NEW YORK: Thanks to the booming
biofuels market, wacky weather and increased world demand, global grain stocks have fallen to a scant 57 days of consumption, their lowest level in 34 years. Prices are up sharply. International-aid organizations warn they will not have enough emergency food on hand to meet anticipated need. Even consumers in rich countries will have to pay significantly more for their food into 2008.
This risks not only starvation and malnutrition among the world’s poor, but also social and political unrest. Governments with the means have nervously shored up national grain stocks. Panic buying by India, which floated tenders to import 50,000 tons of wheat with an option to buy an additional 50,000 tons earlier this year, was blamed for sending the price of wheat to almost double what it commanded just a year ago. The European Union is so concerned, it recently eliminated its 10
percent grain set-aside entirely, and the Organizaton for Economic Cooperation and Development has warned that governments should end subsidies for biofuels.
There is reason for alarm. In recent decades when global grain stocks fell, the drop-off was temporary, the overall trend upward. That trend may be reversing. The weather has become increasingly unpredictable, making it hard for farmers to know when to plant or what will thrive. In 2007, producers faced a hot, dry spring followed either by more dry weather or an overly wet summer, depending on the region. In addition, the biofuels rush has tipped the fuel value of corn in the US above the food value of this staple; 16 percent of the US corn crop was diverted to ethanol production in 2007, and a full third is expected to go to producing ethanol in 2008. And a large sale of corn slated for human consumption redirected to animal feed instead by Cargill and Mexico’s Gruma, partly owned by Archer Daniels Midland Co., didn’t help. The price of tortillas in Mexico shot up 60 percent, sending angry citizens into the streets.
Beyond Mexican tortillas, corn, as Michael Pollan so brilliantly points out in his recent book, “The Omnivore’s Dilemma,” has become the basis of the American industrial and processed-food chain. Corn is now used to produce most of the meat, poultry, dairy and eggs as well as a host of processed foods and soft drinks that Americans consume every day. Plus, more people in booming India and China can afford to add animal protein to their traditional diets, further driving up world demand for corn.