important thing for Mexico City because it's the foundation of the diet for so many people," she said.

Her research confirms what others have also pointed to as one of the principle causes of rising food prices: hoarding.

In Mexico and most other countries, a handful of international companies is controlling more and more of the food production line—from growing crops to purchasing crops from farmers, to warehousing, processing and distribution.

Carlsen said investigations following the tortilla crisis found that huge stores of corn in warehouses had cut down the supply and led to a jump in prices.

However, the problem is not limited to Mexico. The trade practices of brokers and some agri-business giants are one of the major causes of food insecurity.

"They are able to control prices through hoarding or other mechanisms that have to do with manipulating prices on the internal market," explained Carlsen.

Grain brokers and local middlemen will purchase large amounts of a grain and store it on the assumption the price will go up in the future. This speculation causes an artificial shortage which forces a rise in prices.

In the Philippines, which is currently in the throes of a major rice shortage and soaring prices, the government has deployed police and military to crack down on rice hoarders.

Hoarding can be sparked by a local drought or climatic factors that lead to a shortage. Brokers buy up the supply knowing prices will rise, which makes the situation worse, said Carlsen.

This practice can lead to starvation in Africa or artificially high prices elsewhere.

But trade practices are only one of the factors blamed for driving up food prices. Another is the growing use of biofuels. Biodiesel and ethanol have been hailed as an ecological alternative to petroleum and a way to break the West's fuel dependence on the Middle East.

The result is sugar, corn and other crops are being sought by two completely different markets—one that feeds humans and another that feeds vehicles.

Canada is one of many countries to jump on the biofuel wagon. Last December, Agriculture Minister Gerry Ritz announced $1.5 billion in biofuel production incentives.

Touted as a way to address climate change through increasing biofuel production, the incentives aim to boost production to three billion litres a year by 2012.

Biofuels promise an expanding market for Canadian grains and a boon to underpaid farmers, but their overall environmental impact is questionable, said Pat Mooney, executive director of ETC Group and recipient of the Right Livelihood award and the Pearson Medal of Peace.

Mooney said it is "factually incorrect" that biofuels are a green solution to the world's energy problems. "It's not a solution to global warming by any means," he said.

Mooney said it takes approximately 100 years to recoup the carbon dioxide released for every acre of forested land that is stripped for crops. Besides reducing ecological diversity, mono crops of fuel sources like corn require massive amounts of nitrogen fertilizer. Producing nitrogen in turn requires vast amounts of natural gas.

There is also the issue of water. According to some estimates, said Mooney, it takes over 1,000 litres of fresh water to produce 1 litre of biofuel.

But while the green reputation of biofuels is contested, its impact on the world's food supply is not. The increased demand drives up the price of grain while reducing the amount available for the food market.

"The market place does now tie the price of a bushel of corn to the price of a barrel of crude and when it does that it means that poor people are going to lose out," said Mooney.

It's not the fuel we use, but how much we use, that needs to change, he said.

"It's not a matter of replacing fossil fuels with crop fuels, it's a matter of reducing our consumption of energy. That's urgently got to be done … The Canadian government should take a lead in taking us down that path."

Besides vehicles, cows are also providing increased competition for the world's dwindling grain stocks.

Economic growth in Asia means people there are demanding more and better quality protein. Mooney said a growing middle class eating more meat means livestock producers need more fodder.

According to various sources it takes anywhere from 2.6 to 16 lbs of grain (depending on whether cattle are fed by cultivated grains or by grazing) to produce one pound of beef. More beef means much less grain.

But while most of the factors currently affecting the world's grain supply are caused by mismanagement or market forces, there is another factor that will play an ever larger role—and one more difficult to correct the future.

"The specter looming on the horizon … is climate change," said Carlsen. Mooney agreed.

Droughts, desertification and disrupted weather patterns all pose a threat to the world's increasingly insecure food supply, and due to climate change and deforestation, all are predicted to increase.

"There's a tendency to think there is some technological fix to every social problem," said Mooney. "There's no technological fix to climate change or to rising food prices. The solution is for each of us to accept responsibility for our own consumption."

Mooney said the lasting solutions to the world's food crisis rely heavily on the population of developed countries and everyday people changing how they live their lives. Solutions can range from eating less meat to using public transit.

Carlsen highlighted the importance of supporting local small farmers, who supply the majority of the food people eat. When these people lose their land by being forced to compete with large agri-business companies, food security is diminished.

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