Monday, February 7, 2011

Rising Food Prices...why and what's next?

By Paul Krugman, New York Times, February 6, 2011
We’re in the midst of a global food crisis — the second in three years. World food prices hit a record in January, driven by huge increases in the prices of wheat, corn, sugar and oils. These soaring prices have had only a modest effect on U.S. inflation, which is still low by historical standards, but they’re having a brutal impact on the world’s poor, who spend much if not most of their income on basic foodstuffs.

The consequences of this food crisis go far beyond economics. After all, the big question about uprisings against corrupt and oppressive regimes in the Middle East isn’t so much why they’re happening as why they’re happening now. And there’s little question that sky-high food prices have been an important trigger for popular rage.
So what’s behind the price spike? American right-wingers (and the Chinese) blame easy-money policies at the Federal Reserve, with at least one commentator declaring that there is “blood on Bernanke’s hands.” Meanwhile, President Nicolas Sarkozy of France blames speculators, accusing them of “extortion and pillaging.”
But the evidence tells a different, much more ominous story. While several factors have contributed to soaring food prices, what really stands out is the extent to which severe weather events have disrupted agricultural production. And these severe weather events are exactly the kind of thing we’d expect to see as rising concentrations of greenhouse gases change our climate — which means that the current food price surge may be just the beginning.
Now, to some extent soaring food prices are part of a general commodity boom: the prices of many raw materials, running the gamut from aluminum to zinc, have been rising rapidly since early 2009, mainly thanks to rapid industrial growth in emerging markets.
But the link between industrial growth and demand is a lot clearer for, say, copper than it is for food. Except in very poor countries, rising incomes don’t have much effect on how much people eat.
It’s true that growth in emerging nations like China leads to rising meat consumption, and hence rising demand for animal feed. It’s also true that agricultural raw materials, especially cotton, compete for land and other resources with food crops — as does the subsidized production of ethanol, which consumes a lot of corn. So both economic growth and bad energy policy have played some role in the food price surge.
Still, food prices lagged behind the prices of other commodities until last summer. Then the weather struck.
Let's, for argument's sake, agree that Krugman might be right, that climate and weather are beating the ceiling out of food prices. For those aardvarks who still do not believe that climate change is 'man-made,' perhaps the spike in food costs and commodity prices will wake a few of them up to the potential of this dynamic.
Hunger is not like AIDS, or like malaria, or typhoid or cholera. It is not met with drugs, so that the pharmaceutical companies can make some more exorbitant profits. Hunger kills people, without much of a cry or even a whimper. They have no energy for either. And for those who died  because they did not get enough food, whom do we hold accountable? Food and its absence is another weapon in any political conflict, for those who chose to reduce it to that low level. Don't like your enemy: don't feed him!
We have the capacity to grow enough food to feed everyone. We have enough distribution capacity to get food to everyone, everywhere. We have the knowledge and awareness that no all who need food are getting that food every day. And yet, the galloping dinosaur of managing those resources that grow and distribute food along with the politicians in their 'employ' are not opening the gates of those supplies for those increasing numbers who don't have enough to eat.
The "poor" are not some statistical abstraction for social scientists, economists and politicians to debate like another "factor" in their equations. The 'poor' are everywhere; their numbers are growing exponentially; their political power, while quite limited, will not remain impotent forever; their cavernous bellies and their hollow eye sockets and their stick-like arms and legs are all too familiar to our television gaze and the names of their locations are some of the same names of wars and disease and political unrest....all of which could be coming to a neighbourhood like your's very soon. And that includes the affluent gated communities of the northern hemisphere.
And the political class in virtually all countries, while barely mentioning that globalization must bring benefits to the poor in Davos, are, it is not insulting to say, insensitive to the needs of the poor and the hungry and the political implications of the explosion of those needs. And while the power of the powerful continues to grow unabated, the weakness of the weakest also continues to grow unabated...and we all sit back watching what seems to these eyes like an explosion waiting to happen, and not too far 'out there'...
Are we bracing for the perfect storm? Do we need to brace for the perfect storm? Has the perfect storm already come over the horizon, while we were busy counting our stock clippings?





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