Food Crisis Blame Game: Plenty to Go Around

As the world slips into a food crisis of epic proportions, analysts, politicians, producers, investors, purveyors, scientists, economists and pundits are weighing in with opinions on causes. Faced with the morbid spectacle of millions upon millions of deaths by starvation, many special interest sectors are eager to point the finger of blame. Those fingers are generally not pointed back at themselves.

Who are the blameholders? It depends on who is doing the blaming.

George Bush threw an additional $770 million at the problem just last week. In doing so, he pointed the finger of blame squarely at India’s rising middle class and their newfound ability to add a bit of meat to their still largely vegetarian diet. As one might expect, Bush’s finger-pointing isn’t going down too well in India.

The Indian press is pointing the finger of blame right back at the US and its push for biofuels. Indeed, 30% of the 2008 US corn crop is destined for ethanol production. Government-mandated ethanol content in auto fuel has, unarguably, been one factor in the rise of global grain prices.

While we can tout the efficacy of cellulosic ethanol and waste vegetable oil (WVO) biodiesel, the fact remains that there is currently about zero capacity to commercially produce either of those two types of biofuel. If 5%, 10% or 15% ethanol content is mandated or even attempted over the short term, that percentage will necessarily come from food-based, crop-based ethanol: what is being termed “agrofuel.”

Where else can we point the finger of blame? High oil prices seem to be a no-brainer. Oil is used extensively at every stage of food production from planting to end-user delivery. While the incomes of hundreds of millions of human beings are failing to keep pace with rising food prices, the big oil companies are reporting huge increases in profits. Exxon’s profit for 2008 Q1 would fund the entire World Food Program for a year and feed at least 78 million starving people.

High oil prices are nothing new, though. Peak oil, increased demand from emerging economies, civil strife in oil-producing countries and a failure to adopt effective conservation measures are contributing to the high cost of oil. As a party, however, the Green Party is not advocating lower fuel costs. Quite the contrary, we are pushing for a carbon tax and higher prices to discourage waste and overconsumption.

Who are the other blameholders? Commodities market speculators are one of them; perhaps, even the biggest one. Over the past seven years, the commodities market has been the focus of unprecedented speculation. In 2000, about $5 billion in capital was at work in the commodities sector. By 2007, that figure had ballooned to $175 billion. “Ballooned” is a good word for this massive increase in “investment.” This is another example of an economic bubble. Profit-driven, amoral speculators are using the food and commodities sector as the playing field and they are reaping spectacular returns. Speculation on previous bubbles gave us the dotcom boom and bust, as well as the mortgage/housing/credit crunch.

Worldwide stocks of food commodities are lower than normal but there is still enough food to feed the entire planet. If that food was priced affordably, millions would not be facing imminent starvation. Like the oil companies, commodities corporations like Monsanto, ADM and Cargill are reporting huge increases in profits.

The World Bank says that 100 million more people are facing severe hunger. Yet some of the world’s richest food companies are making record profits. Monsanto last month reported that its net income for the three months up to the end of February this year had more than doubled over the same period in 2007, from $543m (£275m) to $1.12bn. Its profits increased from $1.44bn to $2.22bn.

Cargill’s net earnings soared by 86 per cent from $553m to $1.030bn over the same three months. And Archer Daniels Midland, one of the world’s largest agricultural processors of soy, corn and wheat, increased its net earnings by 42 per cent in the first three months of this year from $363m to $517m. The operating profit of its grains merchandising and handling operations jumped 16-fold from $21m to $341m.

Similarly, the Mosaic Company, one of the world’s largest fertiliser companies, saw its income for the three months ending 29 February rise more than 12-fold, from $42.2m to $520.8m, on the back of a shortage of fertiliser. The prices of some kinds of fertiliser have more than tripled over the past year as demand has outstripped supply. As a result, plans to increase harvests in developing countries have been hit hard.
(Source)

Saskatchewan’s Potash Corp. is another big winner. The fertilizer-related business is the new Nortel for early-money speculators. Like all bubbles, the commodities bubble will burst. When it does, there will be millions, possibly hundreds of millions, dead due to rampant, unbridled speculation.

In addition to the major factors of high energy costs, biofuel policy and production, rampant speculation and increased Asian meat consumption, other significant factors can be blamed. And, they are being blamed as blameholders wiggle and spin and attempt to lay the guilt on the other guys.

We can blame international monetary policies that have seen poor countries switch from growing food to growing export crops in an effort to satisfy the World Bank on debt repayment. Globalization has been built on the tenuous basis of cheap transportation for freely flowing imports and exports. For example, Kenyan farmland has been converted to growing flowers for the European flower shop market. With higher fuel costs, Europeans are returning to more nearby sources while Kenyans are deprived of export dollars required to purchase imported food.

We can blame the decadent West – always a ready target and, at least in this instance, a valid one. While hundreds of millions face hunger, the biggest health problem in North America is obesity. While millions could be fed with the agricultural capacity going into agrofuel development, western governments subsidize and promote ethanol from food crops.

The western thirst for fossil fuels has not only driven up the cost of food production, it has fostered an entire biofuel industry that is competing for farmland and agricultural investment with food.

There’s also climate change to blame. Now, there’s a convenient truth. Climate change is to blame and we’re working as hard as we can to put the brakes on climate change, so we’re blameless. Not only that, climate change itself has such a myriad of blameholders that we can spread the blame around so thinly that none of us needs to claim any responsibility for it and, hence, for the food crisis.

How about we look in the mirror? Many North Americans eat meat every single day. If we cut our meat consumption by a couple of meals a week, we could have an impact on the situation. Meat, generally, requires seven times the energy/grain/protein/calorie inputs as are outputted; i.e. it takes seven kg of grain to produce 1 kg of beef. Over 60% of all the corn grown in the US goes into beef and pork production. When we give up a meat meal, we are freeing up seven times what we are sacrificing; if, indeed, eating a healthier, more vegetarian diet is any sort of sacrifice at all.

Are we willing to shoulder some blame? Or, are we like the other blameholders? Many of us were early riders on the biofuel bandwagon. As we looked deeper into ethanol and biodiesel development, it became apparent that agrofuels are not a solution to GHG reduction and threaten global food security. The amount of fresh water required to produce ethanol was warning enough for many, if not most, serious environmentalists and advocates.

Yet, we Greens haven’t entirely stepped up and taken responsibility. We can take solace in the fact that biofuel development, if it is a factor at all, is just a small cog in a big wheel. As I pointed out in a previous piece, Vision Green is calling for 10% ethanol in commercially available gasoline by 2010. Since there is no commercial capacity to produce cellulosic ethanol now and there won’t be by 2010, we are essentially calling for corn-based ethanol to be mandated by by law.

A few days ago, the GPC put out a pretty good press release on the issue.

The Green Party of Canada would take the following steps to address the food crisis:

  • Increase the amount of aid provided by our government to developing nations from 0.5% to 0.7% of GDP by 2016.
  • Take immediate action to reduce greenhouse gas emissions.
  • Fund major efforts to assist developing countries adapt, particularly aimed toward food security.
  • Shift towards a fair trade model that emphasizes human and labour rights, ecosystems, and the development of local economies.
  • Invest in real biofuel alternatives such as biodiesel and cellulosic ethanol from farm and forest wastes, rather than ethanol from crops grown directly for fuel.
    (Source)

That’s okay as far as it goes. It addresses the problem from a standpoint of root causes and delivers some concrete actions and solutions. Each of the steps makes sense and should help – in the long run. The significant and perhaps predominant fundamental cause of rampant speculation on international commodities markets is not really addressed. Nor, is the effect of our own wasteful lifestyle addressed in any specific way except to reduce GHG’s.

If we want to adopt a policy to invest in real biofuel alternatives, we need to quit saying we want 10% ethanol content in our auto fuel by 2010.

Looking at the big picture is noble and necessary. When we are faced with a crisis, though, we need to look at the smaller picture and do what we can until we can find the wherewithal to deal with the underlying causes. When we need a cancer operation, we may recognize and work to correct underlying causes but the immediate, short term action of the operation is what will keep us alive long enough to change our lifestyle.

We need to point fingers of blame where they are deserved. Hundreds of millions of lives are at stake, after all. We also need to be on the lookout for weasels who are unwilling to shoulder any blame while castigating the other guys. Importantly, we need to be on guard that we don’t weasel out of our own responsibility just because we don’t consider our own contribution to the problem to be a dominant factor.

Jim Elve

Note: This article was also posted to my Green Party blog.

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One Response

  1. Jim:-
    It is good to see someone appearing to perform the function of government action/inaction watchdog.

    Why is there a stoney silence on the abuse of taxpayers?

    Does anyone approve, (outside of the CCRA), of taxing people out of their homes and/or life savings?

    I wont hold my breath waiting for an answer.

    Ken

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