Monday, April 14, 2008

Food Fight

From The Wall Street Journal today:
World Bank President Robert Zoellick warned in a recent speech that 33 countries are at risk of social upheaval because of rising food prices. Those could include Indonesia, Yemen, Ghana, Uzbekistan and the Philippines. In countries where buying food requires half to three-quarters of a poor person's income, "there is no margin for survival," he said.
Global food prices have increased 83% in the last three years. Recently, riots over soaring food prices have broken out in Egypt, Cameroon, Ivory Coast, Haiti, Senegal and Ethiopia. Last week's food riots in Haiti quickly segued into a political mine field.

The diversion of food to biofuels is one source of the rising prices. I touched on this in my previous blog post Black Gold, but it's worth repeating how these renewable fuels will result in higher food prices around the world:
When the production of corn intended for human or animal consumption decreases, prices go up. Why does this local shift in policy affect food prices around the world? The diversion of American corn into energy has a ripple effect for two reasons: First, the United States is the world's largest corn exporter, accounting for about 40 percent of global trade, so when corn-as-food production decreases here, costs go up everywhere. Second, when the price of corn increases, farmers in the United States, Europe, and elsewhere who use the crop to feed livestock look for cheaper alternatives, like wheat or sorghum. These alternatives, in turn, become more expensive.
Another source of rising food prices is global warming. From The Toronto Star: "Climate change is also making its toxic contribution. Major droughts have hit wheat-producing nations such as Australia and Ukraine, leading to a 30-year low in the world's wheat inventories."

A third reason for higher food prices is that fast-developing nations in Asia are demanding more and better food.

The U.S. is not immune to rising food costs. In the last year, milk prices are up by 26%, eggs by 24%, and bread by 13%. And yes, there is hunger in America. Our government estimates that 28 million people will be using food stamps this year. This is the highest level since the program began in the 1960's. Meanwhile, our federal farm program pays $1.3 billion to people who don't farm.

I predict we'll be hearing less and less about the so-called obesity epidemic.

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