This three-part series, written by Stuart Clark, originally appeared in the Winnipeg Free Press in July 2011.Originally printed in the Winnipeg Free Press July 23, 2011.The global food system can seem a complicated thing. It involves farmers, buyers, speculators, governments and many others, all affected by weather, politics and other factors.
An easy way to understand it is to think of it is as a water bucket. For most of the last half of the 20th century, the bucket had two holes. One hole was labelled human food, the other one was labelled animal feed. During that time, the water in the bucket leaked out steadily, but it never emptied—each year the world’s farmers added enough water to keep it filled. Most years they added so much that it actually overflowed.
For about 50 years, the system worked fine. But then the holes started getting larger—especially the animal feed hole, as people around the world began to eat more meat. It became harder for farmers to keep the bucket filled.
Then a third hole was drilled in the bucket—biofuels, or food for our cars. At first, it was small. Today, it is very large. Now water is really gushing from the bucket.
Throw in changing weather patterns—things like drought or, as happened this year on the Canadian prairies, too much rain—and production can’t keep up with demand. The result? Global food shortages, and rapidly rising food prices and famine, such as we are seeing in eastern Africa, where people are suffering from drought and high food prices are limiting the attempts to help them.
It wasn’t always this way. Since the Second World War, farmers have kept the world well stocked with food. Rapid mechanisation, improved seeds and petroleum-based fertilizers and pesticides helped them keep up with demand. In fact, many years the bucket was filled with too much food—the challenge facing western governments was what to with all the surplus crops.
Today, that’s all changed. Food surpluses are a thing of the past. This is a very good thing for Canadian farmers—as prices rise, they can finally make a decent living. But high food prices, particularly when they change dramatically and quickly, are causing havoc in developing countries.
How did we get into this situation?
Despite the fact that human population doubled over the past 40 years, food production was always able to keep up with demand. The regular production of largely predictable crops, mostly harvested during one season of the year and coupled with the food stocks left from the previous year, ensured there was always enough to meet the needs for both food and animal feed.
So what changed? For one thing, there are simply more people on the planet. But that’s not the main cause for concern. A bigger challenge is the dramatic growth in the use of grains for animal feed for meat. It’s partly due to consumption at home—Canadians today eat more meat than they used to. But the real pressure comes from the developing world, where rapidly rising incomes are driving exponential growth in demand for meat and dairy products.
In China, for example, annual meat consumption has jumped from three to 60 kilograms per person over the past 50 years. This is still far less than the 110 kilograms per person in Canada, but since China has one-sixth of the global population, the total amounts are staggering. Today the amount of cereals used to feed animals is rapidly approaching that of total human food, and the rise of soybean use for that purpose is even more dramatic.
Another big factor is biofuels. It began slowly in the U.S. in the 1970s, but the conversion of corn to ethanol began to take off in 2003 when laws were passed in that country requiring 10 percent ethanol in all gasoline. Today corn used for biofuels makes up almost 40 percent of the total corn crop in the U.S.—equal to the total amount of corn traded on the entire international market.
All of this consumption is putting a strain on food production and driving up prices. The question is whether production can keep up—and what happens when it doesn’t?
In the past, farmers responded by changing their crops and adding more fertilizers to increase production, causing prices to drop. But that is not working so well now. In 2008, Canadian farmers produced bumper crops, but within 18 months prices were rising again—globally, farmers simply can’t keep up with demand for food for people, animals and biofuels. Less than reliable weather patterns is exacerbating the situation.
As a result, global food stocks, which have traditionally provided a shock absorber when production fell, are declining. Or, to stay with the bucket analogy, the world’s farmers continue to add water although the amount is less predictable, but the outflow is so large that they can’t keep it full, much less produce surpluses. And without that shock absorber, food prices around the world are becoming more volatile and prone to sudden increases.
Since grain prices play only a minor role in our grocery bills, and our grocery bills themselves only take an average of 10-15 percent of our income, the rapidly-emptying bucket doesn’t affect the average Canadian. In developing countries, however, where food bills make up as much as 75 percent of total household income, this is a much more serious problem. When prices suddenly double, as they have in recent years, the impact is immediate: Families eat less, and eat less well—something that hits children particularly hard, since they no longer receive the foods that are vital for their growth.
Food production that can’t always keep up with demand, rapidly rising prices that negatively affect poor people, disappearing surpluses—all things that are part of the new reality facing the world today. We need to think hard about how we are going to adapt to it.
return to topOriginally printed in the Winnipeg Free Press on July 25, 2011.Four grains – wheat, corn, rice and soybeans – are the basis of the global food system. And that system is like a water bucket, a water bucket that is starting to empty. Food production that can’t always keep up with demand, falling surpluses and rapidly rising prices that negatively affect poor people — this is the brave new world for the human food supply.
We still produce enough food most of the time to meet the world’s needs, but the margin of safety-- the overall surpluses of grain-- has shrunk dramatically and, in some years, almost disappeared. How do we adapt to this new world?
Until recently, food production and food prices have been fairly steady and predictable. In recent years, however, the changing balances between supply and consumption have driven more and more periods when these prices become unstable, and international grain prices swing wildly.
For some, there are positive implications from this price volatility. For speculators, it offers the potential for making a lot of money. Well-equipped farmers in Canada can also earn more income, if they time their sales right.
But in developing countries the implications are disastrous. Many of these countries rely on the international food market to provide the food they are unable to produce themselves. To do this, they must budget for these purchases. When international prices rise suddenly, the cost of their food imports skyrocket, stretching already-limited resources. In some cases, they can’t buy food at all -- their suppliers have sent the food to more lucrative markets elsewhere.
The situation can quickly become dire, as it did in the spring of 2008 and again earlier this year, when angry, hungry people take to the streets—as they did in Tunisia and Egypt this spring.
For smallholder farmers in the developing world—people who own small plots of land, have limited resources and who are most vulnerable to risks such as drought, floods or fluctuating prices—even high prices, if unstable and unpredictable, are bad news. They can escape poverty if prices and their production both rise, but are often reluctant to risk their limited resources by renting more land or planting more crops if they fear that prices will collapse by harvest.
Unlike Canadian farmers, poor farmers in the developing world don’t have bank credit and government programs to help them if prices suddenly collapse at harvest time. Their understandable caution means that they often miss the chance to increase the local food supply and strengthen their own incomes.
Unpredictable price rises can also adversely affect Canadian farmers. Many of Canada’s most important customers for our grain exports are importing countries in the Middle East and Africa. After the 2008 food price crisis, some of these countries decided to protect themselves by buying or renting farmland in other countries. The food that they will be able to produce in these foreign farms may mean less being bought from Canadian farmers and lower export prices.
What’s causing this problem? What is driving food price volatility, and how can it be brought under control?
Like all other commodities, grain prices are influenced by supply and demand. In reality, those prices are significantly determined by the level of grain in storage. These ‘stock levels’ are quite well known in the U.S. and Europe due to their regulations, but are less well known elsewhere. A key ‘trigger’ for determining whether or not prices will rise is grain stock levels falling to a certain point that people fear there won’t be enough to supply the demand. For wheat, this trigger is about 75 days of supply or, using the bucket analogy, when we can almost see the bottom of the bucket. When stocks approach this level, prices start to shoot up.
One way to control excessive food price volatility is to ensure there are sufficient stocks for those times when events such as unfavourable weather cause a major hiccup in production. Many countries used to do this but these policies were abandoned in the 1980s as part of the trend to reduce the role of government and rely on the private sector. Unfortunately, the private sector has little reason to hold such large stocks and incur the expenses involved. Countries like China and India continued do so despite this trend with the result that they escaped the 2008 food price crisis unscathed.
If such stocks were held internationally, and their presence and condition were widely reported, they could provide a cushion to keep the total stock levels from reaching the trigger points. In a world where climate change could cause disruptions in crop production from time to time, establishing such stocks just makes sense. In other words, making sure that we have some ‘water’ held in reserve to refill the bucket to prevent fears of it emptying completely.
But providing a cushion to make sure we can prevent emergencies is only part of the answer.
return to topOriginally printed in the Winnipeg Free Press July 27, 2011.The water bucket that is our global food supply is nearly empty. Water leaks out of through holes labelled food, animal feed and biofuels. Farmers use to be able to keep it full—sometimes to overflowing. But these days it is beginning to head towards empty. What can be done to restore the balance so that the water level rises to a safe level?
One way is through increased agricultural production—new farm machinery, new seeds, new types of fertilizers and more irrigation. That would certainly help. At the same time, however, a changing and less predictable climate is already making it difficult for some farmers to achieve maximum harvests. The challenge is to increase production in a way that is less sensitive to unpredictable weather, yet avoids contributing further to climate change.
Canadian farmers have made considerable progress in the last two decades through ‘no-till’ cropping. By not ploughing the land before seeding, more of the organic matter from past years’ crops accumulates in the soil and improves soil fertility. As a result, these soils hold more moisture during dry periods.
Some African farmers have gone one step further by practicing what is called ‘conservation agriculture,’ a way of applying compost and fertilizers only to the places where the seeds are planted and then covering fields with a blanket of grass or leaves to retain moisture during droughts and reduce erosion under heavy rainfall. Not only do these fields become more ‘climate ready’—they also yield up to ten times the crops produced by the neighbouring fields.
Despite these positive developments, the United Nations Food and Agricultural Organization foresees a slowing of the global agricultural production increases. This is due to the increasing shortages of water for agriculture, the limited productive capacity of expanded farmland, and the expected impacts of climate change on crop yields.
So if we can’t fill up the bucket faster, what’s next? We must begin to look at how we use our current crops and how we can slow their growing consumption.
First up is how to deal with growing meat consumption, one of the larger holes in our bucket. The International Food Policy Research Institute (IFPRI) reports that global animal feed demands will double by 2030, due to rising world demand for meat and dairy products. In many parts of the world young children in particular require more meat and dairy products but in rich countries meat consumption is already far above the levels of good nutrition. The only way to tackle this is for more people in rich countries to eat less meat. Practically speaking, this may be very hard to implement except through rising prices. Even if meat consumption in rich countries is halved, the projected saving in global animal feed will be modest due to population growth and rising meat demand in the developing world. But it’s a difference we can all make.
Next is the biofuels—one of the newest holes in the bucket. The current U.S. requirement of 10% ethanol in all gasoline is due to be raised to 15% soon. There are new technologies that have the potential to use non-food raw materials. These could take some of the pressure off on the supply of corn. If they don’t work out, or are long-delayed in coming, the impact on global corn prices will continue to be a serious problem. If corn continues to be the main raw material for biofuels, some system of limiting biofuel production when food prices become too high may become essential.
The biggest hole in the bucket will continue to be food uses. Despite the expected increases in population, there are some important changes we can make to reduce this flow. It is estimated that as much at 40 percent of the food that is grown in developing countries is lost after it leaves the fields. This loss occurs mostly during storage and transport. Even modest improvements in infrastructure here can lead to a bountiful second ‘hidden harvest’. Continued well-designed aid for agriculture in developing countries can make a big difference.
There is enormous loss of food in Canada, too, but it doesn’t occur in the food storage and distribution systems. Rather, it is the waste of food in our shops and homes — food that is uneaten and thrown away.. Accurate numbers are hard to come by, but some research shows that North Americans waste 50 percent more food than Europeans.
Reducing the amount of food that is wasted by Canadians will be difficult. There are no government policies that will affect whether or not you throw out the leftover pizza. Perhaps increasing food prices will be the key to changing these behaviours.
We have entered a new world for our food supply. It is far less predictable and less reliable than the old one. We need new more extensive food stocks to even out the bumps in production. Agricultural production must increase, particularly in developing countries where the food and farm jobs are really needed along with better ways of preventing food loss.
But it is on the consumption side that we must really start to pay attention. We and our governments must start making changes so that food doesn’t become the new engine of global discontent.
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