World food crisis? You bet!
Consider the following:The mackerel war
The European Union could impose trade sanctions against Iceland or stop its ships from entering EU ports in an emerging "mackerel war".Global warming has already cut Asian rice by 10-20%
In an echo of the 1970s "Cod War" when British gunboats were sent to ward off Icelandic trawlers in disputed waters, the EU has warned it will take "all necessary measures" to protect its fishing and economic interests.
The rising tension follows Iceland's unilateral decision to catch three times as much mackerel this year as the EU considers reasonable, prompting a similar move by the Danish-owned Faroe Islands. Together with the amounts traditionally taken by the EU and Norway, the quotas would exceed the sustainable catch by a third and threaten a success story in European fishing, which has been dogged by political dithering and national self-interest.
Iceland – which traditionally has a reputation for good stewardship of fish – insists it has the right to catch any fish it wants within its 200-mile territorial limit, established during the Cod War.
Even modest rises in global temperatures will drive down rice production in Asia, the world's biggest grower of the cereal grain that millions of poor people depend on as a staple food, a study published Monday warned.Russian wheat crop declines, embargo imposed
Researchers from the United States, the Philippines and the Rome-based Food and Agriculture Organization (FAO) looked at the impact of rising daily minimum and maximum temperatures on irrigated rice production between 1994-1999 in 227 fields in China, India, Indonesia, the Philippines, Thailand and Vietnam.
They found that the main culprit in cutting rice yields was higher daily minimum temperatures.
"As the daily minimum temperature increases, or as nights get hotter, rice yields drop," said Jarrod Welch of the University of California, San Diego, and lead author of the study published in the Proceedings of the National Academy of Sciences of the United States.
"Up to a point, higher daytime temperatures can increase rice yield but future yield losses caused by higher night-time temperatures will likely outweigh any such gains because temperatures are rising faster at night," Welch said.
Rising temperatures in the past 25 years have already cut rice yields at several key growing locations by 10-20 percent.
Extreme drought and heat in the wheat producing regions of Russia have prompted officials in that country to embargo wheat exports from Aug. 15 to Dec. 1, 2010. Weather concerns in Russia and other wheat growing areas have prompted the rise of U.S. wheat futures prices, which have rallied more than $2.50 since the end of June.What does all this mean? Was it predicted?
At least 20% of Russia’s 2010 wheat crop has been destroyed by drought, and wildfires also threaten key wheat-producing areas in that country. In 2009, Russia was the third largest exporter of wheat in the world, exporting 18.3 million tons - 632 million bushels - largely to countries in the Middle East. That export total is surpassed only by the U.S. and European Union.
“U.S. farmers harvested an above average crop in 2010, and we have ample supplies of good milling quality wheat,” says Justin Gilpin, chief executive officer of the Kansas Wheat Commission. “Shortfalls in Europe and Russia, however, mean that global consumption of wheat will likely outpace production for the first time in three years.”
[Due] in part to the weather calamity in Russia, the United Nations’ Food and Agriculture Organization has cut its global wheat production forecast for 2010 to 651 million metric tons, from previous estimates of 676 million metric tons. However, the FAO claims existing world stocks will cover the decline.
Meanwhile, Russia’s traditional export customers, which include Egypt, Tunisia and Iraq, will have to look elsewhere for wheat. The United States is a likely source, given large supplies of high quality Hard Red Winter wheat.
Yes, it was.
Here is a story from 2009 explaining why 2010 was going to be (and has been) a food disaster.
2010 food crisis also means financial crisis
Over the last two years, the world has faced a series of unprecedented financial crises: the collapse of the housing market, the freezing of the credit markets, the failure of Wall Street brokerage firms (Bear Stearns/Lehman Brothers), the failure of Freddie Mac and Fannie Mae, the failure of AIG, Iceland’s economic collapse, the bankruptcy of the major auto manufacturers (General Motors, Ford, and Chrysler), etc… In the face of all these challenges, the demise of the dollar, derivative markets, and the modern international system of credit has been repeatedly forecasted and feared. However, all these doomsday scenarios have so far been proved false, and, despite tremendous chaos and losses, the global financial system has held together.
The 2010 Food Crisis is different. It is the crisis. The one that makes all doomsday scenarios come true. The government bailouts and central bank interventions, which have held the financial world together during the last two years, will be powerless to prevent the 2010 Food Crisis from bringing the global financial system to its knees.
Financial crisis will kick into high gear
So far the crisis has been driven by the slow and steady increase in defaults on mortgages and other loans. This is about to change. What will drive the financial crisis in 2010 will be panic about food supplies and the dollar’s plunging value. Things will start moving fast.
Dynamics behind the 2010 food crisis
Early in 2009, the supply and demand in agricultural markets went badly out of balance. The world experienced a catastrophic fall in food production as a result of the financial crisis (low commodity prices and lack of credit) and adverse weather on a global scale. Meanwhile, China and other Asian exporters, in an effort to preserve their economic growth, were unleashing domestic consumption long constrained by inflation fears, and demand for raw materials, especially food staples, exploded as Chinese consumers worked their way towards American-style overconsumption, prodded on by a flood of cheap credit and easy loans from the government.
Normally food prices should have already shot higher months ago, leading to lower food consumption and bringing the global food supply/demand situation back into balance. This never happened because the United States Department of Agriculture (USDA), instead of adjusting production estimates down to reflect decreased production, adjusted estimates upwards to match increasing demand from china. In this way, the USDA has brought supply and demand back into balance (on paper) and temporarily delayed a rise in food prices by ensuring a catastrophe in 2010.
Overconsumption is leading to disaster
It is absolutely key to understand that the production of agricultural goods is a fixed, once a year cycle (or twice a year in the case of double crops). The wheat, corn, soybeans and other food staples are harvested in the fall/spring and then that is it for production. It doesn’t matter how high prices go or how desperate people get, no new supply can be brought online until the next harvest at the earliest. The supply must last until the next harvest, which is why it is critical that food is correctly priced to avoid overconsumption, otherwise food shortages occur.
The USDA—by manufacturing the data needed to keep supply and demand in balance—has ensured that agricultural commodities are incorrectly priced, which has lead to overconsumption and has guaranteed disaster next year when supplies run out.
An astounding lack of awareness
The world is blissful unaware that the greatest economic/financial/political crisis ever is a few months away. While it is understandable that general public has no knowledge of what is headed their way, that same ignorance on the part of professional analysts, economists, and other highly paid financial "experts” is mind boggling, as it takes only the tiniest bit of research to realize something is going critically wrong in agricultural market.
posted by Tom Nadeau at 7:58 AM
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