The new food crisis

Written By: - Date published: 9:57 am, August 13th, 2010 - 21 comments
Categories: climate change, Economy, energy, food - Tags:

Climate change, peak oil, resource exhaustion, and over-population are combing to cause a new food crisis. The human population runs on grass seeds – grains supply half the calories we consume directly and feed much of our live-stock. The prices of those are skyrocketing.

There’s not enough for the number of mouths. The land is becoming less productive. Fertilisers are running out. Oil prices are driving up production costs. Now, in Russia the worst drought in a century has slashed grain production, forcing the government to impose an export ban (the drought has also triggered forest fires at Chernobyl, sending radioactive ash into the atmosphere).

The WTO is pleading for other major exporters to not close off their trade but if they don’t their people will go hungry while their grain goes abroad to feed the rich. Ukraine is imposing its own export controls, and other major exporters may follow.

It’s not just the grain market that is in trouble. Food prices across the board are rising fast and are projected to keep on rising – quite simply, supply is not keeping up with demand.

The grim irony to Russia being the centre of a new food crisis is that for years they have been quietly talking of climate change as an opportunity. Russian leaders have said the melting permafrost will open up huge new areas for farming. The reality is that the soil under the permafrost, having been frozen for tens of thousands of years, is next to useless and their existing farmland is suffering drought and fire.

The last food crisis was in 2007-08, the same time as the last oil shock. They ended only when the world went into recession. Once again, we have emerging food and oil crises, and the world economy is staring at recession.

This is no coincidence. Recession is just an effect of these fundamental constraints. We’re about to slam into the limits of growth again.

21 comments on “The new food crisis ”

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  1. Herodotus 1
    13 August 2010 at 10:24 am

    Marty G you forgot to mention the ability of trading rooms playing games with peoples lives as they speculate on the price. Just watch the futures markets as they have had all the resources thrown at them to be able to hedge for movements. With these shortages and the happenngs in Pakistan, we could very well see a few moving uo the suoer wealth rankings but with blood on their hands as a consequence.

  2. Lanthanide 2
    13 August 2010 at 10:43 am

    All that pessimism and misery and you haven’t even added in Wheat Rust yet!

    http://www.economist.com/node/16481593

    “IT IS sometimes called the “polio of agriculture’: a terrifying but almost forgotten disease. Wheat rust is not just back after a 50-year absence, but spreading in new and scary forms. In some ways it is worse than child-crippling polio, still lingering in parts of Nigeria. Wheat rust has spread silently and speedily by 5,000 miles in a decade. It is now camped at the gates of one of the world’s breadbaskets, Punjab. In June scientists announced the discovery of two new strains in South Africa, the most important food producer yet infected.

    …

    Wheat rust once spurred the Green Revolution, the huge increase in crop yields that started in the 1940s. Now it could threaten those great gains. Norman Borlaug, the great American agronomist who died last year, conducted his original research into wheat rust. After ten years of painstaking crossbreeding, he isolated a gene, Sr31 (Sr for stem rust) that resisted P. graminis. By wonderful good fortune, Sr31 also boosted yields (and not only because plants were impervious to rust). Farmers everywhere adopted his seeds enthusiastically, saving millions of lives. So fast did his new varieties spread that by the 1970s, stem rust seemed to have been wiped out.”

  3. vto 3
    13 August 2010 at 12:17 pm

    Japan only produces 40% of its food requirements………….. another ticking time bomb perhaps

  4. randal 4
    13 August 2010 at 1:02 pm

    reality sandwiches for dinner then?

  5. prism 5
    13 August 2010 at 1:24 pm

    I like to buy a cappucino once a week, it’s gone up from $3.50 to $4.40 – reason cost of milk up. While I drank I flicked through DomPost – something in business section about Mark Hotchins Allied Farmers and Hanover Finance (I think that’s the name). Problem was about share swap but one lot came with hidden debt and now finance payments due may not be met.

    Seems like much of the money in NZ is going to smart sh”s like this guy, the business leaders travel between destinations in their isolation bubbles, and we may end up with food protests like other countries we considered ourselves to be superior to. Often those countries have a top class who have captured most of the wealth, and that’s the way stats show that NZ is trending.

    We can’t even grow bananas, our favourite food just like monkeys, so we can’t become a banana republic, and we can’t make nests in the trees like monkeys do either. Lord Rutherford – ‘We haven’t the money so we’ve got to think (for once)’.

  6. tc 6
    13 August 2010 at 1:52 pm

    Gwnne Dyers excellent ‘Climate wars’ outlines this scenario and details that the US has had a high level gov’t funded group making contingency plans around mass migrations of people in search of food as they consider that a security threat.

    Italian tomatoe crop predicted to be 10-20% down also…mamma mia.

    • Draco T Bastard 6.1
      13 August 2010 at 2:28 pm

      And that is something that we haven’t been doing and will need to do. There’s a very good reason why I say that we will be closing our borders in the near future – There’s no way we can support the influx of millions of people as food refugees start looking for a place to live that can be reached by boat. We will only have one choice and that will be to stop them landing. We will also need better defensive operations – something that can stop an invasion fleet without relying on imported weapons.

  7. Zaphod Beeblebrox 7
    13 August 2010 at 1:55 pm

    WTF is milk so expensive in NZ?. In Aus 2 litres are $A3.40. I know Fonterra are our biggest company and dairy farmers are gods but why to we all ahve to suffer financially for a company that makes millions in profit?

  8. KJT 8
    13 August 2010 at 2:32 pm

    Ask why you can build a house in Australia for the same or less than here even though the cost of labour is 3 times higher over there.

    • Zaphod Beeblebrox 8.1
      13 August 2010 at 3:08 pm

      And builders over there have to have proper qualifications and be registered. Just a guess but that might have something to do with the fact that houses over there don’t leak.

    • Lanthanide 8.2
      13 August 2010 at 3:09 pm

      Yes, the building supplies are so ridiculously overpriced here, someone must be making a killing.

      You can go to a store and pay $4 for a little piece of metal in a specific shape that you need that can’t have cost any more than 0.001 cent to make.

      • loota 8.2.1
        13 August 2010 at 3:12 pm

        No wonder Fletcher Buildings is the share to buy

        • Herodotus 8.2.1.1
          13 August 2010 at 7:32 pm

          It has nothing to do with houses now in NZ having to be double glazed adding $6-10k per house. Water hook ups in Ak costing $1k in 2006 and now $5-6k currently within Manukau Area alone. A house that took 4 months to build and get code of compliance now taking 8-10 months or that councils now charge development contributions ranging from $6-$30+k. And remmber all these council costs then have GStT charged on top. Thanks to the govt that enabled these just add costs not thinking of how NZ voters are and have been struggling to keep a family unit going. But I forget how removed Mps are with the rest if us. I g=bet most no not even know how much it costs to keep a family clothed, fed and housed.

          • Zaphod Beeblebrox 8.2.1.1.1
            13 August 2010 at 10:47 pm

            The fact that its almost impossible to build anything over 2 storeys anywhere can’t help as well. Saw an advertisement for a gated subdivision in Avondale (presumably reasonably expensive land) and it was all single storey stuff. Why wouldn’t the developer make a bit of money and make it 2 or 3 storeys. In Melb or Syd it would be 4 storeys. Would make development contributions and water connections a lot cheaper if we were allowed to build stuff to any scale.

          • KJT 8.2.1.1.2
            14 August 2010 at 11:18 am

            Herod.
            They have similar charges in Australia. Including sales taxes.
            Reserve fees etc are nothing to do with the cost of building the house, but they have those in Aus too.
            It has to do with the fact that you can buy the same building materials. (A lot of which, framing etc, often are NZ sourced) for a lot less over there.

            • Herodotus 8.2.1.1.2.1
              14 August 2010 at 4:44 pm

              We use timber framing, Aust double bricks. We have smaller scale of economies, just look at the no and locations of brick/masonry works are. Our block machines are smaller are run part of the day 1-2 shifts. KRT kitechen and bathrooms are sourced overseas, we had an industry but much of that has closed down, Steel costs for mesh just keeps going up, it was like watching the petrol pump just winding up the numbers. Roughly building costs have gone up from about $1300m2 to over $2000 for a 2 story house. Then add the cost of funding, realestate fees. From a cost + perspective houseing is as cheep as we in NZ have experienced since the late 80’s.
              Most councils limit the heights of buildings to 9m and some developers limit to 8m in height with a traditioanal pitch roof limits to 2 levels.
              Land for a low populated country is expensive, yet much of that is because of the lack (My perspective) of ability to plan, they cannot fund infrastructure (as they have no money) With fragmented land ownership this procludes then individual developers to proceed as they will require 3rd party land to build stormwater ponds, infrastructure to their development, the lack of easily developed land in Auck. Much of what is to be developed is tricky and requiring expensive geotechnical work, that many do not see or are aware of the cost. e.g shearkeys to keep land stable $1m for each key to be dugup and then recompacted with suitable fill.. the only thing keeping developement costs down is very aggressive sub contractors earthworks and civils. This is short term as many are hard pressed financially.
              We also have a market unable to afford new housing and banks unwilling to lend developers and potential house owners.
              rant finished !!! developers are even selling their European cars !!! the 2 seater versions anyway

  9. David 9
    15 August 2010 at 12:33 am

    Last time I checked the stats (a few years ago now) there was more than twice as much food (in terms of kilojoules) produced each year than was needed to give everyone on the planet a decent diet. The problem is that not everyone can afford it. I’m sceptical too about the notion of “over-population”…

    I reconmend two articles from Australia: “Population control — a political weapon for conservatives”
    http://www.greenleft.org.au/node/44864

    “The battle for the world food system: an interview with Raj Patel”

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