Price volatility and food shortages – cousins of our good friend globalisation – have become familiar, albeit unwelcome visitors to the global community.
The food crisis of 2007-08 has given us a taste of things to come. A combination of factors (droughts in grain-producing nations, changes in trade and production, rising oil prices and hence an escalation in the cost of fertilizers, food transportation and industrial agriculture) led to a worldwide increase in food prices. These events triggered violent protests across the world, from Egypt, Haiti and Côte d’Ivoire to Uzbekistan, Senegal and Bolivia.
So where do we stand in 2010? Certainly not in the dire straits of 2007-08, but recent reports don’t inspire much optimism for the near future. According to the Reuters-Jefferies commodity price indicator, global wheat and corn prices jumped nearly 30% in a few weeks, while meat prices are at 20-year highs. World wheat and corn prices have risen 57%, rice 45% and sugar 55% over the last six months and soybeans are at their highest price for 16 months. Food prices are rising around 15% a year in India and Nepal, and similarly in Latin America and China.
Even the big players need to assess their options. America and Russia occupy pivotal roles in global food supply. The latter is one of the world’s largest wheat exporters. Hit by fires and drought which have wiped out a third of the grain crop, Russian authorities banned exports, first temporarily and now until next year’s harvest. As a result, wheat prices spiked: they have nearly doubled since the low point in June of $4.26 a bushel.
America harvests two-fifths of the world’s corn and provides nearly 60% of global exports. On October 8th, news that America’s production of corn would be 4% lower in 2010 than previously estimated sent prices surging by 6%, enough to stop trading on the Chicago Board of Trade.
The recession has demonstrated the degree to which countries are connected. Events, economic or otherwise, no longer occur in a vacuum, their consequences divorced from the rest of the world. As global warming continues, we are less likely to benefit from stable production patterns. Drastic climate changes lie ahead. Whether Russian wheat, Argentinean beef or American corn, we are too reliant on a few big countries. It’s time to start looking inward again and start re-discovering our roots. Home-grown domestic produce could still be the way of the future. It’s food for thought at least.
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