A food price spike that needn't be
The UN warns of a global spike in food prices, caused in large part by drought, that could lead to riots like those four years ago. Big grain exporters need to rethink their policies, especially in the US with its mandate on ethanol for fuel.
Farmers have never been better at growing more food for an expanding global population. Yet on Tuesday three United Nations food agencies issued a warning about a worrisome spike in grain prices caused in large part by long droughts.
The UN alert came with specific advice for grain exporters such as the United States on what they can do to ease a historic shortage in corn, wheat, and soybeans. It was a welcome reminder of how much the world has learned about adjusting after each food crisis. Famine is now no longer the norm but an exception.
Yet memories are fresh of food riots that erupted in more than a dozen countries four years ago during a similar spike in food prices. Erratic weather has been the main cause of food woes in recent years, which means both consumers and producers still need to change many of their ways.
The UN, for example, wants the US to suspend a federal mandate for the use of corn-based ethanol as a fuel for cars. It also asks that big producers such as Russia keep allowing exports of grain, instead of banning them in order to offset the lower production of domestic farms. The world’s poor are too connected to global markets for producer nations to act selfishly.
The UN advice for America will not be easy to take. The ethanol lobby is powerful, especially before an election when Midwest corn states are up for grabs. Yet most of the country is experiencing the worst drought in half a century. Corn prices are up 50 percent so far this year. World markets warily await the next US crop report on Sept. 12.
Diverting 40 percent of US corn harvests to ethanol production now seems like a luxury, one forced by government fiat at a time when American energy markets are now able to extract more oil and natural gas with new drilling technique. The original excuse for government-aided ethanol seems less compelling.
The Environmental Protection Agency has been asked by several states to suspend the mandate that Congress imposed in 2007. A decision is expected by Nov. 13. President Obama may want to ask the EPA to wait until after the election in order to prevent a rise in gasoline prices that would come if refiners don’t need to add less-expensive ethanol to their blend.
But the world’s poor may not be able to wait that long. World grain markets must see the US putting food needs ahead of lower fuel prices.
World food demand is expected to double by 2030. Countries must work together to meet that need. The US accounts for 60 percent of world grain exports. It should be a leader in preventing hunger, not be a cause of it.