Food Ethics Magazine – The Food Crisis

FoodEthics-magazine-08-summer

The current issue of the magazine of the Food Ethics Council covers the issues behind and caused by the recent food commodity price rises (that I also wrote about here). Here are some contributions that stood out for me…

Alex Evans of the Center on International Cooperation, New York University presents some detailed analysis of the factors causing the situation. He writes that the International Food Policy Research Institute estimates that roughly half the recent price increases are due to changing consumption patterns with growing affluence in places like China, India and Russia. Extra income allows the purchase of more meat and dairy products and animal rearing consumes large quantities of agricultural outputs as feed. They give the role of biofuels in removing food-crops from the food markets a lesser importance, responsible for around 30% of the price increases. The high prices should ease this year but are likely to remain higher than before. He goes on to warn of the other factors that threaten food security in the near future such as water scarcity, climate changes and feeding the poorest people of the world. Feeding the poor has been made much more difficult for the World Food Programme, much of its food came from surplus stocks and its budget can now purchase much less food and transport than previously. On top of this there are now many more hungry people in the world.

Adam Drewnowski of the UW Center for Obesity Research, University of Washington, Seattle writes that where it could be thought that higher food prices would reduce obesity rates, in fact the opposite could be true. This is because as poorer people try to save money on food, they will buy cheaper energy-dense foods and will be even less likely to buy healthier, fresh foods.

Peter Melchett of the Soil Association explains how prices of organic agricultural products have not had the same level of price rises, insulating organic producers from some of the shock. However, he thinks that with the renewed greater profitability of non-organic farming, there will be less conversion of farmers to organic production – organic margins were especially attractive to farmers facing low market prices for conventional crops.

David Barling of the Centre for Food Policy, City University, London had been working on a study of UK food security. After a recent high in the 1980s when 75% of all food was produced in the UK, this fell to 58.1% in 2006. He believes that the government should align their food policy with their other priorities for sustainable development, making sure they are economically, environmentally and socially sustainable.

Bill Vorley of the International Institute for Environmental Development worries that the environment will be one of the big losers from the current crisis. Rather than dealing with some of the underlying causes, the outcome will be increased planting of crops, using land that had been set aside, and opening up new agricultural land for example clearing forest.

Sophia Murphy of the Institute for Agriculture and Trade Policy provides an eloquent criticism of globalised “free trade” systems which have mostly only benefited the large agricultural trading companies. The World Trade Organisation purports to give markets stability, Murphy writes that the current conditions show that it does nothing of the sort. To conclude, she details some solutions governments could adopt that have been developed in a report by the International Assessment of Agricultural Science and Technology for Development.

Daryll E. Ray and Harwood Schaffer of the Agricultural Policy Analysis Center, University of Tennessee analyse the causes of the price rises, most of which have been identifiable for some time. They conclude therefore that governments could have planned for this situation.

Edward Clay of the ODI looks at some problems in the way the World Food Programme operates, for example that much of its donations have been food-based out of unsold surpluses. This has helped promote an import-based solution which may further hinder long-term local solutions. With less surplus and higher prices, funding of the programme will probably need to change and he presents some ideas on how the whole concept of food aid might be improved.

Patrick Mulvany of Practical Action praises the work of the International Assessment of Agricultural Science and Technology for Development. Their report was sponsored by FAO, GEF, UNDP, UNEP, UNESCO, the World Bank and WHO. 400 scientists were involved with the research. The 2,000 page report was overseen by a committee that included representatives from 30 governments and 30 other organisations. The report concludes that to feed the world’s population into the future, agriculture needs to be radically changed to a more sustainable practice.

Tido von Schoen-Angerer of Médecins sans Frontières warns that the people most at risk with the increased food prices are poor children. The most important time for good nutrition is between the age of 6 months and 2 years. Even before the price rises, malnutrition was contributing to the death of 5 million children under the age of 5.

And finally, Nick Snelgar of Futurefarms offers their vision of community-owned agriculture as a possible model for revitalising food and agriculture in the UK.

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How bad will this oil situation get?

I have heard mentions of the coming of peak oil for a number of years now. The other night I watched the film A Crude Awakening: The Oil Crash, a film first released in the US back in March 2006 but not in the UK until November 2007. The film is mostly made up of parts of interviews with some oil industry people and people who have researched the subject.

The film, coupled with the current massive increase in oil prices made me realise that I hadn’t really understood the full implications of peak oil and how quickly it could affect us.

The peak oil concept, while being significantly absent from much of the media, government and industrial dialogue, seems mostly to have been met by dismissal, a little like how global warming was received 10-20 years ago. As the film points out, there are a few dangerous assumptions at work behind these dismissals… there seem to be some hangovers from the 1970s when 2 oil crises prompted a lot of “it’s the end of the world” type cries followed by complete returns to normality shortly afterwards, unfortunately, the current situation is based on a completely different problem. There also seems to be a belief that we have to be “running out of oil” before we have a serious problem. But this does not take into account how catastrophic rising demand and falling production can be for market prices. In fact in the 1970s it seems that the quadrupling of prices was only caused by a 5% reduction in availability.

Finally, with the incredible reliance on oil that we have built much of the world’s economy and infrastructure on, the realisation that oil supply will only shrink and become more expensive in the future is highly likely to cause an economic crash, possibly of gigantic proportions.

One of the most interesting interviewees in the film was Matthew Simmons, an energy investment analyst with a long history with the oil business, he is even reputed to be an adviser to George W Bush. He points out that data show that their was a peak in global oil production in May 2005 of 74.3 million barrels per day. As time passes, this is looking likely to have been the point of peak oil production! In August 2007 when he collated this data, the production was down to 72.5 mbpd. Meanwhile, consumption of oil has been growing consistently by almost 2% per year.

The question is, what will happen next? The Guardian’s economist last week wrote that he thought the oil price was suffering from a classic bubble market effect, with speculation driving most of the recent price gains. He was expecting this to collapse at some point and become more stable. Certainly, high oil prices should start to have some impact on demand. Unfortunately, energy markets do not respond as easily to price increases due to lack of alternatives (a person commuting 80km to work by car with no public transport alternative can not easily reduce consumption even if the cost doubles). However, there seem to be noises that the US is losing its appetite for SUVs and some airlines are starting to fold.

What is unclear for me is how much the financial markets have really taken account of of this situation and its implications, and what effect there will be when most people do come to understand it. Are we facing sudden financial melt down or a slower reaction depending on exactly what happens with oil prices? With the way global finance seems to be based on ever more illusory forms of investment, I’m not sure I credit the system with much intelligence.

To understand more, I recommend watching the film and looking at some of the following…

http://en.wikipedia.org/wiki/Peak_oil

http://www.theoildrum.com/

http://www.oilcrisis.com/

http://www.lifeaftertheoilcrash.net/