Remember 2008, when the economy crashed and global food prices went through the roof? It was a time when protestors took to the streets in 35 countries, and in the case of Madagascar, toppled their own elected government. It was also a time when the world’s markets started investing in agriculture as if it was oil.
As of August, the FAO’s Cereal Price Index found that overall cereal prices had risen 36 percent from where they were in August 2010, and were up 2.2 percent from where they were last month. This price rise comes even as the world’s farmers are expecting bumper harvests, except for corn.
Stocks for corn are now at 30-year lows, and prices have spiked to 80 percent above their levels a year ago. This is bad news for Africans in particular, who rely on corn as a staple of their diets, but higher food prices in general are likely to spell trouble for aid organizations attempting to buy and distribute food in the famine-affected regions of the Horn of Africa.
David Orr, the World Food Programme’s spokesman in Nairobi, Kenya, told the IRIN news agency that the food agency was likely to switch to other grains such as wheat in countries where that would be acceptable. But he said that high prices would have an impact on aid budgets nonetheless.
The cause of the higher corn prices can be blamed on a number of factors, including unusually hot weather in the American Midwest, which is the world’s largest producer of corn, or maize as it is known outside of the US. But growing demand for corn, both as animal feed and as a raw material for biofuels such as ethanol, is also increasing competition for the food that many people in sub-Saharan Africa consider to be their main source of carbohydrates. The US Department of Agriculture estimates that the US’s corn surplus, estimated at 920 million bushels, would last 26 days, less than the 30 days that is considered ideal.
In an interview with the Monitor, Oxfam America President Ray Offenheiser says that the growing strain on global food supplies are reaching the point where radical solutions may be required.
“In the 1980s, when we had excess food in the markets, there was an agreement that the market will provide, and many countries decided to take that gamble,” Mr. Offenheiser says. “But then we realized in 2008 that the shelves were empty, and consumers were also competing against other uses for food, such as biofuels.”
As much as 40 percent of the US’s corn crop ends up being used to make biofuels, Offenheiser says, adding that the demand for corn as a fuel source is growing. In 2007, there were 105 biofuel plants in the US, with a potential production capacity of 864 million gallons. By the following year, there were an additional 113 biofuel plants under construction, according to Offenheiser.
“Our food system is broken and is in need of a radical fix,” says Offenheiser, noting that 2008 was the first time that 1 billion of the world experienced food deficits. Falling food prices in the past two years eased that situation, he says, but rising food prices this year could see the world’s food deficient rising, yet again, to 1 billion.
Oxfam recommends a five-point plan to reform the global food system, including investing in small-scale food producers and in the old system of agricultural extension services; restraining “excessive speculation” in agricultural commodities; modernizing the system for food aid; ending the subsidies for the ethanol industry, so more corn is available for use as food; and regulating the purchase and leasing of agricultural lands in developing countries.