13 February 2011

Global Food Crisis Looming

Is another global food crisis around the corner? The UN’s food and agriculture organization, FAO, has been warning that global food prices continue to rise and are a cause for concern. FAO’s cereal price index is now at its highest level since July 2008, but still 11% below the peak in April that year.

The world’s poor live mainly on cereals and rising prices have a direct effect on their livelihood.

Extreme weather has been responsible for shortfalls among many of the world’s major cereal producers: drought in Russia and Argentina, a heat wave and heavy rains in the U.S. and widespread flooding in Australia and Canada. And now China, the world’s largest wheat producer, is bracing itself for the worst drought in 200 years, at least in the province of Shandong.

Canada is the world’s third largest wheat exporter, after the U.S. and France, according to the International Grains Council. But production in 2010 was down 14% and extreme weather is by no means the only cause for the decline. A report just released by the Canadian Agri-Food Policy Institute concludes that Canada is in need of a significant overhaul of its agricultural policy in order to compete in global markets and help feed the world.

But it’s not just wheat production that’s the problem. The increasing demand on corn or maize (see photo) and soybeans for livestock feed and bio-fuels only adds to the pressure when grain is short for human consumption.

While the world has been warned that a major food crisis could develop this year, the good news is that global cereal stocks are higher than they were in 2007-08. But in a world struggling to recover from economic recession, the haves will be less able to share with the have-nots without running their deficits higher.

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