"Things cost more than they used to"; or, The Pit, redux

We're looking at major price hikes in staple foods right now--skyrocketing hunger rates in southeast Asia, looming food riots in Haiti. According to some UN numbers cited in an NYTimes article, the price of wheat has risen 130% since March of 2007, and soy has risen 87% during the same period so that now 60-80% of consumer spending in developing countries goes to food. The same story says the World Bank notes that food prices have risen 83% over the last three years. Another article reports that the price of rice has doubled over the last three months and predicts it will rise "dramatically" over the next two months. These problems, of course, run deeper than the inflation we see at our grocery stores--inflation that's largely motivated by transportation costs according to the excessive leaps in gas prices (see post 31 Jan 2008)**.

So what's motivating the food crisis? The media is a hodge-podge of narratives for the the problem: Biofuels are subtracting goods from circulating as foods so that they can fuel our cars. Global warming is creating droughts that are killing off food production. The human population is growing beyond our farming capacities. They narratives are hard to parse out and often may not coincide in one account of the food crisis, but each thread bears a little thought:

1) The goods taken out of food circulation for biofuels are mostly corns, which are not really factoring in to the food crises we see in rice and wheat commodities. Now, long term, the loss of edible corn to biofuels could have some significant drawbacks for industrialized foodstuffs--imagine how many commercial food products in your pantry list high-fructose corn syrup as a significant ingredient, and you'll get a sense of the stakes--but those eventual problems aren't really related to the food crises we have at hand. (And that's to say nothing of the inefficiency of corn-based biofuels. An NYTimes article reports that Brazilian sugar-based ethanol can produce eight times the yield of U.S. corn ethanol with zero impact on food prices. Screw you, Iowa.)

2) Global warming is indeed a germane issue, and it's not one I want to dismiss. As a 21 April 2008 article reports, "More than 10 million people in parts of Thailand's rice bowl region have been hit by drought, the government said Monday, causing further concerns as prices of the staple grain soar." Surely over time global warming will produce drastic changes in the way we farm and eat, and just as surely it is being felt in the case of Thai rice. But this still doesn't explain the total picture of the food crises.

3) The human population is booming, and like global warming it's a problem that cannot continue to go unchecked. "The growth in world population is 78.5 million people each year, and by 2050, the global population will have risen from six to nine billion," UN food agency chief Jacques Diouf says. But that doesn't fully explain the drastic leaps in food commodity prices that we've seen in the last couple of months, as the population growth rate hasn't spiked inordinately during that period.


So while there's truth to each of these narratives of the food crisis, none really explains the total picture of the drastic, punctual leaps in food prices. Try this one on for size: market speculation. Say Beat Balzli and Frank Hornig, "But classic supply and demand theory offers only a partial explanation. Sudden price hikes since last January have been alarming. The UN estimates that at least $500 million (€312 million) in immediate aid will be needed by May 1 to avoid serious famines. Agricultural scientists at the world body's Educational, Scientific and Cultural Organization (UNESCO) have presented a report on the world food crisis. And criticism is growing that hedge funds, index funds, pension funds and investment banks bear part of the blame." And that's to say nothing of the rest of the article, which is pretty alarming.

I don't guess ethics are even relevant here. If we allow unchecked profit motive to generate "security contractors" who outsource their labor to developing nations, it only makes sense that futures markets can deepen the poverty and suffering of millions and millions of people they'll never meet.

The market has decided. And it has decided that you, young woman in Mauritania; that you, hungry family in Ethiopia; that you, impoverished farmer in Indonesia; and that you, starving children in Cameroon--it has decided that all of you are simply fucked: voiceless, hungry, and in many cases dying.


**NB: About the inflation rate, is it true that it doesn't factor in fuel and staple foods? I'd heard on NPR that this was the case, a provision in the government's inflation math that would avoid short, presumably temporary, spikes in a given price that might exaggerate inflation figures (you can imagine some bovine virus that would make milk $10/gallon that might misrepresent the state of the economy if it figured in to the inflation numbers). If that's the case, though, the current numbers on inflation are ridiculously underestimated, as our increases in gas and now evidently food prices are not temporary fluctuations so much as they are lasting trends cutting deep into the pockets of those who can least afford the increases.

***

Update: A 5 June 2008 NYTimes story reports that the speculation has broadened from the food commodities themselves to the infrastructure that supports them--farmland itself, fertilizer, grain elevators, etc.