CONTINUATION: Soaring Food Prices Raise Fears for the Survival of the World’s Poorest

it is really happening, is an increase in the price of food that occurs as a result of increased demand from human consumption and the diversion of crops into usage as an alternative energy resource.

On the one hand the growing affluence of millions of people in China and India is creating a surge in demand for food – the rising populations are not content with their parents’ diet and demand more meat. On the other, is the use of food crops as a source of energy in place of oil, the so-called biofuels boom.

As these two forces combine they are setting off warning bells around the world. Rice prices are climbing worldwide. Butter prices in Europe have spiked by 40 per cent in the past year. Wheat futures are trading at their highest level for a decade. Global soybean prices have risen by a half. Pork prices in China are up 20 per cent on last year and the food price index in India was up by 11 per cent year on year. In Mexico there have been riots in response to a 60 per cent rise in the cost of tortillas.

It has even revived discussion of the work of the 18th-century British thinker Robert Malthus. He predicted that the growth of the world’s population would outstrip its ability to produce food, leading to mass starvation.

So far in Britain we have been insulated from the early effects of these price rises by the competitive nature of our retail system. But the supermarkets cannot shield us for long. The European Commission no longer has reserves to help cushion its citizens. Its mountains of unsold butter and meat and its lake of powdered milk have disappeared after reforms to the Common Agricultural Policy.

Then there is corn. While relatively little corn is eaten directly it is of pivotal importance to the food economy as so much of it is consumed indirectly. The milk, eggs, cheese, butter, chicken, beef, ice cream and yoghurt in our refrigerators is all produced using corn and the price of every one of these is influenced by the price of corn. In effect, our fridges are full of corn.

In the past 12 months the global corn price has doubled. The constant aim of agriculture is to produce enough food to carry us over to the next harvest. In six of the past seven years, we have used more grain worldwide than we have produced. As a result world grain reserves – or carryover stocks – have dwindled to 57 days. This is the lowest level of grain reserves in 34 years.

The reason for the price surge is the wholesale diversion of grain crops into the production of ethanol. Thirty per cent of next year’s grain harvest in the US will go straight to an ethanol distillery. As the US supplies more than two thirds of the world’s grain imports this unprecedented move will affect food prices everywhere. In Europe farmers are switching en masse to fuel crops to meet the EU requirement that biofuels account for 20 per cent of the energy mix.

Ethanol is almost universally popular with politicians as it allows them to tell voters to keep on motoring, while biofuels will fix the problem of harmful greenhouse gas emissions. But biofuels are not a green panacea, as the influential economist Lester Brown from the Earth Policy Institute explained in a briefing to the US Senate last week. He said: "The stage is now set for direct competition for grain between the 800 million people who own automobiles, and the world’s 2 billion poorest people."

Already there are signs that the food economy is merging with the fuel economy. The ethanol boom has seen sugar prices track oil prices and now the same is set to happen with grain, Mr Brown argues. "As the price of oil climbs so will the price of food," he says. "If oil jumps from $60 a barrel to $80, you can bet that your supermarket bills will also go up."

In the developed world this could mean a change of lifestyle. Elsewhere it could cost lives. Soaring food prices have already sparked riots in poor countries that depend on grain imports. More will follow. After decades of decline in the number of starving people worldwide the numbers are starting to rise. The United Nations lists 34 countries as needing food aid. Since feeding programmes tend to have fixed budgets, a doubling in the price of grain halves food aid.

Anger boiled over this week as Jean Ziegler, the UN special rapporteur on the right to food, accused the US and EU of "total hypocrisy" for promoting ethanol production in order to reduce their dependence on imported oil. He said producing ethanol instead of food would condemn hundreds of thousands of people to death from hunger.

Changing rates

The statistics on rising food prices we used were compiled from information collated by the US Department of Agriculture (USDA), individual governments and the Earth Policy Institute. The figures are country specific, except the price for corn, which was collated by the USDA. The 20 per cent rise in pork and 16 per cent rise in eggs occurred in China, while in India, wheat has risen by 11 per cent. Butter has increased by 40 per cent in Europe. The 10 per cent rise in prices for wholesale chicken compared to last year was predicted in America by the USDA. The 60 per cent rise in milk occurred in New Zealand, with the central bank blaming the increase on its recent rise in interest rates to 8 per cent.

(c) 2007 Independent, The; London (UK). Provided by ProQuest Information and Learning. All rights Reserved.