"It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong." Richard P. Feynman

Tuesday, February 1, 2011

Global Food Shortage Looming!

While the Governments of the world fiddle with the faux problem of "Climate Change" starvation is looming as a major threat for much of the world's poorer population. Large amounts  of our resources are being channeled into useless greenie toys like wind and solar generation  and massive amounts of grain are fashionably being fed into Western petrol tanks as bio-fuels ,while food prices sky-rocket severely affecting the poor of the world. While Malthus has never got it right , intelligent decision making and planning will be needed to prevent his predictions eventuating. Malthusian predictions have never come to pass because of man's ingenuity and technology being used to overcome the problems of a growing population. The world now needs proper priorities - not false ones like Climate Change.


Leadership is needed if the world is to head off mass famine, writes Ambrose Evans-Pritchard.
Political risk has returned with a vengeance. The first food revolutions of our Malthusian era have exposed the weak grip of authoritarian regimes in poor countries that import grain, whether in north Africa today or parts of Asia tomorrow.
Events have moved briskly since a Tunisian fruit vendor with a handcart set fire to himself six weeks ago, and in doing so lit the fuse that has detonated Egypt and threatens to topple the political order of the Maghreb, Yemen, and beyond.
As we sit glued to al-Jazeera watching authority crumble in the cultural and political capital of the Arab world, exhilaration can turn quickly to foreboding.
This is nothing like the fall of the Berlin Wall. The triumph of secular democracy was hardly in doubt in central Europe. Whatever the mix of aspirations of those on the streets of Cairo, such uprisings are easy prey for tight-knit organisations - known in the revolutionary lexicon as Leninist vanguard parties.
In Egypt this means the Muslim Brotherhood, whether or not the Nobel laureate Mohammed ElBaradei ever serves as fig leaf. The Brotherhood is of course a different kettle of fish from Iran's ayatollahs; and Turkey shows that an ''Islamic-leaning'' government can be part of the liberal world - though the Turkish Prime Minister, Recep Tayyip Erdogan, once let slip that democracy was a tram "you ride until you arrive at your destination, then you step off''.
It does not take a febrile imagination to guess what the Brotherhood's ascendancy might mean for Israel, and for stability in the Middle East. Asia has as much to lose if this goes wrong as the West.
The surge in global food prices is not the underlying cause of Arab revolt, any more than bad harvests in 1788 were the cause of the French Revolution.
Yet they are the trigger, and have set off a vicious circle. Vulnerable governments are scrambling to lock up world supplies of grain. Algeria bought 800,000 tonnes of wheat last week, and Indonesia has ordered 800,000 tonnes of rice, both greatly exceeding their normal pace of purchases. Saudi Arabia, Libya, and Bangladesh are trying to secure extra grain supplies.
The United Nations Food and Agriculture Organisation said its global food index has surpassed the record of 2008. The cereals index has risen 39 per cent in the past year, the oil and fats index 55 per cent.
The FAO implored governments to avoid panic responses that "aggravate the situation". If you are Hosni Mubarak hanging on in Cairo's presidential palace, do you care about such niceties?
France's President, Nicolas Sarkozy, blames the commodity spike on hedge funds, speculators and the derivatives market. He vowed to use his G20 presidency to smash the racket, but then Sarkozy has a penchant for witch-hunts against easy targets.
The European Commission has been hunting for proof to support his claims, without success. Its draft report - to be released last Wednesday, but withdrawn under pressure from Paris - reached exactly the same conclusion as investigators from the International Monetary Fund and US and British regulators.
"There is little evidence that the price formation process on commodity markets has changed in recent years with the growing importance of derivatives markets," it said.
As Jeff Currie of Goldman Sachs points out, future contracts are neutral. For every trader making money by going long on wheat, sugar, pork bellies, zinc or crude oil, there is a trader losing money on the other side. It is a paper transfer between financial players.
You have to buy and hoard the vast amounts of these bulk commodities to have much impact on the price, which is costly and difficult to do.
Only governments have strategic petroleum and grain reserves big enough to make a difference.
The cause of this food spike was the worst drought in Russia and the Black Sea region for 130 years, damaging winter planting as well as the northern hemisphere summer harvest. Russia imposed an export ban on grains. This was compounded by late rains in Canada, La Nina disruptions in Argentina, and a series of acreage downgrades in the US.
The deeper causes are well known: an annual rise in global population by 73 million; the "exhaustion" of the Green Revolution as the gains in crop yields fade, to cite the World Bank; diet shifts in Asia as the rising middle class switch to animal-protein diets, requiring three to five kilograms of grain feed for every kilo of meat produced; the biofuel mandates that have diverted a third of the US corn crop into ethanol.
Add the loss of farmland to Asia's urban sprawl, and the depletion of aquifers for irrigation of north China's plains, and the geopolitics of global food supply starts to look neuralgic.
Can the world head off mass famine? Yes, with leadership. The regions of the former Soviet Union farm 30 million hectares less today than in the Khrushchev era, and yields are half Western levels.
There are untapped hinterlands in Brazil, and in Africa where land titles and access to credit could unleash a great leap forward. The global reservoir of unforested cropland is 445 million hectares, compared with 1.5 billion in production. But the low-hanging fruit has already gone, and the investment needed will not come soon enough to avoid a menacing shift in the terms of trade between the land and the urban poor.
We are on a thinner margin of food security, as north Africa is discovering painfully, and China understands all too well. Perhaps it is a little too early to write off farm-rich Europe and America.
H/T Trevor

1 comment:

  1. Maybe other governments do things differently, but in India, the government is sitting on wheat stockpiles of 18 million tonnes which is left to rot in the sun and rain. The government cant give it away for free[for economic reasons], or export it[for political reasons]. So it just sits in various Railway stations until it rots. Of course the government is committed to maintain 3 years of wheat stocks in reserve. So it continues to buy every year to replace the rotting stocks. Here are a few links to the wastage story : http://www.belfasttelegraph.co.uk/news/world-news/indias-huge-wheat-store-rotting-14900487.html

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