Food Crisis and Starvation: The Maze of Maize
Food riots in Cameroon, Egypt, and the Ivory Coast. Haitian anger over rice prices topples a prime minister.
This week the “food crisis” rates scare headlines — but the problem is an old one and no surprise.
For numerous reasons, but especially the wildcard of biofuels and how they affect global food prices, this subject is an excellent subject for another Consequences video.
From this week’s Creators Syndicate column (via StrategyPage):
…(corn) Prices have increased for numerous, complex and often opaquely connected reasons, but producing ethanol “biofuel” (an alleged “green” alternative to gasoline) certainly contributes to the rising demand for corn…
And:
Ethanol is an easy target for the sensationalists. The pun is more accurate than the accusation: A maze of interrelated factors affect the price of maize and most other foodstuffs. The growing economies of India and China require energy, and demand from these two Asian giants as well as sustained demand from other advanced economies has spurred a long-term rise in oil prices. Higher oil prices bump food prices; it takes energy to raise and transport food.
“Middle class” Indians and Chinese also buy more foods. Lousy weather (in Australia as well as the United States), crop rotation and, in the case of the world’s No. 1 food producer, the United States, fewer acres under cultivation (likely culprit: suburbs) also factor in higher food prices.
So the “world food crisis” sprouting bold headlines this week isn’t so much sudden as it is vexingly systemic.
The column ran long, but on the blog I’ve space to add several other issues.
Countries employ import tariffs, export taxes, and agricultural subsidies to protect domestic farmers and food supplies; however, these programs have downsides, like protecting the inefficient. There’s a lot of space for structural change, but it would require political leaders with spine from Canada to Cameroon.
Ending food tariffs (import tariffs but also “export taxes”) and agricultural subsidies is probably a very good idea but it’s politically difficult, desperately so in the short-term; however, tariffs and subsidies, particularly in the developed world, distort global prices.
The food crisis has brought back Malthusian doomsters, but every once in awhile a blind hog finds an acorn and Haiti is arguably a genuine Malthusian hell –lack of resources exacerbated by very complex social, economic, and political problems. I recall reading in 1987 an extract from a Canadian report that relying on its own resources Haiti could support a population of two million people. At the time it had a population of six million. US and Canadian food aid kept four million people alive. The corrupt Haitian government, soil depletion, and bizarre land rights issues depressed Haitian agricultural productivity but bottom line there were too many people given the food resources.
However, the planet’s worst examples of mass starvation are the result of corruption and murderous dictatorships.
Where I currently live, Indonesia, is a place that should be wealthy and easily able to produce all the food it needs for its own (large) population. It has incredibly rich volcanic soil, abundant rainfall, and seas full of fish and crustaceans. Most of the people are farmers and actually live on farms. However, the policies that this place has followed for generations, including the 10 years since Suharto fell, now require that it import rice from Thailand and Vietnam. Because of price controls and government subsidies on the retail end, rice farmers can’t sell their produce at a high enough price to turn a profit. So lots of them end up going to the big cities (especially Jakarta) and becoming laborers, taxi drivers, maids, and such. When there, they of course become net consumers of food rather than net producers, leading in turn to smaller crops having to feed more mouths. The soybean is also a staple here for tofu and a dish called tempe, which is fermented soybean curd (it sounds gross, but it’s not bad, if a little on the bland side). Unfortunately, the same situation exists for soybeans, most of which are imported from the U.S., and because of their use in biofuels (it’s not just corn), the price on soybeans just went up. No riots, but people were not happy. From the technical side, there are numerous problems. Farm size is one issue (most farms are under one hectare), land ownership is another (most farmers are actually tenant farmers rather than freeholders, so there’s less incentive to make a go of it), for those who do own their farms, Islamic inheritance laws are another (except in West Timor, Bali, parts of the Malukus, and assorted other locations, most farmers are Muslims, and Syaria, to use its Indonesian spelling, requires that each son receive an equal share. After a few generations, there isn’t much land left to go around), and farm technology is another (there really isn’t much other than hand tools). This is what I, a non-farmer, have been able to glean in less than 6 months of living here, from my Indonesian colleagues and from the Indonesian-language press and TV. (The English-language press here is limited and only hits the high points; the local press digs pretty deep). I’m sure an agronomist or other technical expert could paint a more detailed, and possibly grimmer, picture. There’s plenty of food at a reasonable price for an expat like me, where a price increase is barely noticeable, but it’s very different for most of the locals. They’re caught in a vicious circle of low wages, rising prices, outdated and inefficient farming practices, and a national diet that now requires imports. There’s also the effect of 32 years of dictatorship causing a lingering overreliance on government, but that’s an issue in itself that far transcends farming. And I won’t even mention corruption except to note it. None of the locals I’ve talked to really knows of a way out. I’m afraid I have to agree with them. They’ll keep muddling through somehow, but it won’t be pretty.
Comment by waltj — 4/16/2008 @ 8:20 am
“fewer acres under cultivation (likely culprit: suburbs”
Just a question here but doesn’t the government pay farmers to not grow on their land? Also what about all the preservation areas in the midwest where the government is controlling the land? Couldn’t we open that land up for production?
Comment by knat — 4/16/2008 @ 12:03 pm
I hope people realize that this is what happens when green chickens come home to roost. Biofuel subsidies are an obvious and immediate cause of higher food prices. But one reason oil is so expensive (which in turn makes food expensive) is environmental restrictions on exploration (e.g., ANWR) and extraction (e.g., the California coast). Nuclear power, which could substitute for oil-burning plants thereby driving down demand for oil, has been all but regulated out of existence (at least in the US). It’s probably a much more minor effect, but green regulations have also stymied any increase in hydroelectric power, and have even caused dams to be destroyed.
Food riots are just a small preview of what we can expect if the greens also get their way with restrictions on carbon dioxide output.
Comment by Dana H. — 4/16/2008 @ 12:31 pm
It’s a sad state of affairs, but the old truism is still true–there has never been a famine in a democratic country with a free press.
Comment by tim maguire — 4/16/2008 @ 12:44 pm
…in the case of the world’s No. 1 food producer, the United States, fewer acres under cultivation (likely culprit: suburbs) also factor in higher food prices.
Suburbs are not shoving agricultural land out of use. By an order of magnitude, farms are closing down (and the land reverting to nature) because economies of scale favor larger farms. Large farms work best way ge fout in the sticks were they aren’t chopped up by transportation paths. The average family farm today is 10 times larger than the average farm 50 years ago.
People have stopped farming because we grow more food on less land. There simply isn’t any economic incentive to keep a large number of marginal farms as we did in the past. However, that means we don’t have the production buffer that those farms provided. Just in time has come to the farm and that means lower stocks on hand to deal with unexpected short falls.
Comment by Shannon Love — 4/16/2008 @ 1:52 pm
I drafted a speech for the then British Foreign Secretary Sir Geoffrey Howe on world food issues back in 1986. Most of the issues he spelled out then are just as valid now, above all that a Subsidy Race in some sort of ghastly echo of the Cold War arms race was (and remains) at the root (sic) of the problems. And the French Agriculture Minister blames … the market. Aaargh.
Comment by Charles Crawford — 4/16/2008 @ 2:15 pm
‘It’s a sad state of affairs, but the old truism is still true–there has never been a famine in a democratic country with a free press.’
Yeah, Tim, but that would be a better statement if there WERE such a country…..
Comment by bt — 4/16/2008 @ 6:13 pm
In 2007, about 14% of the entire US corn crop got turned into ethanol in order to feed the cars. In 2010 that percentage will be 30% under the current mandate. Considering that US Corn is 40% of global corn production, it is no wonder that prices of the downstream products spiked 80% as the perfect storm of rising oil prices, high Asian demand and such a significant cut in supply hit the markets. Rice and wheat are also at all time highs. Although independence from foreign oil is a worthwhile goal, biofuels are one of the worst conceivable ways of storing solar energy. Better is that Grand Solar Plan. Not only is the choice of feeding the cars or feeding the people being forced on a world that has gotten spoiled relying on abundant American food, but American consumers will pay for the folly of biofuels too, I reckon, because at least we are not dependent on foreign food. That better not change.
Comment by DJB Rizalist — 4/16/2008 @ 9:07 pm
“Fewer acres under cultivation (likely culprit: suburbs)”
If suburbs are truly the “likely culprit”, then you should have little difficultly showing a correlation between (a) the food prices in a country and (b) the percentage of total land area in the country occupied by suburbs. Please research that and come back when you can show us the numbers to back up your claim. I won’t hold my breath.
Comment by Pat Berry — 4/17/2008 @ 9:09 am
Just to note, I live in a Chicago burb ( Will County ) that still has farms. One reason that farms are selling to developers is that the children of the farmers go on to college and into other professions. Most have no desire to farm. That being said, the farmer, in old age, doesn’t have much choice. The farms get sold to developers for large sums of money and, viola, new subdivisions are born.
Comment by rockdalian — 4/17/2008 @ 8:48 pm
In Minnesota we have more county parks than urban areas including the burbs. I believe this is also true for the total country. Also, we have many state and federal parks and restricted land areas. Urban areas take up little land in the USA, about 5%, so that leaves 95% for agriculture.
Comment by Gene — 4/17/2008 @ 9:03 pm
Yet another problem to which there are a dozen known answers, all of which will be ignored until it becomes a catastrophe for lack of political will.
Comment by hitnrun — 4/17/2008 @ 9:20 pm
This is bogus. Consider:
1) The amount of corn for human/animal feed is not down significantly.
2) It takes a lot of petroleum to grow corn and get it to market. With record oil prices you get higher corn prices. Same for cost of wheat, rice, etc.
3) Worldwide demand for corn is way up.
4) Commodities traders are close-cousins of the Wall Street geniuses that caused the sub-prime mortgage crisis. When one of them says there will be a mass shortage of corn, they will all push the price higher.
5) Corn is only one way to get alcohol for cars. It’s may be the worst because it’s relatively resource intensive to make. Note that Brazil has done wonders with sugarcane.
Comment by GS — 4/18/2008 @ 9:01 am
I have to agree with the poster who said less ground is being farmed. I personally know of one large family farm (6 brothers who all farm together) who didn’t plant 9 quarters ( 1440 acers ) because they just didn’t have the time to get it planted to corn or soybeans. My own father who is now 72 had roughly 800 acers of farmland on our ranch (5,500 acers of grassland) that he has stopped planting to wheat. My father in law has 4 quarters (also known as a section) that he rents out at least 1 quarter of that didn’t get planted because it was to wet last year. You drive around the area that I live in and you see lots of fields that have not been planted if you know what your looking at. It is a little bit here and a little bit there and that all adds up.
Comment by Southdakotaboy — 4/18/2008 @ 11:50 am
The idea that development is eating up farmland and, consequently, we have less ag production in this country, is just plain old nonsense. I work for my family’s farming company (4th generation farmer) in the Salinas Valley - the so-called Salad Bowl of the US. Farming technologies, seeds, irrigation methods, etc., mean that we are vastly more productive with an acre than the previous generation. We grow crops on 80-inch beds now, for crying out loud. Productivity has skyrocketed. In fact, our collective productivity is killing the market…
…so enough of the development argument.
Comment by Christopher — 4/18/2008 @ 7:38 pm
I am an economist by training and a farmer by choice. I don’t imagine there is much that can be said to disabuse people of the notion that biofuels are a primary cause of food inflation around the globe. It’s sorta like the thing with Richard Gere and the hamster, you hear it enough times, you figure there must be some truth to it.
Our country has BILLIONS of bushels of corn carryout (leftovers) each year. In recent years, it’s not uncommon for around 10% of the previous year’s crop to still be sitting around spoiling at the time farmers go begin picking the next crop. If you believe in free markets, it would follow that a weakening of our dollar would tend to encourage sales of these surpluses as their price for people off our shores drops considerably. Couple it with the fact that the southern hemisphere suffered a number of crop catastrophies the past couple years and the market is what it is. What goes around comes around, and the huge surpluses that nearly killed rural America through farm consolidation over the past 30 years are going to shrink, putting a premium on farmers to overproduce once again–the way they always seem to! No more paying farmers not to farm–an ineffective government strategy unable to even keep pace with crop genetic advancement– but enough sustainable demand growth encouraging a new generation of farmers to continue to stretch the boundaries of productivity.
Fix the dollar and drive the hedge fund managers seeking shelter from the currency markets out of the food economy. Then both the real and artificial demand for American commodities or foreign oil will start to look more normal. And don’t forget to throw in the cost of transportation to put all those goodies on the shelves at your local Piggly Wiggly. A 25% cost increase in transportation (fuel prices) the past year contributes most of the 5% increase in the cost of our food over that time.
These are the main factors affecting the price of food around the globe today. Biofuels consume a small amount of global grain reserves, and while I will not say they have no effect (the perception that they do is enough to have an effect on the markets)they are one of the smaller parts of the bigger picture.
Comment by Caustic Conservative — 4/18/2008 @ 10:09 pm
the reason for the food shortage and hence rising prices is very simple - governments all across the ‘developing world’ and europe have put numerous obstacles and bans against GMO crops/seeds. GMO crops are the reason millions of people are alive today and not dead from malnutrition. if they would allow their farmers to use current farming techniques and crop, output from the same exact land will double or triple.
Comment by anon — 4/19/2008 @ 11:55 am
As we are now hearing a lot about ethanol production impacting corn supplies and other staples, what is missed is that the protein rich corn residue from alcohol production is apparently not being widely used as feedstock as it could be (http://www.npr.org/templates/story/story.php?storyId=87782087). Had we started an early rational production of alcohol for ethanol and the needed realignment of our animal feed process/transportation system this would have been minimized. Such changes take time. But as usual with a rush of government interference, in this case the subsidizing of ethanol production, after ignoring the potential for fuel disruptions for over 30 years is that the corn field to animal feed lot process is broken and farmers redirect their energies towards growing the new cash crop, corn.
Corn residue could be used for human nourishment as well, but I doubt that that will be done, even though Mexico and other areas have seen as much as a three fold price increase for corn meal. With an average wage of $20.00 per day as reported by the Mexican government, although I was told last year when visiting Baja California that it was $5.00 per day, the cost increase cuts heavily into household budgets. The rush to plant corn and reap the harvest of government subsidies has impacted wheat and hops production among many others. So expect the cost of bread, milk and other food commodities to continue to increase. Oh, the price of beer will probably go up too.
Comment by amr — 4/19/2008 @ 8:14 pm
Will farmers of the US be as oil barons of any country. Can not gasoline be more refind to burn cleaner as we seek the next step for mankind.
Comment by allan — 4/21/2008 @ 6:38 pm