The issue of food production is basic to any civilization. In this blog I will look at this, one of the three pillars of prosperity I have posited, and see how things are going.
In another blog on this site I have gone into detail about the three: cheap energy, cheap labor and cheap food constitute the basic needs of a society.
Here we look at food in more detail.
Lets start with the BBC article on the current situation.
The article states:
"Overall global food prices have risen by an average of more than 80% in the past 10 years, according to figures from the FAO released last year." (My emphasis)
"Analysts say that as well as environmental issues, fast-growing world population and the increased demand for biofuels has further put pressure on crop supplies.
"Rising food prices will have an effect almost all over the world but especially in poor countries where food and energy are the major things people spend their money on," said George Magnus, senior economic adviser to UBS.
"There's a risk, I wouldn't say a huge risk, but some risk of higher energy prices and higher food prices being very destabilising in some countries.
"We saw that in 2008 and in Mozambique last year and it's something to watch."
Why has this ocurred? Why such a rise? Le'ts look at the history tomorrow. Meantime here is a link to the BBC article.
Price rises from Nov 2010 to Dec 2010
- Sugar - 6.7%
- Cereals (including wheat, rice, corn) - 6.4%
- Oils - 8%
This is a lot if you spend 50% of your income on food already: it is disasterous for most of the poor of the world. And note oils here refers to oil and gasoline: a devastating one-two punch.
Jan 10, 2010
Note the chart below from the US Department of Agriculture. It shows that rye prices jumped 187% between 1991 and 2008. Why was that? I have argued that wheat prices were stable for many years jumped up when wall street speculators entered the commodities market looking for profits and running away from the wall street collapse. The result was and has been food riots around the world. Even the Chinese are concerned. They have 1.3 million citizens to feed everyday and rising prices do not help them if the citizens have to pay 50% of their income on food.
Sure there have been other factors, rising population, but nothing in the market stats below reflect "market" conditions. Yields have been relatively stable if not increasing. Why then did the price go up? Humm...
Here, again another dent in the cheap food pillar of American properity I have posited.
|Table 2--Rye: Planted acreage, harvested acreage, production, yield, and farm price
|Mkt yr 1/
||Weighted-average farm price
||(bushels per acre)
||(dollars per bushel)
|1/ June-May. Latest data may be preliminary or projected.
|2/ U.S. season-average price based on monthly prices weighted by monthly marketings. Prices do not include an allowance for loans outstanding and government purchases.
|Sources: USDA, National Agricultural Statistics Service, Crop Production and Agricultural Prices.
Date run: 12/21/2010
Now if, as we see, food prices have gone up due to commodity speculations
and the like, there are other negative complicating factors at work as well.
"Who owns the seeds?"
Monsanto, unknown to most, is a major factor. Monsanto, the giant chemical company owns, repeat owns the patent on many seeds, including corn. Therefore, Amercan farmers and others cannot legally plant several varieties of corn seed without their permission, since the hundreds of varieties of seed corn has been drastically reduced, this means that these fewer varieties are owned by companies like Monsanto. The rationale is that since these companies developed bug and disease resistant corn seed varieties, they have a right to the patents to those seeds.
What it means is that giant companies can control the production of food and determine prices for maximum profits. And this is precisely what they have done, starting in 2007-2008.
Diverting crop acerage for ethanol use has contributed to the crisis as well..
Below are links to several articles taking differing points of view on the issue of who owns crop seeds.
After that I will take a closer look at the history of how we got to this point
where seeds become the private property of giant corporations.
The above link to a BBC article makes it clear that most of the world understands that speculators have driven up food prices such that unrest and even war over food and resources is a threat.
French President Sakrozy:
"...called for regulation to rein in speculation and volatility in prices."
"Nicolas Sarkozy, meanwhile, who holds the chair of both the G20 global economic forum and the G8 major economies, repeated his belief that regulation was needed.
"Let those who buy big quantities of commodities commit to putting on deposit part of the financing for those commodities," he said.
The global food crisis is being ignored in the American press because wall street benefits from these rising food prices at the expense of the rest of the world.
It is no accident that it is the French President speaking out. In turn I predict the Chinese will speak out as well and the Indians will join them.
Their situation is potentially dire in that the latter countries now have to import food to feed their combined populations of of 2.5 billion people. In India some farmers have commited suicide because the government there is forcing them to buy Monsanto seeds.
Food is basic and since the United States is the bread basket of the world food has been and is, an instrument of foreign policy.
Food could cause the next war.
Lets have a closer look tomorrow.
The rebellions and riots in Egypt currently underway illustrate many of the themes I have explored in blogs on this site. What is it all about? What caused it?
The dissatisfaction with the Egyptian regime hits all of the pillars of any civilizaton-food, energy, and labor.
We see now worldwide shortages in these areas of food, energy and labor and jobs, thereby placing whole countries at risk.
First note that the students in Egypt, Tunisia, Algeria, France, Ireland, and even Germany are rebelling against high unemployment, high food and energy costs and corrupt governments who are profiting from all of this-all the while instituting austerity programs among their own people which make things worse-indeed destroying the middle class in those countries. (The same thing is happening here in the United States as well.)
And now we must include India and China who also are complaining about the increases in food and commodity prices. Both are experiencing high inflation and prices for basic food stuffs.
The French have responded with a mild rebuke to "speculators" whose movements of money instantly and overnight caused and continue to affect food and oil prices.
This all started, in the most recent iteration, in 2008 when the monied classes moved their monies from wall street into commodies looking for profits and into gold looking for "security" and running away from the market melt-down of that year.
They abandoned the American stock market and in acts which some have described as "economic treason" moved money overseas and sought to control food supplies through investments in commodities and in Monsanto, whose seed patents were being foisted upon whole countries.
In the Indian example, farmers were forced, through lucrative government contracts with Monsanto, to use Monsanto and genetically modified seeds. These seeds, of course, were and are expensive--too expensive for many Indian farmers to afford and were usable only once.
Driven off the land they migrate to the cities and India may become a net food importer.
The story is similar across the planet where countries have come to depend upon imported food, where many in Africa, India and China have populations which have abandoned self-sufficient farming for an impoverished city life.
The destructive impact of monied classes in these areas range across many areas from Face Book (note that Goldman Sachs is buying a stake in Face Book) to real estate, to govenment, to the health care system--virtually everywhere.
As a result bad things have ensued
A concrete example in the Egyptian situation:
The monied classes' response to the Egyptian situation is to calculate that oil prices will go up as a result of the unrest, especially if it spreads, and overnight have pulled out of the stock market causing the market to plummet, and have put money into oil and energy comodities foods and commodities, chasing profits.
The connection is that if food and oil become scare, made scarce by their own market manupliations, prices go up and then profits ensue.
Chaos reigns under a global system which allows speculators and wall street types untrammeled freedom to milk entire societies for profits.
It is unacceptable, especially, when these same monied classes push the middle classes into poverty, via their governments austerity programs.
The circle of money is complete.
Money, perhaps, is the root of all evil.
Major Food Importing Nations:
Switzerland, Japan, South Korea, Bulgaria, Iceland, Israel, Mauritius, Norway, Taiwan and Liechtenstein. To be an food importing nation is to vunerable.
Other nations suffer from high food prices due to seed and cost issues and that includes Indian and China.
But note in terms of volume:
"The industrial nations of the European Community, Japan, and the USSR import more food today than all of the poor countries combined."
"...they seek to shift adjustment burdens onto others, to enjoy something of a free ride. All have subsidized production for export in times of world surplus, and all have stepped ahead of poor countries to purchase high priced imports in times of scarcity."
This has the effect of driving up prices other countries have to pay for scarce food commodities and riots ensue and poor countries run out of money to subsidize or purchase food stuffs for their populations.
To compound matters food exporting nations as well has food importing nations have begun to hoard food, seeking to keep stores on hand to feed their own people and as a hedge against rising and higher prices.
See an excellent article published this month on the topic in the January 27, 2011 issue of the Financial Times. See link below:
The Financial Times article above makes the following points
1-World prices for basic food stuffs have reached record levels
2-Countries are hoarding food, the rich countries to drive up prices and the poor countries to buy now in the face of future higher prices which would directly threaten regimes all over the world, Egyptian and Tunisian style.
3-World food riots are inevitable.
4-There are few good solutions in the present system of food management.
5-Food is now a political issue in many countries
Few will state the facts plain; why after centuries of stable food prices is this happening? Bravely, we will try to give an answer tomorrow and have a closer look at the situation in the United States and how we might be affected.
Until then note:
"The era of cheap food is at an end, with the real prices of key crops set to rise 50-100 per cent during the next 40 years, according to a UK government report."
This, if accurate, is the worst possible news. See link below.
See the link below on the latest estimates on food prices. They will double in 20 years. That means food riots and turmoil world wide, especially in China, India and the Middle East.
6-9-11 Hedge Fund Managers Invade African Ariable Land for Profit and to Corner the Market on Food
As predicted here months ago the wealthy of the world moved out of stocks in 2008 and into commdities and food, thereby by driving up the price of food. This is directly related to the Arab Spring riots were about food, jobs and fuel prices.
Now ready to take their profits and expand their hold on the food and commodities, these same hedge fund managers, fat on food profits are now invading the site of the largest tracts of arible lands remaining in the world--Africa.
Forty percent of the worlds ariable land lies in Africa. It is the food prize of the next 20 years and our profiteers know it.
They have bought of land tracts totally an area the size of France.
With a food monopoy, can water be far behind?
Corporations and indeed governments are getting into the act to buy, stock and withhold from the market food stuffs and thereby hold the world hostage in order to get at those supplies for their own people but only by paying prices the food profiteers demand. This will be food and water blackmail.
Desperate are going to be the Chinese and all net and food and commodity importers.
The Africans, I predict will be food importers in 20 years unable to afford food grown on their own lands.
For more detail see the link below.
Food riots predicted.
China food prices rise. This is a bad sign.
300,000 Indian Farmers Commit Suicide Over Seed Prices?