Climate and Food Price Spikes

Volatility in commodity food prices, specifically a third sudden price spike, is likely in the coming months. If it comes it will affect the poorest people and countries disproportionately. Drought has been widespread in the major food exporting regions.

The New York Times:

The directors of three major United Nations food and agriculture programs sounded the alarm both on the immediate problem of high food prices and the “long-term issue of how we produce, trade and consume food in an age of increasing population, demand and climate change.”

Agricultural production has fallen in a number of major crop exporters this summer. Sweltering heat and a severe drought have damaged the corn crop in the United States. Droughts have also hit Russia and Ukraine, hurting the wheat harvest, as well as Brazil, affecting soybean production.

David Frum at CNN suggests possibly severe consequences:

But step outside the developed world, and the price of food suddenly becomes the single most important fact of human economic life. In poor countries, people typically spend half their incomes on food — and by “food,” they mean first and foremost bread.

When grain prices spiked in 2007-2008, bread riots shook 30 countries across the developing world, from Haiti to Bangladesh, according to the Financial Times. A drought in Russia in 2010 forced suspension of Russian grain exports that year and set in motion the so-called Arab spring.

Since the days of Gamal Abdel Nasser, the Egyptian government has provided subsidized bread to the population. A disk of round flat bread costs about a penny. In the later 2000s, however, the Mubarak government found it could not keep pace with surging grain costs.

“The conversations of tiny groups of Cairo’s English-speaking elites, and their Western drinking companions, were a world apart from talk among the Egyptian masses. … The main hope of those who poured into Tahrir Square was shared by the revolutionaries in Tunisia: that sudden and radical change would miraculously mean affordable food.”

The Arab Spring of 2011 is sometimes compared to the revolutions of 1848. That’s apter than people realize: the “hungry ’40s” were years of bad harvests across Europe. Hungry people are angry people, and angry people bring governments down.

Oxfam suggests that we get used to it:

Food price spikes caused by extreme weather events like the
US drought will become the norm over the next twenty years, leading to millions
of deaths from malnutrition among the world’s poorest if Governments do not act
on climate change, Oxfam has warned.

While the average price of staple foods is already expected to double in the next twenty years, the UK’s leading poverty charity predicts that separate catastrophes such as droughts, floods and bad harvests will also become more common as a result of climate change, leading to regular and dramatic jumps in prices.

The effect may have already been seen this year, the charity says. A 10 per cent rise in world food prices in July has been blamed on the severest drought in the USA in fifty years, along with dry weather in Eastern Europe and Kenya. Oxfam warned that policymakers have “underestimated” the full impact of climate change on future food prices.

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