"Huge rise" in food prices is a threat to global stability

I had lunch with a friend the other day and she told me that her two sons no longer listen to NPR with her because the news frightens them so much. They are both in elementary school.

The bad news is that everything does seem to be spiraling out of control these days: the unending war, an unstable global climate, ecosystems in peril, skyrocketing energy and food prices, food supply, a chaotic housing market. It's hard to believe that things could get much worse.

Perhaps the only good news in all this is that many of these problems are interconnected. Consequently a number of them could be addressed at the same time if comprehensive systems-based solutions are implemented. On the other hand, short-sighted "solutions" could indeed make things even worse.

The development of indigenous renewable energy sources and sustainable agricultural practices that emphasize their use while minimizing dependence on fossil fuel inputs is an example of a comprehensive approach to the looming food crisis. Going the genetically modified organism (GMO) route is certainly problematic. (GW)

'Era of cheap food is over,' says EU

EurActiv
April 23, 2008

EU consumers should get used to paying more for food as prices for meat, grain, cereal and a range of agricultural commodities are set to increase further, according to EU officials and MEPs debating the issue in Strasbourg yesterday (22 April). The EU's current push for biofuels came under repeated scrutiny during the discussion.

Background:

Sharp increases in food prices in recent months have sparked riots in a number of countries, including Haïti, Mexico, Egypt, Morocco, Senegal, Uzebkistan, the Philippines, Bangladesh, Thailand and Indonesia. EU consumers have also seen dramatic increases in prices for basic foodstuffs.

Rising global populations and demand for food, climate change related crop failures, higher fuel and fertilizer prices, speculation on commodity markets, dysfunctional global agricultural markets and greater biofuels production are widely seen as the causes of the crisis.

EU policies, most notably export subsidies under the Common Agricultural Policy (CAP) and more recently the bloc's proposed target to increase biofuels use by 10% by 2020, are also coming under increasing scrutiny. There are concerns that the combined effect of these measures acts as a disincentive to boost greater agricultural output in developing countries, notably in Africa.

"We won't see food prices going back down to former levels," EU Development Commissioner Louis Michel told a Strasbourg audience of MEPs convened to discuss the global food crisis.

The "huge rise" in food prices is a threat to global stability, according to Michel, who announced an increase in EU spending on food aid to developing countries.

But Michel also stressed that solving the crisis is "far beyond the EU's ability", pointing to structural problems in world agricultural markets and, in particular, a lack of purchasing power in poorer countries.

Empty bellies

Global average food prices have risen by 83% in the past three years, according to the World Bank, which notes a particularly sharp increase in the past six months. While EU citizens have to dig deeper into their pockets to meet rising costs, in many poor nations - where hundreds of millions of families and individuals live on less than one euro per day - the increase means the difference between poverty and starvation.

Josette Sheeran, executive director of the UN's World Food Programme (WFP), has compared the crisis to the 2004 Asian tsunami, and is calling for "large-scale, high-level action by the global community, focused on emergency and longer-term solutions".

The crisis has also raised concerns that the UN's objective of halving global poverty by 2015, the so-called Millenium Development Goals, will not be met.

'Hedge foods'

Growing demand for previously unaffordable meat and other 'luxury' foods in rapidly developing nations like China, India and Brasil is frequently cited as one of the main drivers of higher prices.

But during their debate, a number of MEPs also pointed to increased food commodities speculation and profiteering in the wake of the recent melt-down of global financial markets. The implication, according to a number of Socialist MEPs in particular, is that players on the financial markets have scrambled to find new profits, and are deliberately driving down food supplies while pushing demand in order to boost the price of food commodities.

Calls for greater regulation of financial markets have raised red flags in Brussels, where the EU's Trade Commissioner Peter Mandelson recently warned against using the crisis as an excuse for greater agricultural protectionism (EurActiv 21/04/08).

Bashing biofuels

There are growing concerns that a greater shift from food production towards biomass-for-biofuels production will further aggravate food shortages and price concerns.

Italy's outgoing prime minister, Romano Prodi, most recently addressed the issue at the International Energy Forum in Rome on 22 April. Competition between food and fuels is creating a conflict that could result in "disastrous social conflicts and dubious environmental results," he said.

The office of Gordon Brown, the UK prime minister, also promised on 22 April to "push for a change" in the EU's biofuels policy if a UK government review finds that the policy is counter-productive in terms of food prices and environmental sustainability.

Brussels meanwhile continues to defend its biofuels proposals.

"Biofuels have become a scapegoat for recent commodity price increases that have other causes – poor harvests worldwide and growing food demand generated by increased standards of living in China and India," EU Energy Commissioner Andris Piebalgs wrote in a blog post on 28 March.

A number of MEPs have also cautioned against 'throwing out the baby with the bath water', arguing that biofuels have only a marginal impact on food price hikes and that structural changes to world food markets, as well as greater agricultural output from Africa, would largely cancel out the food price impact of biofuels production.

The GMO solution?

While most MEPs agreed during their debate that greater agricultural productivity is needed to address the crisis, views differed sharply about the benefits of using biotechnology and genetically modified (GM) crops in order to boost harvests in the EU and in developing states.

There is also speculation that the extent of the price hikes may push EU consumers towards a generally more favourable view of GM crops. EU citizens "hearts may be on the left, but their pockets are on the right," said MEP Neil Parish, chairman of the Parliament's agriculture committee, the International Herald Tribune reported.

But a collection of EU consumer, family farm and environmental groups remain opposed to GM crops. In a statement issued to MEPs as part of the debate, the groups argue that "there is little evidence to suggest that weakening the GMO regime in Europe will address [the crisis]. Price increases have occurred all over the world – even in the US which has the most permissive system of GM approvals".

Positions:

The 22 April Strasbourg debate drew a range of reactions across party lines.

French Christian Democrat MEP Joseph Daul, chairman of the EPP-ED group, said that agrofuels (or biofuels) are "not to blame" for the crisis, particularly in Europe, where agro-fuels production accounts for only 2% of the bloc's total agricultural output. Europe needs to "think seriously" about GM crops, he added.

The leader of the Socialists (PES), German MEP Martin Schulz, focused on the "considerable speculation" in global food markets. "Casino capitalism has taken a seat at the table of the poor. This is immorality carried to the extreme. This is why we need international controls on financial markets," Schulz said in a press statement.

UK MEP Graham Watson, chairman of the Liberals (ALDE), argued for a greater reform of the EU's Common Agricultural Policy (CAP), which he sees as the "root cause" of the problem. Watson also argued against an excessive focus on biofuels. "While it is true that bio-fuels increase demand for crops and displace food production the reasons for the recent food price rises are many and varied and so must be the international community's response", he said.

But independent UK MEP Graham Booth called on the EU to reverse its biofuels policy immediately, arguing that is is a "key factor in the surge in food prices around the world".

German Green MEP Rebecca Harms was slightly more measured in her stance on the issue. "Agrofuels alone are not to blame for the rise in food prices, but they are exacerbating the current crisis. Agrofuels only make sense when they contribute to climate protection and that is not currently the case," she said.