News From Around the World
Tuesday, January 18, 2011
A big story is developing that a significant rise in global food prices is now underway. But, the world doesn’t seem to notice its real cause.
The United Nations food agency announced that 2010 showed food prices have surpassed the record levels hit during 2008. You’ll remember that triggered riots in Egypt, Cameroon, and Haiti. The current spike in food prices has already caused violent food riots in Algeria, Tunisia, Morocco, Yemen, and Jordan.
The world is straining to keep up its food production to feed a burgeoning population. Food inflation has already hit double digits in China, India and Brazil and it's not hard to see why if you examine how other major soft commodities have performed over the last 12 months:
- Corn: + 69%
- Wheat: + 47%
- Soy Beans: + 44%
- Sugar: + 15%
- Coffee: + 65%
- Cotton: + 105%
While these price hikes have caused food and clothing prices to rise, the effect will undoubtedly be worsened by the rise in energy and raw materials we have seen recently. Oil is up + 15% over 12 months and + 30% since the August, 2010. Copper is up + 30%.
The price hikes aren’t likely temporary, but a tell-tale sign of our future.
After 30 years of falling prices for food, the trend was reversed around 2002 when a sudden and continuing increase in prices began to emerge. As the number of farmed hectares (a hectare is 10,000 sq. meters) under irrigation increased, prices fell. But, the supply of fresh water for irrigation is falling, and with it, food prices are rising.
A small increase in the price of food will starve millions. Increasing global demand for food will mean higher food productivity must be maintained in the world’s major breadbasket regions. If not, up to 3.5 Billion people could be at risk of starvation within two decades.
In terms of calories, more than 99.9% of the human food supply comes from the land, while less than 0.01% comes from oceans and other aquatic ecosystems. Of the total world land area – approximately 13 billion hectares (Gha) – only 10% for is used for cropland; more than 26% for pasture land; 32% for forest land; 9% for urban; and 21% for other areas. Most of the other remaining 21% of the total land area is unsuitable for cropland, pasture, and/or forests because the soils are too infertile or shallow to support plant growth or the climates and regions are too harsh, too cold, dry, steep, stony, or wet.
Most of the suitable cropland is already is in use around the world. Thirty-six percent of suitable lands are used to produce crops and as pasture to produce meat, milk and fiber from grazing animals.
Only seven countries produce substantially more food than they consume: Argentina, Australia, Canada, France, Thailand, and United States. There are 193 nations that must import at least some of their food. Some nations (e.g., China, Egypt, Mexico, and Nigeria) whose populations are rapidly increasing must import more and more food each year. Since nearly 40% of the projected 2025 global population will live in countries whose water supplies are too limited for food self-sufficiency, dependence on grain imports is bound to increase. Virtually the entire Middle East is having to abandon farming and resort to importing food.
This means food security of nations is being threatened. About 50% of the food produced in China and India is grown on irrigated land versus only 16% in the U.S. Therefore, the Chinese have likely reached or exceeded the production limits of their agricultural system. The dependence of China on large inputs of oil-based fertilizers and biocides (e.g., pesticides, fungicides) compensate for shortages and their degrading croplands, severely eroding soils, and limited water supplies.
As a comparison, it takes a total of 1,400 kg per capita per year of agricultural product to feed each American, while the average food supply in China is only 800 kg per year per capita – which corresponds to an affluent diet (U.S.) and a moderate diet (China).
Moreover, China must import large quantities of grain in order to supply its domestic demand and will continue to depend heavily on increased grain imports because of land and water shortages. All of these factors indicate that severe food production problems are ahead for China.
By 2050, the global human population is projected to be 9.2 billion from about 6.8 billion in 2010 doubling the need for food production. In order to supply a doubling of food demand by 2050, global crop yields will nearly have to double without an increase in the area of cropland. That isn’t going to happen.
If crop yields per area of land do not change, the area of land dedicated to food production would have to double to about 3 Gha. The area of cropland globally is increasing at a rate of 5 – 8 million ha (Mha) per year from the conversion of forested and other wild land. The global demand for farm land will increase by 200 – 750 Mha, which means that between 1.7 – 2.25 Gha of farm land will be needed by 2050. From 1950 – 1995, global grain yields per acre increased an average of only 2% per year.
Unfortunately, since 1995, the growth in grain yields has declined. An additional 200 Mha of cropland would likely be required to supply our global food demand assuming that crop yields increase 0.3% per year and that per capita consumption does not change (particularly by the newly affluent who are consuming more meat and more calories).
And that, my friends, is not going to happen either.
The geo-political ramifications that lie before us are profound. Food security will soon become everyday words in our vocabulary.
About Ed DeShields
Last week: Are Most Americans Missing the Point?
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