Thursday, November 18, 2010

Will the Food Riots of 2008 Return in 2011?

The short answer is yes.

From the Food and Agriculture Organization:
Food import bills for the world’s poorest countries are predicted to rise 11 percent in 2010 and by 20 percent for low-income food-deficit countries.
This means, by passing a trillion dollars, the global import food bill will likely rise to a level not seen since food prices peaked at record levels in 2008.
Price increases, seen for most agricultural commodities over the past six months, are the result of a combination of factors, especially unexpected supply shortfalls due to unfavourable weather events, policy responses by some of the exporting countries, and fluctuations in currency markets.
International prices could rise even more if production next year does not increase significantly – especially in maizesoybean, and wheat, FAO said in its report.
The weather is partly to blame. And it is not too much of a stretch to expect extreme weather events, like the massive floods that decimated Pakistan’s agricultural sector, to increase in intensity and frequency as climate change gets worse. Presumably, that means we should be prepared for more of these kinds of food price shocks in the future.
Our short memories have allowed us to already forget how much food prices shot up in 2008 and how poor people around the world rioted as their difficult living conditions became all the more precarious with rising grain prices. For example, Mexico reached a state of national crisis as the price of corn reached record highs. Then, in 2009, grain prices fell because of the global economic crisis. But that fall, like the fall in oil prices, was likely an aberration strictly related to that economic crisis. Like oil, traders of most other commodities have been chomping at the bit for prices to again rise. But that's going to have real consequences around the globe. Americans may get upset because Cheetos prices could go up by 10%.  But in Asia, Africa, and Latin America, these price hikes could be calamitous and contribute to a rise in global insecurity. Which as we should know by now, could come back and bite America in the behind.