The causes are not temporary, but fundamental trends
By Jake Caldwell, CAP’s Director of Policy for Agriculture, Trade & Energy
Renowned environmental analyst, Lester Brown, is predicting long term tight global food supplies and rising prices for the foreseeable future.
Brown, founder and president of the Earth Policy Institute, made the comments and proffered his analysis of the present global food situation during a media call today to assess the prospects for the 2011 world grain harvest.
In an analysis of the upcoming 2011 global grain harvest (rice, wheat, corn, and cereals) Lester Brown and EPI are predicting a modest increase of 80 million metric tons in all grains over last year’s harvest. Unfortunately, that is 20 million metric tons short of the 100 million metric tons we will need to maintain the status quo of global supplies, and 70 million metric tons below the 150 million metric tons needed for ‘normalcy’ in grain supplies, according to Brown. As a result, the FAO food price index is likely to increase over the coming few months with the poorest nations hit the hardest by higher prices.
The 2011 harvest is buoyed by stable rice production, and predicted increases in corn and cereals production in the United States and the world. Increased irrigation and more rain and snowfall, have reduced fears of widespread drought and a poor wheat crop in China. China is the world’s largest wheat producer. According to EPI, with a better, but not exceptional, wheat harvest in Russia in comparison to last year when the crop was ravaged by extreme drought, wheat supplies globally are likely to increase 20 million metric tons.
The tightening of food supplies and higher prices is not a temporary phenomenon, but is fundamentally “trend driven” by a set of factors influencing supply and demand, according to Brown.
On the demand side, Brown sees the major drivers as:
- Population Growth
- Rising Affluence and Diet Change in Emerging Economies
- Ethanol, and the diversion of grain for food to fuel
On the supply side, Brown believes the factors driving prices upward include:
- Climate Change and the increasing disconnect between agriculture and a changing climate
- Falling Water Tables — EPI has identified 18 countries with declining water tables due to overpumping of aquifers for irrigation. A telling example of aquifer decline is occurring in the Middle East. Saudi Arabia had been self-sufficient in wheat production for 20 years as a result of aquifer pumping. In 2008, Saudi Arabia announced it’s aquifer was severely depleted and in the last three years, it has seen its wheat crop decline 70 percent. Syria and Iraq are facing similar aquifer peaks and declines.
- Soil Erosion
- Inability of Technology to make significantly greater gains in yields from previous milestones.
As a result, Brown believes “We’re in a dangerous situation and we really don’t realize how dangerous it is.” Brown senses the time might be right for the world to consider an “International Food Reserve” to act as a control on the interacting supply and demand factors. He is concerned that international attention to transparency in stocks and stricter disciplines on speculators are good policies, but are “treating the symptoms, and not the cure.” In Brown’s view, there is far too little discussion of such factors as population growth and its impact on food supplies.
In the near future, Lester Brown anticipates at least another few months of rising food prices in the FAO food price index and predicts, “We’re going to be living with tight food supplies and higher prices and all the instability that brings — through this harvest and likely the next harvest.”
– By CAP’s Jake Caldwell
For more information on the global food situation, please see CP’s food insecurity series