The future arrived more quickly than anyone expected. Starting in the 1960s, environmentalists warned that the world was about to run out of food as populations grew and agricultural land was exhausted.
But then came the Green Revolution, that period when yields were multiplied by scientific growing methods, and the old, pessimistic predictions were largely forgotten.
These fears have returned, however. Population growth, coupled with rising consumption habits, climate change, and higher production costs have sent food prices soaring. The UN Food and Agriculture Organisation (FAO) says its food price index rose by 40 percent in 2007 -- and it's still going up.
In the same year, supply tightened significantly. World wheat reserves fell from 18 to 12 weeks, and corn from 11 to eight weeks.
One reaction among grain-producing countries has been to ban exports so that their own populations are not exposed to shortages. One country which has just done that is Kazakhstan, Central Asia's biggest wheat exporter. Its ban threatens supplies to neighbors Kyrgyzstan, Tajikistan, and Azerbaijan.
"Food exporters are facing this problem and are cutting off their exports and are making it very hard for other countries, whether it's a country like the Philippines or an organization like [the World Food Program] to buy in the open market," the World Food Program's Asia director, Tony Banbury, said on April 22 of the combined impact of such export bans. "Right now we cannot buy the wheat we need for Afghanistan with the $78 million donors have given us. We simply can't get it. And it's the same in East Timor right now; they can't buy the food they need -- rice -- on the commercial markets."
FAO food reserves expert Abdolreza Abbassian tells RFE/RL from Rome that accumulation of stocks may superficially seem a good thing. Once acquired, reserves can be used to help stabilize prices. Exporting countries in the past used them as a buffer against unexpected changes in production anywhere in the world, contributing to more stability in prices.
But he also noted a downside: Imagine the impact on the market of many countries trying to acquire reserves at the same time.
"The problem we have today is that if more countries, especially importing countries, decide that keeping large stocks is the way forward for preventing [price] developments such as we have seen in recent weeks and months, well, keeping stocks has an economic cost, and in economic terms, its not a very efficient way of protecting yourself," Abbassian says.
EU Trade Commissioner Peter Mandelson came out strongly against national hoarding practices in comments in Tokyo on April 23. "If we restrict trade, we're simply going to add food scarcity to the already large problems of food shortages that exist in different countries," Mandelson said.
Abassian points out that nobody is carrying big reserves as they did in past decades, when farm policies for instance in North America and the European Union encouraged maximum production, and silos were full of stored -- unwanted -- grain.
He says the tendency in the developed world has been rather the reverse.
"If you're talking about cereals, a lot of developing countries actually do have a more sophisticated stocks policy and reserves policy than many developed countries, for a very simple reason: the developed countries have a more developed [crop] return and production system, and usually do not import food, and there is a tendency to keep reserves at the 'pipeline' [minimum] level," Abassian says.
Abbassian says the present surge in prices may lead to a reassessment of whether greater stockpiles of basic foods are needed once again, or whether some new form of risk management, using for instance an exchange scheme as a sort of insurance policy, could be developed between countries.
He says he does not share the view that food is itself genuinely scarce, even though its distribution is uneven. What is needed is a proper trade regime which will prevent countries from resorting to distorting methods, such as food export bans.
with additional agency reporting
... Payvand News - 04/26/08 ... --