The Cost of Food

The World Bank recently reported that its food price index has increased by 29 per cent in the past year.

Of course the problem of higher food costs is felt most keenly in poor countries where it is reported that in many situations the price of food has risen 50 percent in the last six months. And it is no secret that hunger lies behind much of the social and political unrest around the world today.

We are told that higher commodity prices are benefiting some 24 million farmers in poor countries because they now receive more for their crops. However, the World Bank notes that the high cost of food has pushed 68 million people below the extreme poverty line, defined by an income of $1.25 (US) a day.

Analysts have identified at least four trends driving food prices higher: a rising middle class in emerging economies who want to eat better, weird weather patterns, a shrinking dollar which buys less grain than it used to, and the growing use of ethanol to fuel vehicles.

I will only comment on the fourth trend because we are capable of doing something about it. 

What we are witnessing is a massive paradigm shift in agriculture. Traditionally, agriculture was preoccupied with food production. For the past few decades at least, a lot of global dialogue has taken place about how agriculture can become more efficient in order to feed the world’s growing population. Now the momentum has shifted, especially in developed countries, to how agriculture can churn out more bio-fuel to replace the fossil fuels that are ever harder to extract from the earth. A tectonic shift!

The high demands of this new market have driven up the price of agricultural products around the world. But cash-strapped farmers can hardly be blamed for cashing in on this bonanza. Who wouldn’t force marginal and traditional grasslands into corn production if you can clear $1500 per acre annually by doing so? Or grow more canola that is destined for bio-diesel?

But there are some troubling questions that refuse to go away. If increasingly more foodstuffs go into fuel, where will our food come from in the future? Will depleted and eroded marginal grasslands of the future be useful for any agriculture at all? How will the lowest third of humanity feed itself tomorrow? What kind of cataclysmic social and political upheavals can we expect down the road?

If the current trend toward bio-fuels were seen only as a stopgap measure until other renewable energies can come on stream we could possibly be more optimistic. But much of society seems convinced that bio-fuels will allow us to maintain a status quo lifestyle without transitioning to renewable energies. Unless that notion changes, we, along with the global population, are in for a rough ride indeed.

Those of us concerned about a sustainable future should advocate for a halt to government incentives to the bio-fuels industry [which indirectly promote energy consumption], and replace these with incentives to curb energy consumption.

Jack Heppner