Almost overnight, the media have discovered a world food crisis. "The End of Cheap Food" was the alarming headline on the cover of The Economist (December 8, 2007), and "Grains Gone Wild" topped a New York Times column by Paul Krugman (April 7, 2008). The alarm is being echoed in scores of front page news accounts. World market prices of wheat, corn, rice, and other farm products have soared, raising the Consumer Price Index in the United States by at least 4.3 percent since last year. In many poorer countries, retail food prices have risen much higher.
Farmers here and abroad have heard it all before: "high food prices," or, as often has been the contrary case, "burdensome farm surpluses." Much of the non-farm public puts the onus on farmers and their governments' efforts to deal with the problems, and ignores the long-term danger that both catch-phrases betray.
This time, however, the crisis is real, and is less likely than ever to blow over within a season or two. Its global impact is devastating, and has already stirred food riots in poorer countries that can no longer count on their own farmers' production, nor on American grain surpluses for emergency relief. And it is a portent of a huge, serious, and long-neglected challenge that faces governments and their leaders in the months and years ahead.
The immediate challenge--and an appropriate response--was spelled out by United Nations Secretary-General Ban Ki Moon, writing in the Washington Post (March 12, 2008):
The threat of hunger and malnutrition is growing. Millions of the world's most vulnerable people are at risk.... The effects are widely seen. Food riots have erupted from West Africa to South Asia. In countries where food has to be imported to feed hungry populations, communities are rising to protest the high cost of living. Fragile democracies are feeling the pressure of food insecurity. Many governments have issued export bans and price controls on food, distorting markets and presenting challenges to commerce. He called upon better-off nations to increase their donations to the UN's World Food Program, adding that inevitably "it is the 'bottom billion' who are hit hardest--people living on one dollar a day or less."
Short-term, the crisis has multiple sources. Australia, a major grain producer and exporter, has suffered a protracted drought. Bad weather has reduced farm output in Afghanistan, Bangladesh, Burkina Faso, Cambodia, Egypt, El Salvador, Guatemala, India, Indonesia, Sierra Leone, and Syria, among others. (Global warming is a prime suspect, and a much-dreaded harbinger of even worse to come.) Diversion of corn, sugar cane, and palm oil--but not wheat--for use in biofuels is a lesser factor. World production of grains has increased at a normal pace in recent years, but has generally lagged behind demand. Exacerbating the crisis is the declining value of the American dollar, the currency in which the major commodities are traded, making imported food suddenly more expensive in the currencies of the importing countries. The dollar's fall has had the same impact on import prices of oil--dealing a double blow to all importing countries' economies. And the soaring price of oil has inescapably worked its way up the food production chain.
Yet the most durable, fundamental, and accelerating source of the crisis is the recent surge in demand for more and better food in China and India, and in other developing countries. As economies grow, millions of once-poor consumers are suddenly able to spend more on meat, which in turn spurs the demand for grain.
Thus "not enough food" is the core problem, not "high prices." The emphasis on prices by media, governments, and political authorities exposes the misunderstanding of, or indifference to, the realities of the global food economy that has dominated agricultural policy for the past half-century. Simply put, we have failed to provide the productive capability to feed everyone decently, and this is both an American and a universal problem.
The Shrinking Staff of Life
Wheat is the global bellwether of food and grain economics, and output in the United States, the world's primary exporter, helps tell the story. In December 2007, the Department of Agriculture estimated that the U.S. wheat harvest had reached 2,067 million bushels, an increase of 14 percent over the year before. But the department also estimated that the carryover from old crops when the 2008 harvest begins this June would be only 280 million bushels, the smallest in 60 years, following several years of declining American and global carryover stocks. Consumers with newly realized purchasing power have eaten up the supply that the world has too long taken for granted as normal, and occasionally "surplus."
The United States carryover is reckoned to be approximately 12 percent of the total wheat used during this year, the smallest percentage since the drastic...