Price shock in global food

Riots over grain prices call for a rethink of global stability based on better farming.

from the April 7, 2008 edition

Americans may fret that Wheat Thins cost 15 percent more than a year ago but in poor nations, such price hikes aren't taken lightly. In Ivory Coast last week, women rioted against higher food costs, leaving one person dead.

In Haiti, four people were killed in protests last week over a 50 percent rise in the cost of food staples in the past year. From Egypt to Vietnam, price rises of 40 percent or more for rice, wheat, and corn are stirring unrest and forcing governments to take drastic steps, such as blocking grain exports and arresting farmers who hoard surpluses.

The UN International Fund for Agriculture predicts food riots will become common on the world scene for at least a year. The World Bank says 33 countries face unrest from higher prices in both food and energy.

Even in grain-rich America, wholesale food prices are rising at a rate not seen in 27 years. The most acute "ag-flation," however, is in Asia and Africa, where food costs take up a higher proportion of family income. And the face of hunger is now seen more in cities as a historic shift takes place with more than half of the world's population soon to be living in or near urban areas.

The food price hikes may not be temporary, according to the UN World Food Program, which sees long-lasting causes, such as spreading deserts and more demand for grain-fed meat. The WFP itself, which feeds about 73 million of the most destitute people, warns its rich donor nations that it will require more money for some time to come. Its latest need: $500 million more by May 1.

The food price crisis has created a welcome stir about government policy. Last week, World Bank President Robert Zoellick called for increased agricultural production in poorer nations while warning rich countries not to set up more trade protection and subsidies for farmers. "This economic isolationism signals a defeatism that will reap losses, not the gains, of globalization," he said.

Indeed, a government's attempt to control food markets, either for farmers or for urban dwellers, often creates the kind of distortions that contribute to higher prices. One of the worst examples is a rush by Europe and the US to devote more farmland to growing biofuels – a dubious action to curb greenhouse gases. In 2008, about 18 percent of grain in the US will go to make ethanol and, according to the Earth Policy Institute, such production over the past two years could have fed nearly 250 million people.

UN officials are split over their high priority given to biofuels in the fight against climate change, with Secretary-General Ban Ki Moon now suggesting a review of that policy. But international bodies also need to review reduced investment in agricultural productivity. A second "green revolution" from scientific research, like that seen during the 1960s, could transform farming once again.

In Asia, where two-thirds of the poor live, growth in farm productivity is down to 1 percent a year compared with 2.5 percent two decades ago. More money needs to go toward research in creating new strains of grain and toward better irrigation. Too many nations are rushing to industrialize and urbanize at the expense of farmers.

Food riots signal the need to rethink global stability and the critical role of those who till the land and feed us all.