04.23.08 Food Crisis Goes Mainstream

Food shortages are going to be an increasingly important story going forward. The Washington Post has an excellent article on the food crisis, labelling it a 'silent tsunami'. Britain's Prime Minister Gordon Brown said that 25,000 people a day die from hunger related conditions. He said that translates to one child dying every five seconds from hunger related causes. Main reasons cited for the increased strain on world food supplies are:
....Rising fuel prices.
....Droughts in some food producing countries.
....Increased demand, particularly in Asia. China and India, in particular, continue to shape the world supply/demand area in many areas.
....And last, but certainly not least, the decision by our powers that be to divert part of our grain growing into ethanol production instead of food. Not only is that inefficient economically - there are cheaper and better alternatives, though likely not as profitable to the parties involved - but it now adds to the burden on already strained food supplies.
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Here in the U.S., Wal-Mart just announced that it is limiting sales of certain types of rice due to 'recent supply and demand trends'. Costco also announced that they have seen signs of customers stocking up on rice, flour and cooking oil. Some of their stores had already started limiting the amount of these items that could be purchased in one shopping trip. There were also reports of some kinds of rice being completely gone from the shelves.
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JAPAN'S HUNGER BECOMES A DIRE WARNING FOR OTHER NATIONS, screams this headline from the TheAge.com, an Australian site. Food shortages are also hitting now in prosperous Japan. According to this Australian article, 80% of the Japanese people are frightened about what the future holds regarding food supplies. They are concerned about a future that could include a permanent reduction in the amount and quality of the food available. Japan imports 90% of its wheat supplies. The government has already had to provide emergency funds to continue bringing wheat into the country. The funds they had budgeted for wheat imports had run out with more than two months remaining in the fiscal year. It was the first time since the 2nd world war that the Japanese government had to take such action.
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According to a piece in the Wall Street Journal, Manu Daftary, who heads up the Quaker Strategic Growth mutual fund, says that folks should be 'loading up the pantry'. "I think prices are going higher. People are too complacent. They think it isn't going to happen here. But I don't know how the food companies can absorb higher costs."
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RICE SHORTAGE IN THE PHILIPPINES could possible endanger that government's stability. This article from Bloomberg paints a vivid illustration of the different sides involved in grain shortages. On the one hand, the price of rice is up 41% in the past year and rice futures last week had their biggest gains in seven years. On the other hand are the villages where families cluster together in shacks and are dependent on rice as the staple of their diets and are being priced out of the food markets.
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This article in the Asia Times points the bony finger of blame directly at the U.S. "The global food crisis is a monetary phenomenon, an unintended consequence of America's attempt to inflate its way out of a market failure. There are long-term reasons for food prices to rise, but the unprecedented spike in grain prices during the past year stems from the weakness of the American dollar. Washington's economic misery now threatens to become a geopolitical catastrophe."
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