The bad news about global food supplies keeps coming. The World Bank reports that 44 million people have been driven into poverty since last June because of increasing food costs. And within days of the release of one U.N. report warning that global food prices in January 2011 were at an all-time high, another U.N. alert projected that drought in China would have a severe impact on the nation’s next wheat harvest. Because China has been largely self-sufficient in grain production for decades, a shortage there would mean a surge of demand through the global wheat market.
The U.N. Food and Agriculture Organization’s Price Food Index, a monthly measure of commodity costs for basic household foods, was up 3.4 percent from December 2010, the seventh consecutive month of food price increases. Sugar prices are at a 30-year high. The F.A.O. price index now stands at its highest level since the agency started measuring food prices in 1990. Prices in fact are now higher than they were in 2007 and 2008, when escalating commodity prices triggered food riots around the world. Rising food prices were among the forces underlying the discontent in Egypt and Tunisia. Unrest in other nations will be a likely outcome of the 2011 harvest of high prices if stronger measures are not taken.
World Bank and F.A.O. analysts worry that the world could be facing a long stretch of commodity price volatility and rising food prices. That might not mean much in a nation like the United States, which can anticipate minor and mostly tolerable increases in food costs in the coming year. But in the developing world, where many subsist on $3 or less a day, the results can be life-threatening. Some nations are already experiencing price shocks on food staples like rice, wheat and sugar, commodities that are now 30 percent to 40 percent higher than they were just last year. Many of the world’s poorest people are already spending more than half their income on food. They will be forced to stretch household budgets even further by skipping meals, reducing portions or buying cheaper but less nutritious substitutes. During the last food crisis, the World Bank estimated that 870 million people in developing countries were hungry or malnourished. The F.A.O. estimates the current number to be closer to 925 million.
The rising prices reflect higher global demand and poor yields in breadbasket nations like the United States and Australia, where bad weather this year played havoc across normally reliable growing fields. But hoarding has also contributed to the problem as some nations attempt to ensure domestic supplies by sequestering reserves from the commodities markets. Such efforts have a boomerang effect, adding sudden demand spikes on tight supplies.
In the short term, greater food aid from wealthy nations will certainly be necessary to stave off hunger, and poor nations can respond to the crisis by lowering tariffs and other import barriers. Meanwhile, U.S. and European regulators should keep a tight rein on market speculators tempted to increase profits by artificially inflating already high commodity prices. Over the long term, however, the rush toward biofuel production—for example, the corn-consuming and generously subsidized ethanol in the United States—needs to be seriously re-evaluated. It does not do the world much good to stiff-arm one crisis, climate change, by generating another, food insecurity and impoverishment. It may seem obvious that the best long-term step away from this carousel of scarcity, demand and price spikes would be to increase overall global supplies of staples. Less obvious is how best to go about that without further intensifying the suffering of the world’s hungriest people.
The global commodities market is a modern marvel in matching agricultural output with demand, but it has had at times a devastating impact on local production of food. In recent decades many nations have shifted from food self-sufficiency based on subsistence farming to export crop production, which discourages domestic production of basic food crops and specializes on a handful of crops or even a single major crop. Such efforts can lead nations to become dangerously reliant on imports for foodstuffs that used to be produced locally.
Efforts like the Obama administration’s Feed the Future program, a foreign aid program designed to get at the root of food insecurity by increasing agricultural production and raising smallholder farmer incomes, are welcome. But what would do the most to revive self-sufficiency and extinguish hotspots of hunger would be a critical review of expensive U.S. and European agricultural subsidy programs that contribute to the disruption of local food production. That examination of market conscience may allow subsistence producers to stay on the farm, where they can earn their daily bread and, more important, produce it within their own communities.