Food shortages to inflate food prices
Americans enjoy a lower cost of food than most any nation in the world due to intense farm subsidies. These subsidies support large numbers of U.S. farmers, which would otherwise be wiped out due to competition from the cheaper cost of production in other countries. Governments have a large stake in food production; without easy access to food for all, the government cannot stand. As such, the U.S. government has made damn sure food is cheap for all in this country. This even allows for importation of rare foods not found in the Americas. Within these other countries, the crunch is being felt.
According to the United Nations, since December, 37 countries have faced a food shortage, and the U.N. World Food Program has claimed a $500 million shortfall. Food riots have occurred through out the world recently in Haiti and Pakistan. Corn, the major staple of Mexican diets, has quadrupled in price leading to violent riots. Even here at home, the poor are feeling the crunch. Meals on Wheels, a program which provides food to senior citizens who are unable to prepare there on meals, is no longer accepting applications and has a waiting list.
Those with a budget-conscious eye may have noticed the steady increase in food prices in the past year. According to The Economist, food prices have rose 75 percent overall since 2005. Dairy, wheat and corn prices have doubled in the food market. Even with such shortages, the USDA is still adding to the shortfall by paying farmers not to grow foods in order to “stabilize the market.”
There are several reasons for rising food costs across the world, which have apparently peaked simultaneously. Increased fuel costs, the rising economic status of citizens in China and other third world nations, and increased use of agricultural lands for non-food crops all of which attribute to what economists are now calling “the perfect storm.”
While hotly debated, the “peak oil” plays a large role in world fuel costs. Peak oil theory states that oil production will hit a high point and then decrease leading to higher oil costs with less production. This maximum production point cannot be maintained, and no matter what technology is developed, scientists believe oil levels will plateau. Economists are unsure if peak oil has occurred, however it is clear that it will occur soon, with 1995 being the earliest estimations, and 2020 being the most optimistic. The human population fails to follow the same bell-shaped curve, and demand continues to increases with increasing population, stretching current reserves desperately. Food transportation as well as use of fossil fuels in, not only farm equipment, but also another huge piece of the fossil-fuel pie, although less well known, the production of inorganic fertilizers.
China has the largest population of any country. All of Nixon’s good-hearted efforts to open up the east for trade finally paid off… and maybe a little too much. The former isolationists are now ruling the global economy, and now expect to reap the rewards in the forms of store bought food. Traditional farms or gardens that the average Chinese had just 40 years ago are unlikely to be tended to by the rising (and time stressed) middle class. Food production within the country increasingly occurs on larger company farms, or in other countries to be imported.
Increased productions of agro-fuels decreased arable land that is used for food production. Soy, corn and sugar cane are all currently grown for ethanol, which makes up for a portion of global energy sources. With Western stress on decreasing fossil fuel consumption, the increased reliance on biofuels will only further inflate food prices. It is a misconception, however, to believe that these crops grown for biofuel can be used for food. The varieties grown for optimal ethanol production are not actually edible. The decreased food production occurs simply due to decreased farm land used for food production. Cellulosic ethanol from sources such as native tall grasses or poplar clones may decrease the stress on agriculture.
All in all, it appears that the globalization and the laissez-faire market the U.S. has been pushing for has finally bitten us in the ass. The U.S. has been fortunate with government subsidised food costs, but it appears these benefits may not last. Until the total costs of food (carbon usage, land usage) are addressed in the market price, these food shortages will be unregulated by the market.