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Food shortages and spreading unrest

It’s not often that one can look into the future and say with some degree of certainty what is going to happen and where.  Thanks to a just released World Bank/IMF report, I think  we can say the social and political upheaval that has swept from Tunisia and Egypt to Iran, Sudan and Syria, and which has been, at least in part, fueled by spiralling food costs, is going to intensify and spread to new countries. We can even, I think, hazard an informed guess as to which countries will be next.

Last week on April 16th the IMF and World Bank held a joint meeting to discuss a study they had commissioned on world food shortages and prices. It makes for grim reading and says quite clearly that the global food price crisis is going to get worse. At the meeting  Robert Zoellick, the World Bank President, said the global food situation was “one shock away from a full-blown crisis.”

According to their report, in just 10 months, since June 2010, 44 million more people are having to live on less than $1.25 per day, which is the poverty line set by the World Bank. 44 million more hungry and frightened people watching food, which only a short time ago they could afford, now spiralling beyond their reach.

It’s not the already abjectly poor who worry the World Bank and our political leaders.  It is those who thought they had struggled up out of hopeless poverty but who, as food prices spiral up, will now have the sickening sensation of feeling themselves and their families slipping back in to hunger and desperation.  They are the tinder for revolution. 
In an article I wrote back in Feb called Food, Democracy and Markets,  I made the point that we could make sense of which countries had had uprisings simply by looking at which most relied on importing Wheat to feed their people. Wheat was and is the most important food import in Egypt and most of the other countries  in North Africa and the Middle East, and experienced the greatest price rises and volatility over the last year. Those countries which imported the most wheat per capita were the ones where the people took to the streets in protest. 
The simple fact that there are another 44 million people reduced to hunger says the unrest is not over. But what, I suspect, really alarms Mr Zoellick, however, is the clear prospect that with prices of food continuing to rise their study indicates,
another 10 million people may end up among the ranks of the poverty-stricken if food prices climb by a further 10 percent, and another 34 million would suffer a similar fate if prices of staples were to rise by 30 percent.”

Will the price of food continue to rise?  Food prices, with generous help from speculators, spiked in 2008 and then fell back. The bad news is that since the middle of last year food prices have been rising sharply. Today they are almost back at the highs of 2008 and the trend is up further.  Prices are already up 63% from a year ago.

The difference from 2008, is that globally we have not replenished world reserves to off-set another spike and we are facing bad harvests in a number of countries. China is still in the grip of a long and widespread drought. If the drought does not break China may seek to compete for imports.

At the same time a severe drought

“… has hit corn and plantain production in Kenya, Tanzania and Uganda. Among all Eastern African countries, Somalia was worst affected by drought where the price of sorghum and maize increased by 80 percent and 20 percent respectively in comparison with January.

It is easy to see political and social unrest spreading south form North African countries down the East coast of Africa to nations already riven with internal conflict.

In Bangladesh the government headed off unrest by stabilizing prices using its own stocks of rice. Stocks which is now needs to replenish by doubling what it imports. But with other countries also needing to increase imports what price will Bangladesh have to pay and will it have the means?

Part of what has spooked Mr Zoellik is that we are approaching a volatile situation where food exporters like Russia are, to stop food price rises at home, banning exports of Wheat till October. What are countries that depend on imports, like Egypt, and those like Tajikistan and Kyrgyzstan which have already dipped in to state reserves and need to replenish them, to do?  The cost of wheat flour in South American countries is up between 10 and 20% in under a year.

And then there is corn. Corn consumption is growing far faster than production but a major part of the corn is being turned in to bio-fuel. Which, the world bank has helped to keep fuel prices from rising as much as they might have done. This seems perverse to me and made much worse when you add in the fact that oil prices have, nevertheless, shot up and has contributed to the rise in the price of food. Oil is an input in food production in agro-chemical use, energy inputs in tractors etc and in transport.

Food prices are going to continue to be very volatile.  This will be due to uncertainties in supply at a time when every nation is afraid they might not get as much as they need. This will push countries to offer a little above the odds in order to get to lock in a price and order now. This will push prices up, but more importantly will give speculators the perfect opportunity and environment for plying their trade. Speculation will amplify the price volatility which will make nations even more desperate and so on around.

Any further spread in Africa will also feed back I think, to those countries already in open revolt. I think Egypt is not settled by a long way. If, as it appears, wheat is going to remain expensive and perhaps get more so, then the military in Egypt will not, I don’t think, be able to keep the lid on things as they have done in their brief honeymoon period.

And last but not least food prices rises are going to become a factor here in Europe and in America. Food prices went up 2% just last month in Hungary. They have been going up in Portugal. Austerity and food price rises are a volatile mixture.

I think we are getting a little fore taste of the resource wars to come.  Food, Water and Oil to name but three.

23 Responses to Food shortages and spreading unrest

  1. John April 22, 2011 at 5:19 pm #

    Golem, I liked your February article on Food, Democracy and Markets, and think you are right on track with this one too.

    Food has been ridiculously cheap for us in the West for a couple of generations, so much so that we take cheap food for granted. By cheap, I mean the share of household income we spend on food.

    I live in a poor Asian country where families spend most of their disposable income on food. Asia is in a better situation than north Africa because most countries here are self-sufficient in their staple; rice.

    International trade is good, but I think we'll see more focus on self-sufficiency by countries worldwide in coming years.

  2. John April 22, 2011 at 5:23 pm #

    This is a massive issue in China. It terrifies the leaders. They remember famine…
    http://www.ft.com/cms/s/0/a2170530-66b4-11e0-8d88-00144feab49a.html#axzz1KGt9Y56v

  3. Golem XIV - Thoughts April 22, 2011 at 5:27 pm #

    John,

    Thank you. Your perpsective and thoughts coming from outside Europe are valuable.

  4. Trofim April 22, 2011 at 7:01 pm #

    What’s significant to me is that neither the word “finite” nor “population” occur in your little essay. I don’t know how long I, and others, have been stating the obvious: it is a finite planet. To imagine that any species can proliferate in numbers and consume infinitely, is madness. However, on both the left and the right we have been told that this is nonsense. Mankind will always find a way, human ingenuity will always triumph – or in more prosaic terms – something will always turn up. Perhaps we are on the cusp of massive change in our weltschauung, whereby even socialists and libertarians will be able to bring themselves to acknowledge that the world’s resources are finite.
    Would we face the prospect of resource wars if the human population was half of what it is now, or even if it were to stabilise tomorrow? The answer is emphatically NO. Egypt adds 1 million people to its population every nine months. The population of the Middle East is predicted to double by 2030. Libya imports more than 70% of its food. Since Ethiopia required international help to feed itself in 1985, it has doubled its population. This beginning of resource wars is nothing more than chickens coming home to roost.

    (slightly longer comment on Liberal Conspiracy).

  5. Golem XIV - Thoughts April 22, 2011 at 7:47 pm #

    Trofim,

    I couldn't agree more. The fact that neither the word 'finite' nor 'population' occured in my 'little essay' doesn't mean I don't know these things nor that I don't agree they are of paramount importance.

    The reason they don't appear is because this 'little essay' is not about over-populatoin. It is about how food shortages are not oevr but are going to get worse soon and so are going to spread much more political unrest. A simple point but one I thought still worth making.

  6. RichGB April 22, 2011 at 8:12 pm #

    Two global catastrophes have met head on: the international insolvency crisis and the major fall in world food production. For the last two years droughts

    have hit countries producing two thirds of the world's food output. This includes countries like Kenya, Syria, China, Australia, United States (California and

    Texas) and Brazil. As you would expect, food stock-piles are depleting and some statistics indicate that they are half what they were 6 years ago.

    With the unstoppable rise in oil prices adding yet more pressure to food production costs, I think we can safely say that we're safe from deflation and its

    cousin 'stagflation'. After seeing the effects of hunger-motivated riots in the Middle East, the governments of many other nations will be wary of the

    consequences of ignoring the plight of their underprivileged citizens. Positive action might entail importing food at exorbitant prices and using up foreign currency reserves in the process. Might we see a downward pressure on the US dollar due to it being the world's favoured reserve currency? Could the dollar take a precipitous dive so extreme that US exports will receive a major boost and national debt lose some of its potency?

    Finally, I pose a moral dilemma: if a food production company can make more money by exporting its products abroad, rather than selling to the home market, what action should be taken by governments to ensure that their own citizens are not deprived, whilst still supporting the spirit of globalisation?

  7. StevieFinn April 22, 2011 at 10:37 pm #

    @ Rebecca,
    Well, you couldn't possibly do a worse job than us fellas, I have one small request though, please keep Sarah Palin out of it.

  8. mikehall April 22, 2011 at 11:10 pm #

    Rebecca,

    I don't accept at all your gender division as regards responsibility for where we are. In my own experience women are every bit as culpable as men, but in their own ways which reflect the very real differences in brain neurology & function & psychological & sociological roles that separate the genders.

    What's more, such arbitrary division plays wonderfully into the hands of the elites who would have us all slaves. Divide & rule – the oldest game in the book & probably still the no. 1 today. More helpful to try & find solutions I think than wallow in arbitrary blame games?

    So, moving on (hopefully), as regards population growth, the Guardian published an article reporting a research paper that suggested that stabilising population is not in fact hard as only very small differences in birth rates to death rates are needed. The report suggested that topping out around 9 billion within the next few decades might even happen of it's own accord. Suffice to say that exponential population growth is not at all inevitable.

    There's no doubt either that all 9 billion can be fed a perfectly adequate diet, if we make the right choices.

    As ever, the real resource defecit we face is the democratic defecit & it's associated general apathy, ignorance & artificial divisions.

    When we fix that we will solve all the other problems quite easily I think. In order to do that, a great many more people need to understand how the rich elites scam the rest of us financially whilst maintaining the pretence that the 'majority' are somehow being 'represented'.

    Good piece on Real News recently. Cambridge Prof. of Economics Ha-Joon Chang is interviewed in depth about his book '23 Things They Don't Tell You About Capitalism'.

    It's not 'anti-capitalist' at all, pointing out that there's many different ways to run a 'capitalist' system, but usefully goes about busting the myths – fundamental lies in fact – of the 'neo-liberal' version that, by no accident, has been foisted on most countries over the last 3 decades & lies at the heart of the world financial crisis.

    http://therealnews.com/t2/index.php?option=com_content&task=view&id=33&Itemid=74&jumival=708

  9. ahimsa April 23, 2011 at 12:47 am #

    @ Mikehall

    Does your 9 billion on a perfectly adequate diet allow for effects of climate change, declining energy resources & disruption of globalised economics??

    I imagine the global transition with it's associated famines and wars unfolding will provide something more than "very small differences" in death & birth rates.

    @ Rebecca

    I accept the facetious and knarky points. We need to return to greater balance between female & male energy. Though we may all be biologically programmed to ensure gene survival and reproduce like rabbits, as conscious beings it is perfectly possible for us to channel our creative energies more responsibly.

  10. bill April 23, 2011 at 8:13 am #

    Another point missing from this article is the devil incarnate known as monasto. This company should be run for the benefit of the world and not the monopoly they so blatantly aspire to be.

    You could also throw in lunatic policies from the EU like set aside and it's ruinous fishing policies. I mean how in the name of God can we be paying farmers NOT to produce food when there's people starving? It's beyond immoral it is evil.

    China, as ever, sees ahead and plans to double wages in 5 years. This plan is entirely designed to offset expected price rises for food.

    I am in Nanning at the moment and can confirm what John said above. Nothing terrifies the government more than the prospect of famine.

  11. bill April 23, 2011 at 8:27 am #

    http://www.walletpop.com/2010/02/04/monsanto-the-evil-corporation-in-your-refrigerator/

    Sorry quite forgot the link. I know this is not a scientific pool but if you type "monsanto are evil" into google you get around 860,000 hits. Yet still they lurk outside the public scrutiny.

  12. Fungus FitzJuggler III April 23, 2011 at 8:30 am #

    There is a very sinister reason for speculation in food. It is profitable as TPTB are stuffing the system with credit and there are no competitors for it! Thus they pass the parcel, drive up prices and make money while increasing production at the arms factory … Only after it was obvious to all that the depression was not going away, did America enter WWII. Massive unemployment really helps to drive a big war… I hope I am wrong about this, but those countries without NATO bases, putting it politely, will be the recipients of the benefits of democracy movements that "must be supported" by those who "love freedom".

    Let's just watch as another generation get to make the ultimate sacrifice?

  13. mikehall April 23, 2011 at 1:19 pm #

    @ ahimsa

    No, the ability to support 9 billion requires radically different policies, but there are not really any insoluble physical problems. It's very late to be making such a transition & we have barely started yet, so the prognosis is poor to say the least – for many millions now to billions by century end. Right now I would not bet on more than 20% of present poulation size remaining 100 years from now, but a far different outcome is still possible. Tricky to figure out precisely when tons of, say, DMT might be dropped in the water supply as a last ditch effort to wake people up? (Not that I'd have any clue if that was possible, it's just, you know, a fantasy idea for a little (ok, lot of) consciousness evolutionary nudging.)

    @ All

    I think we can take it as read at this stage that significant numbers of the ruling rich elites are well aware of certainly resource risks etc. & are even enthusiastically anticipating the profit opportunities as demand begins to outstrip supply. These people are fed at the teat in all the ways to manipulate 'markets' to their own benefit.

    I suspect some are even aware of the climate/ecological risks, but I'd be sure the arrogance & belief in their own invincibilty on the one hand, & their complete disdain for the survival of others on the other, means the ruling classes will never sacrifice one cent of their wealth more than they have to to address these issues.

    Unless we see things the way the really are – placing all the various issues appropriately within the framework of a 'class' war, a war for the 'democracy' much touted but that we've never had, effective opposition & renewal will either not succeed or not be sustained. But it's a war that the majority can easily win & without violence of any kind. (In fact, lack of violence is one of the things that would truly define such a 'victory'.)

    I've no great problem with people having wealth, within reason. It can be a useful thing for some & beneficial for society as a whole.

    But the wealthy have no business whatsover purporting to represent the majority of citizens & should not be allowed to 'capture' (the way they have nearly 100% now) the systems, institutions & media who should be representing the majority.

    The key is to tackle the problem – any problem & particularly corruption by wealth – as close to the source as possible.

    So that's easy. No one who's job/vocation has a major public (interest) representation element is allowed to become 'wealthy' – for life, including spouse. Simple, near 100% effective in removing corruption.

  14. 24K April 23, 2011 at 2:45 pm #

    RICH GB!

    I did a sigh of relief then 🙂 Let someone know if your gonna be gone for a while. You had us all worried.

    Hope you watched my music video HERE? It was done on a compact with an anamorphic strap-on but I've been researching, the next one will look so nice it'll bring a tear to G's eye.

    Hope everything is ok dude.

    Rebbeca, your sounding like the New Women Order.

    HERE is a population growth chart.

    HERE is oil production.

    The population chart matches the oil chart. When the oil goes the people go. Most of the extra people are from developing countries. When the oil goes the third world goes. No man or woman or policy will stop it. We are dizzy on oil like the dude in Carlitto's way who Dysoned up half of Bolivia.

    I'm with Mike, anybody know where we can get a ton of DMT?

  15. Ben Gabel April 23, 2011 at 5:23 pm #

    A professional friend of mine – who does incomprehensible things with mind-boggling amounts of investment products – told me two months ago

    ' the one thing that worries me is that there is going to be an unbelievable short squeeze on food commodities this year, it could be awful, causing terrible hardship all over the world.'

    Sadly I'm none the wiser. What's a short squeeze?

  16. John April 23, 2011 at 5:59 pm #

    The old Malthusian debate will always be with us. For all we know the earth may be able to support 50 billion humans (possibly minus or plus a few other species) if well managed.

    Rebecca you're quite right to feel disquiet by talk of population overload. One just has to look at birth rates for boys and girls in both India and China. Female infanticide is a real problem.

    Also Rebecca your first post, which did all but mention the Common Agricultural Policy (CAP) needs to be looked at. Globalisation is not a problem, rather how we manage it.

    When a fisherman in Mali can't cast his net for sardines because his government owes money to the EU, but a Spanish trawler can take his sardines, bring them back to Europe and can them, and then sell them back to Mali at a price the unemployed fisherman cannot afford, then something is truly rotten.

    But we still have cheap food. WTO please stand up.

  17. kaya April 23, 2011 at 11:46 pm #

    A factor in this must surely be QE I and II, and a a similar process in Europe and Japan. Pumping so much liquidity into markets has to be inflationary. The problem is that the bulk of the money stays in speculator hands driving up commodity prices for no benefit except the speculators. This will end badly.

  18. guidoromero April 24, 2011 at 5:15 am #

    Fungus FitzJuggler III
    @ 23 April – 9:30

    Very astute observation sir. Let's do watch. But the die is cast. The end of the inflationary cycle is characterized by excessive debt and excessive industrial capacity. The point at which credit markets can no longer be expanded, a third and politically lethal condition develops: unemployment.

    The situation can only be resolved by obliterating industrial capacity and infrastructure. That is "obliterating".

    Obliterating industrial capacity takes boots on the ground and, guess what! The throngs of unemployed, soon to be homeless and potentially hungry that are about to turn on Western politicians and bankers are just the ticket.

    A bon entendeur…

  19. Syzygy April 24, 2011 at 9:11 am #

    The actual producing of food is not generally the problem… access to land is. A very small plot can feed a family. The UN are finally backing small holdings as being much more efficient than the environmentally destructive agribusinesses.

    The 'food shortages' result from Capitalism and neoliberal policies at every level. This is the modern equivalent of the devastating Land enclosure Act.

  20. Fungus FitzJuggler III April 26, 2011 at 6:40 am #

    Golem, I am sorry you think me correct.

    I was hoping for correction, that TPTB will split into winners and losers or not so winners, and that those who win will be those who have the greater conscience as they will be aided by those crucial office holders.

    I hope that the NWO initiate food production asap. It may help crush their rivals for the top table …. I also believe we can easily sustain many more than 10Bn in population. But we do not need to. The sharing out of wealth, reducing the American pie, may enable all countries to become middling if not middle class.

    The nuclear disaster is now making some food consumption moot. If this dithering in Japan continues, it will worsen. I doubt that was part of anyone's plan? China may stay whole instead of becoming 100 fiefdoms. Investing anywhere near Singapore, the strategic chokepoint, may then be most foolish.

  21. StevieFinn April 26, 2011 at 10:52 am #

    As to the Fukushima incident there seems to be 2 extremes, apocalypse or nothing to see here folks. I found this vid, Dr. Helen Caldicott who says amongst other things " Do not eat European food ".

    http://www.youtube.com/watch?feature=player_detailpage&v=TMXvpWoHzeE
    On the other hand you have Malcolm Grimston ( good name that ) Gerry Thomas & 2 others saying there's nothing to worry about on this BBC radio 4 programme.

    http://www.bbc.co.uk/programmes/b00zf4j5

    It's all very confusing, maybe the truth is somewhere in the middle, I think Grimston gave himself away by saying that all wind & wave power would have been destroyed by the earthquake & Japan would have been worse off with these energy methods.

    If these people win the argument, nobody will know if their conclusions are/were correct for many years & by that time the nuclear industry would have expanded & our Grandchildren will be stuck with it. Surely there should be absolute certainty, a conference or whatever where all the evidence is put together & weighed up transparently, so we could come to some sort of conclusion as to the way forward with something as important as this.

    Just got my copy of " Debt Generation "

  22. 24K April 28, 2011 at 5:00 pm #

    Rebbeca, Only Ribbing just for fun like 🙂

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