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Generational Dynamics Web Log for 16-Jul-07
The global warming fad is becoming the enemy of food production.

Web Log - July, 2007

The global warming fad is becoming the enemy of food production.

Food prices are continuing to increase sharply around the world.

Josette Sheeran, the director of the United Nations World Food Program (WFP), says that rising food prices are forcing it to cut back on programs to feed the poor.

"We face the tightest agriculture markets in decades and, in same cases, on record," said Sheeran in an interview with Financial Times. Noting that global wheat stocks have fallen to the lowest level in 25 years, she said, "We are no longer in a surplus world."

The WFP said its purchasing costs had risen "almost 50 per cent in the last five years," and that the price it pays for maize had risen up to 120 per cent in the past sixth months in some countries.

Actually, there have been plethora of news stories recently about food prices rising steeply around the world.

Sunday's Boston Globe says that Boston milk prices soared to their highest level ever this month as tightening national and world markets for dairy products pushed up the cost of cheese, yogurt, ice cream, chocolate, and even pizza.

According to the article, the price of a gallon of milk is $3.90, up 25 cents from a month ago, and 92 cents over the past year.

According to the latest American Farm Bureau Federation Marketbasket Survey, food inflation is up about 4% in the second quarter, and nearly 8% year-over-year.

Corn prices worldwide have risen about 60%, and wheat prices have risen 50%, according to Financial Times. Sugar, milk and cocoa prices have also surged, with food inflation the highest in three decades.

This has triggered a a stark warning from Peter Brabeck, chairman of Nestlé, the world's largest food company. In an interview, he said that "significant and long-lasting" food inflation will continue. He listed several major long-term and structural issues that contribute to this: Increased demand from China and India, and the use of crops for biofuels.

Biofuels? It's becoming a major factor in food prices.

Four countries are leading the charge for biofuels or "agrofuels": US, Brazil, Europe and China. Last year more than a third of the total US maize crop went to ethanol for fuel, a 48% increase on 2005. Brazil and China grew the crops on nearly 50 million acres of land. The increasing use of crops for fuel is taking land out of food production, and increasing food prices.

This has created some international political infighting.

Brazil is the world's largest exporter of ethanol, and President Luiz Inácio Lula da Silva says that he wants Brazil to do even more.

Business Week says that money is flying into Brazil to get on the biofuel train. Investors, including George Soros, are eager to put money into biofuel firms, and are expecting big returns.

Brazil's agribusiness is growing rapidly by any measure. Foreign agricultural exports grew 25% in the first half of this year, compared to the same period last year.

Brazil's president Lula believes that the growth in agricultural exports, especially ethanol, is the key to gaining clout and power for Brazil on the world stage.

"Brazil has already consolidated its position as the agriculture supplier of the world," according to a Brazilian trade official. "Now I think the Brazilian government sees ethanol as an instrument to make other countries pay attention to us, as a supplier of both food and energy."

In fact, Brazil is pretty much the only country in the world whose agricultural output is growing at all. Why? Because they've been cutting down the rain forest, clearing the way for more farm land and more food production. Since the 1970s, the Brazilian Amazon has lost more than 270,000 square miles of forest.

Now, this is a very sore subject with the Europeans, who enjoy taking having highly moralistic values, as long as those standards are applied only to other people, not themselves. (This is an allusion to the Kyoto protocol treaty, over which they regularly pummel the US for refusing to sign it. They signed it, but they don't abide by it. It's a joke.)

The Europeans are accusing are accusing Brazil of going on this program at the expense of cutting down its rain forests.

President Lula responded sharply: "We have adversaries that will make up any kind of slander against the quality of ethanol and biodiesel." Referring to a recent European conference where the deforestation issue arose over the use of sugar cane for biofuels, "I told them the Portuguese, who arrived in 1500, introduced sugar cane 470 years ago and it didn't reach the Amazon for a simple reason -- the temperature isn't suitable."

He added, "Brazil should not be afraid of this debate, we won't again accept the cartel of the powerful trying to stop Brazil from developing."

So, we have a beautiful irony, a conflict between the "global warming" fad and feeding people. We have the hypocritical Europeans getting into high dudgeon with the Brazilians, and President Lula calling their bluff. It's a sight to behold.

Putting up this web site and writing articles for it has lead to some fascinating insights that I couldn't have learned any other way. One of those issues is how emotional the food issue is.

Ever since I wrote my first article on the subject of food and population in 2004, I've had five or six online conversations with people on this subject that ended badly. People just really freak out on this subject.

It's as if they're saying to me, "A world war? Ha, ha! We always have wars. That's nothing. A stock market crash? Ha, ha! Everyone says that. Don't take it seriously. We're running out of enough food to feed people? WHAT??? ARE YOU CRAZY??? THEY SHOULD LOCK YOU UP AND THROW AWAY THE KEY!!!" One woman ended the conversation by saying that she thought that I already must be dead. Whew!

Nonetheless, from the point of view of Generational Dynamics, it's increasingly clear what's going on.

After WW II, there was a concerted effort to make sure that everyone would eat, because it was recognized that poverty and starvation were one of the major causes of the war. There was the Green Revolution that brought the latest agricultural technology to countries around the world, especially India. And there have been programs like the U.N. World Food Program that purchases food for needy people.

But the problem is that the population grows faster than the food supply. You can see this from the fact that food prices around the world have been increasing faster than inflation since 2000, and they've really skyrocketed since 2004.

What I believe has happened is that the "Green Revolution" ran out of steam around the mid-1990s, and population growth has been rapidly overtaking food production since then.

As one article after another has been appearing on increasing food prices, it's almost beginning to appear that some kind of "tipping point" has been reached, and worldwide food prices are really becoming uncontrollable.

Whatever the causes are -- and according to the president of Peter Brabeck,chairman of Nestlé, the causes are "significant and long-lasting," this will turn out to be one of the leading reasons why we're headed for a Clash of Civilizations world war. (16-Jul-07) Permanent Link
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Generational Dynamics Web Log for 16-Jul-07 The global warming fad is becoming the enemy of food production.

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Generational Dynamics Web Log for 16-Jul-07
The global warming fad is becoming the enemy of food production.