Bye-bye cheap food, hello turmoil

Brian Stewart on the global warning signs that are rising food prices.

The cost of food is something many of us don't give much thought to, at least until the word "crisis" arrives.

That's when our separate worlds begin to shake and governments show signs of panic.

We're not officially at that point yet, but we are creeping steadily closer.

What's worrisome today is that we're only three years past the last great food crisis, which swept across much of the globe in 2008. With it came riots in more than 30 countries and enormous misery to as many as 400 million of the world's poorest.

The shortened cycle suggests humanity's attempt at feeding itself on a reliable basis is stumbling. If so, it's hard to exaggerate the seriousness of the situation.

During the 2008 crisis, Evan Fraser, one of the co-authors of Empires of Food, said the riots that followed the price hikes that year reminded him "of the decades preceding the bloody French Revolution in the 18th century."

Harvesting coffee fruits in Indonesia's North Sumatra province in February 2011. Higher coffee prices mean more money for growers, but offsetting that is the fact that all other Indonesian food costs have been rising steadily for the past four years. (Y.T. Haryono/Reuters)

And yes, skyrocketing prices for bread are at least partially to blame for much of the unrest we are witnessing in the Middle East, a broad revolutionary wave that may only be in its early phase.

In a vicious cycle, this unrest drives up the price of petroleum, which in turn forces the cost of transportation and fertilizer higher still.

The upshot is often hoarding and speculation, which can cripple the economic recovery in rich nations at the same time as it causes profound anguish and more violence in the developing world.

That's why a sudden food panic causes almost more misery than anything short of war, because it affects the stability of the entire globe.

The rice wall

In broad terms, food prices today are at the highest level ever recorded by the UN.

Wheat has risen by 58 per cent in the past 12 months, while corn has soared 87 per cent. Raw sugar prices are up 37 per cent.

Overall the UN food price index climbed by over one-third in the past year, with all food goods advancing.

So why aren't we as bad off as we were in 2008?  For one reason only: the key staple of more than half the world's population has not taken off along with the others. Rice.

It has gained only a modest 6.5 per cent in the past 12 months.

"I've never loved rice more than now," gushed Abdolreza Abbassian, a senior economist at the Food and Agriculture Organization in Rome. "Probably rice is the commodity separating us from a food crisis."

In the aftermath of 2008, some Asian countries began stockpiling rice more effectively. But we still need to be hyper-vigilant as today's rising oil prices, combined with some weak harvests, are starting to affect local prices.

Bangladesh, Indonesia and China, for example just announced rice increases of over 20 per cent.

If that seems like dull reading, just pause for a moment to contemplate what the current unrest in the world would be like if Asia were also to boil over should rice shortages become an issue.

At one point in 2008, Britain's MI6 foreign intelligence unit warned that as many as 70 countries might be unhinged by food costs.

Since then intelligence agencies have been keeping a close watch on rising food prices because of two events that tend to follow in their wake: widespread political unrest and mass financial devastation.

Two Indias worth

In sheer numbers, the main hardship caused by a global food crisis is not so much actual starvation, although this is still very serious and requires enormous international aid to keep at bay, but the gradual erosion of poor families, those that have to spend two-thirds of their income on food.

Checking out the price of vegetables in Anhui province in China, where rapid price increases are affecting social stability, Premier Wen Jiabo said in February 2011. (Reuters)

At the height of the 2008 crisis, it was estimated that more than 400 million people were made destitute by the rise in food prices. Often they were forced to leave cities, sell their few possessions and take children out of school, curtailing any hopes of advancement.

Less noted, but also devastating, panicky governments cut back on the so-called guest workers who send home an estimated $200 billion a year in remittances to their families.

This brought a new sense of helplessness, and no doubt anger, to tens of millions of young workers cut off from any hopeful future.

Today, the world is trying to recover from several generations of complacency over food. Agriculture has not been the glamorous research investment it once was. 

But now the numbers are stark, and unless governments step in to invest in all aspects of food production they could face clusters of crises in the coming years.

Just consider the demographics. Within 40 years the world will have nine billion people, which means we'll have to feed two billion more a day than we do now. That's an additional two Indias.

We will have to grow far more food and waste half as much; develop new seeds for a new green revolution; manage scarce water and climate change; develop new fertilizers, fuels and transport infrastructure to get more crops to markets --- and so much more.

We need to focus on the fact that while the world's population is growing at about one per cent a year, the yields of staples such as wheat and rice have stagnated at below that rate.

Meanwhile the agricultural lands in many poor countries are worn out and one billion people are currently existing at near-starvation levels.

I tend to be an optimist when it comes to big challenges, assuming a crisis shakes us into action.

But the age of cheap food is almost certainly behind us and properly managing the world's ability to eat enough without dangerous and even violent disruptions ahead will take all the ingenuity we have at hand, and some we have not yet even imagined.