*GLOBAL FOOD CRISIS

By Peter Montague

Global food prices have risen 83% in the last 3 years. This spring,
as prices rose steeply, food riots broke out in Haiti, Egypt,
Cameroon, Ivory Coast, Mauritania, Ethiopia, Uzbekistan, Yemen, the
Philippines, Thailand, Indonesia and Italy, among other places.
Because U.S. energy policy subsidizes farmers to grow corn to make
ethanol (alcohol that can supplement gasoline), the U.S. is being
accused of feeding its sport utility vehicles (SUVs) instead of
feeding people. There is some truth to this charge, but it's more
complicated than that.[1]

The global food crisis has been created by a combination of things,
among them:

** Climate changes, perhaps related to global warming, such as the
recent large tornado in Myanmar, the epic drought going on now in
Australia, floods last year in North Korea, and years of low rainfall
in the western U.S., among other costly weather changes. Australia
used to export enough rice to feed 20 million people, but six years of
drought have cut their rice yield by 98%. Australia used to be the
world's second-largest exporter of wheat, but the drought has changed
that, too. "A big reason for higher wheat prices... is the multi-year
drought in Australia, something scientists say may become persistent
because of global warming," according to the Washington Post.

** U.S. farmers have been growing less wheat since the mid-1990s in
favor of more-reliable soybeans and better-subsidized corn. "Wheat's
biggest problem is its susceptibility to disease, which has turned
many farmers against it," explains Dan Morgan in the Washington
Post.

** Rising oil prices, caused partly by rising demand for oil in
China and India (and in U.S. SUVs), and partly by diminished supply
caused by the Iraq war. Because of rising oil prices, the cost of
transporting food has doubled in the last year alone. Furthermore,
the price of fertilizer is tightly linked to the price of oil and
has been rising for about five years. Use of fertilizer in the third
world increased 56% between 1996 and 2008.


** The demand for meat is growing in the third world as our own
meat-heavy diet is increasingly adopted world-wide. It takes about 700
calories of animal feed to produce a 100-calorie piece of red meat, so
a shift to a meat-rich diet requires large increases in grains, which
in turn requires greater use of expensive fertilizers, which in turn
raises the demand for oil.

** As the soaring price of oil has increased the cost of transporting
food, economies as diverse as Argentina, Brazil, Egypt, India, Vietnam
and the Ukraine (among others) have been feeling inflationary
pressures, and have restricted food exports in an attempt to hold
down domestic food prices. This has reduced food available on the
global market.

** So-called "free trade" policies have caused some previously
self-sufficient nations to become food importers. This occurs in
several ways. First, the World Bank and the International Monetary
Fund require loan recipients to make "structural adjustments" in the
way they do business. For example, they must open their grain markets
to competition from U.S. farmers, who are subsidized by Uncle Sam to
the tune of $300 billion per year). Competition from cheap,
subsidized U.S. crops tends to drive small local farmers out of
business and off their land. Second, "structural adjustment" often
demands a reduction of social safety nets, so when a food crisis hits
the remaining infrastructure can't manage. Third, stockpiling food is
officially discouraged (a mountain of available food interferes with
the "free market"). Thus an important cushion against hunger has been
eliminated. A classic case is Haiti, which used to be
self-sufficient for its main staple crop -- rice -- but now is a rice
importer, increasingly subject to the whims of commodity speculators
and agribusiness corporations.

** Commodity speculators. Food has become "the new gold." "Investors
fleeing Wall Street's mortgage-related strife plowed hundreds of
millions of dollars into grain futures, driving prices up even more,"
the Washington Post reported April 27. Rising food prices have
attracted hedge fund speculators, who have helped create a "bubble" in
food prices. "As financial markets have tumbled, food prices have
soared," acknowledges Robert Zoellick, president of the World Bank.


** And lastly, in the U.S. at least, we spend huge amounts of money
feeding our pets. I know I am touching the third rail here, but
someone has got to mention this 900-pound gorilla in the room.

The American Pet Products Manufacturers Association expects Americans
to spend about $43.4 billion on their pets in 2008, up from $41.2
billion in 2007. About $16.9 billion of that will be spent on pet
food.

Meanwhile President Bush has proposed that Congress should dedicate
$770 million for food aid to a hungry world. "The American people
are generous people, and they're compassionate people," Mr. Bush said,
announcing his new food aid plan. "We believe in a timeless truth: to
whom much is given, much is expected."

The President's gift of $770 million to the world's 100 million
hungriest people represents 4.6% of what we spend each year feeding
Fido and Kitty. (And, by the way, we are spending $770 million every
42 hours in Iraq.)