Friday, August 20, 2010

The emerging new geopolitics of food

The raging fires in Russia have resulted in a government-enforced ban on Russian wheat exports. Droughts and floods are wreaking agricultural chaos in other parts of the world. Globalization makes all of these events more interconnected than they may have otherwise been. However, global climate change is the ultimate interconnecting force at work here. (GW)

Looming food crisis to hit Afghanistan and Africa first

20 August 2010

Sub-Saharan Africa and Afghanistan have the most insecure food supplies in the world, while Nordic countries are least at risk, shows an index published yesterday (19 August).


In 2007-2008 food prices soared following a peak in oil prices, creating political unrest throughout the world.

Rising global populations and demand for food, climate change-related crop failures, higher fuel and fertiliser prices, speculation on commodity markets, dysfunctional global agricultural markets and greater biofuels production are widely seen as the causes of the 2008 crisis.

The world now fears a renewed food crisis as a record heat wave plaguing Europe and Russia this summer has reduced wheat supplies and caused prices to rise. A Russian ban on wheat exports is further increasing concerns of a renewed spike in global wheat prices.

African nations make up 36 of the 50 nations whose food supplies are most at risk, according to the Food Security Risk Index of 163 countries, compiled by risk analysis firm Maplecroft.

Extreme droughts and high poverty rates, as well as poor infrastructure for transporting agricultural products, render Sub-Saharan Africa particularly vulnerable, it said.

Afghanistan's rating as the most vulnerable to food supply shocks was further fuelled by ongoing violence in the country.

Pakistan, where massive floods have produced a severe humanitarian crisis, is currently ranked "high risk" at number 30. But Maplecroft predicted that the floods will have a long-term effect and make its situation even more vulnerable.

"Russian brakes on exports, plus a reduction in Canada's harvest by almost a quarter due to flooding in June, are provoking fluctuations in the commodity markets. This will further affect the food security of the most vulnerable countries," said Fiona Place, an environmental analyst at Maplecroft.

By contrast, Finland was judged to have the most secure food supplies, followed by fellow Nordic states Sweden, Denmark and Norway. The US, Germany, the UK and France also fared well.

Food crisis in the making?

The hot, dry summer has reduced food supplies, triggering concerns over a pending new food crisis.

The US Department of Agriculture predicted in its latest 'World Agricultural Supply and Demand Estimates' report on 12 August that global grain carry-over stocks will fall to 444 million tons. The amount of grain that will sit in world's silos at the time of the next harvest will only cover 72 days of consumption, the Earth Policy Institute warned.

"This drop in world carry-over stocks of grain to 72 days of consumption is moving us uncomfortably close to the 64 days of carry-over stocks in 2007 that fueled the 2007–08 spike in world food prices," said Lester R. Brown, president of the Earth Policy Institute.

Wheat supplies are severely reduced, mostly due to a heat wave and droughts in EU countries and former Soviet Union states (EurActiv 26/07/10). In Russia, wildfires have wreaked further havoc and encouraged Russia to ban heat exports earlier this month, which sent prices soaring.

The economic crisis and rising prices have allayed fears of an imminent food crisis by reducing demand. However, some analysts are predicting the onset of severe food shortages once the economy has picked up again.

When demand starts to go up in the West again, this will inevitably lead to rising oil prices, economist Jeremy Rifkin predicted earlier this summer (EurActiv 16/06/10). During the 2007-2008 crisis, oil spiked at $147 a barrel, dragging food prices up with it.

Agricultural production is intricately linked with oil, as petroleum is used to manufacture fertilisers and pesticides. Moreover, higher oil prices increase the demand for biofuels, which will shift the use of farm land from food towards energy crops.

The heat wave in Russia and the floods in Pakistan will have long-term impacts on their food security, Maplecroft warned, adding that climate change is having a profound impact on world food supplies.

"Food security is a critical geopolitical issue and an important factor for investors concerned with sovereign risk, food and agricultural business with respect to supply chain integrity and foreign direct investments," said Professor Alyson Warhurst, CEO of Maplecroft.

"The world will now look to China as one of the biggest storage countries; however, food consumption there is on the increase and surpluses are not quantified."


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