Two years after the vicious spike in food prices, global food prices are once again on the rise. Are we going to see another food crisis?
The current rise in prices stems largely from the prospects of a lower than expected wheat harvest in Russia, the consequence of high temperatures and drought. The reduced demand attracts speculators who further push up the prices. Supply is further reduced when nations implement export bans. In response to an imminent poor harvest, today Russia imposed a ban on exporting grains. By shutting the door on exports, nations hope to keep the food in country to feed their citizens. This was a strategy adopted by several countries during the 2008 food crisis, which placed further upward pressure on prices. By disallowing exports, the global grain supply suddenly gets a lot smaller with no concomitant change in demand, and prices rise. When Russia decided to ban grain exports prices reacted predictably: they soared to their highest levels in two years” reaching “the highest level since August 29, 2008”. August 2008 is notable because it marks the height of the 2008 global food crisis, the food price index for cereals reached a whopping 238 (compared to 167 in August 2007, and 85 in 2000). Russia did not just ban exports on wheat; corn, barley, rye and flour were also banned from export, with predictable impacts on corn and other grains: Today corn futures shot to a 13 month high. It is likely that fertilizer will also increase in price as declining yields drive increased fertilizer applications.
Things do not (yet?) look as dire as 2007/8 and some will (again) benefit from the price increase. US wheat farmers, for instance, will likely gain as prices for their exports increase and rural producers in low-income countries may as well. But, the global poor could again suffer and those at the margins of poverty could be driven over the edge. Even small increases in food prices translate into human suffering. The International Fund for Agricultural Development estimates that a one percent increase in the price of staples results in 16 million more food insecure people in the world. A rise in food prices so close on the heels of the last price spike also threatens those households that are still rebuilding their livelihoods.
The causes of the 2007/8 crisis and the current price increase do not entirely overlap. The conversion of grains to fuels is thought to have been a driving force in the 2008 food crisis, for instance. Speculation in agricultural futures markets however may be a common factor. The role of hoarding and speculation in the 2008 food crisis has been widely debated, with mixed evidence on its role. Some suggest that the role was minimal, while others believe speculation and hoarding played significant roles. (Fredrick Kaufman has written a wonderful piece on this for Harpers called The Food Bubble: How Wall St starved millions and got away with it, available in full, alas, only to subscribers.) The current rapid price increase, however, seems to be unambiguously driven by speculation.
This is a situation to watch closely, especially if other countries begin to impose similar export bans. It might also be a good time to revisit the issue of the commodification of food and to think on how we can avoid food price spikes. As nutritional anthropologists it might also be a time to think about how our work can contribute to policy debates and to the popular understanding of the local impacts of global market forces.
Posted by Craig Hadley