Global Policy Forum

By John Vidal

Empty shelves in Caracas. Food riots in West Bengal and Mexico. Warnings of hunger in Jamaica, Nepal, the Philippines and sub-Saharan Africa. Soaring prices for basic foods are beginning to lead to political instability, with governments being forced to step in to artificially control the cost of bread, maize, rice and dairy products.

Record world prices for most staple foods have led to 18% food price inflation in China, 13% in Indonesia and Pakistan, and 10% or more in Latin America, Russia and India, according to the United Nations Food and Agricultural Organisation (FAO). Wheat has doubled in price, maize is nearly 50% higher than a year ago and rice is 20% more expensive, says the UN. Next week the FAO is expected to say that global food reserves are at their lowest in 25 years and that prices will remain high for years.

Last week the Kremlin forced Russian companies to freeze the price of milk, bread and other foods until January 31, for fear of a public backlash with a parliamentary election looming. "The price of goods has risen sharply and that has hit the poor particularly hard," said Oleg Savelyev, of the Levada Centre polling institute.

India, Yemen, Mexico, Burkina Faso and several other countries have had, or been close to, food riots in the last year, something not seen in decades of low global food commodity prices. Meanwhile, there are shortages of beef, chicken and milk in Venezuela and other countries as governments try to keep a lid on food price inflation.

Boycotts have become commonplace. Argentinians shunned tomatoes during the recent presidential election campaign when they became more expensive than meat. Italians organised a one-day boycott of pasta in protest at rising prices. German left-wing politicians have called for an increase in welfare benefits so that people can cope with price rises.

"If you combine the increase of the oil prices and the increase of food prices then you have the elements of a very serious [social] crisis in the future," said Jacques Diouf, head of the FAO, in London last week. The price rises are a result of record oil prices, United States farmers switching out of cereals to grow biofuel crops, extreme weather and growing demand from countries India and China, the UN said on Friday. "There is no one cause but a lot of things are coming together to lead to this. It's hard to separate out the factors," said Ali Gurkan, head of the FAO's Food Outlook programme, on Friday. He said cereal stocks had been declining for more than a decade but now stood at around 57 days, which made global food supplies vulnerable to an international crisis or big natural disaster such as a drought or flood. "Any unforeseen flood or crisis can make prices rise very quickly. I do not think we should panic but we should be very careful about what may happen," he warned.

Lester Brown, president of the Washington-based Worldwatch Institute think tank, said: "The competition for grain between the world's 800-million motorists, who want to maintain their mobility, and its two billion poorest people, who are simply trying to survive, is emerging as an epic issue." Last year, he said, US farmers distorted the world market for cereals by growing 14-million tonnes, or 20% of the whole maize crop, for ethanol for vehicles. This took millions of hectares of land out of food production and nearly doubled the price of maize. United States President George Bush this year called for steep rises in ethanol production as part of plans to reduce petrol demand by 20% by 2017.

Maize is a staple food in many countries which import from the US, including Japan, Egypt, and Mexico. US exports are 70% of the world total, and are used widely for animal feed. The shortages have disrupted livestock and poultry industries worldwide. "The use of food as a source of fuel may have serious implications for the demand for food if the expansion of biofuels continues," said a spokesperson for the International Monetary Fund last week.

The outlook is widely expected to worsen as agro-industries prepare to switch to highly profitable biofuels. according to Grain, a Barcelona-based food resources group. Its research suggests that the Indian government is committed to planting 14-million hectares of land with jatropha, an exotic bush from which biodiesel can be manufactured. Brazil intends to grow 120-million hectares for biofuels, and Africa as much as 400-million hectares in the next few years. Much of the growth, the countries say, would be on unproductive land, but many millions of people are expected to be forced off the land.

This week Oxfam warned the EU that its policy of substituting 10% of all car fuel with biofuels threatened to displace poor farmers. The food crisis is being compounded by growing populations, extreme weather and ecological stress, according to a number of recent reports. This week the UN Environment Programme said the planet's water, land, air, plants, animals and fish stocks were all in "inexorable decline". According to the UN's World Food Programme (WFP) 57 countries, including 29 in Africa, 19 in Asia and nine in Latin America, have been hit by catastrophic floods. Harvests have been affected by drought and heatwaves in south Asia, Europe, China, Sudan, Mozambique and Uruguay. This week the Australian government said drought had slashed predictions of winter harvests by nearly 40%, or four million tonnes. "It is likely to be even smaller than the disastrous drought-ravaged 2006/07 harvest and the worst in more than a decade," said the Bureau of Agricultural and Resource Economics. According to Josette Sheeran, director of the WFP, "There are 854-million hungry people in the world and four million more join their ranks every year. We are facing the tightest food supplies in recent history. For the world's most vulnerable, food is simply being priced out of their reach."

Food for thought -- possible scenarios

Experts describe various scenarios for the precarious food supply balance in coming years. An optimistic version would see markets automatically readjust to shortages, as higher prices make it more profitable once again to grow crops for people rather than cars. There are hopes that new crop varieties and technologies will help crops adapt to capricious climactic conditions. And if people move on to a path of eating less meat, more land can be freed up for human food rather than animal feed.

A slowdown in population growth would naturally ease pressures on the food market, while the cultivation of hitherto unproductive land could also help supply.

But fears for even tighter conditions revolve around deepening climate change, which generates worsening floods and droughts, diminishing food supplies. If the price of oil rises further it will make fertilisers and transport more expensive, and at the same time make it more profitable to grow biofuel crops.

Supply will be further restricted if fish stocks continue to decline due to overfishing, and if soils become exhausted and erosion decreases the arable area.