by: J. D. Heyes
The drought which gripped most of the U.S. this past summer had much more far-reaching consequences for the rest of the world, leading the World Bank, in part, to issue a hunger warning in late August.
The U.S. drought, coupled with similar weather patterns and conditions in parts of Europe and Africa this year, have led to a dramatic reduction in crop production, the bank said, which has curbed availability and set food prices to record highs for some items and leading the Washington, D.C.-based financial institution to raise its food price index above its previous peak in early 2011.
The bank has blamed the drought conditions for a 25 percent increase in the price of corn and a 17 percent increase in the price of soybeans in July, noting that a dry summer in Russia, the Ukraine and Kazakhstan was behind an additional 25 percent hike in wheat prices.
Prices will likely continue to rise as shortages persist
“Food prices rose again sharply threatening the health and well-being of millions of people,” said Jim Yong Kim, World Bank group president. “Africa and the Middle East are particularly vulnerable, but so are people in other countries where the prices of grains have gone up abruptly.”
Food prices overall rose 10 percent between June and July, the bank said, which put them six percent above last year’s levels.
“We cannot allow these historic price hikes to turn into a lifetime of perils as families take their children out of school and eat less nutritious food to compensate for the high prices,” said Kim. “Countries must strengthen their targeted programs to ease the pressure on the most vulnerable population, and implement the right policies.”
Kim said the World Bank was spending $9 billion this year to support agriculture, and he promised that help to poorer nations affected by the rising food costs would be ongoing.
This year’s drought has only added to the ongoing problem of scarce food supplies (and resultant higher prices for the food that is available). While that’s not as big a problem in richer nations, the issue has had a near-crippling effect on poorer countries.
In January 2011, Foreign Policy magazine reported on “The Great Food Crisis of 2011,” citing a cascade of events that have led to global shortages of key commodities.
Factors influencing shortages, price hikes
First and perhaps the most obvious cause, the magazine reported, has to do with the weather: Drought conditions throughout the world have led to decreases in crop production.
“But whereas in years past, it’s been weather that has caused a spike in commodities prices, now it’s trends on both sides of the food supply/demand equation that are driving up prices,” said the magazine, noting that “on the demand side,” population growth and growing affluence worldwide has caused shortages as well.
“There’s at least a glimmer of good news on the demand side: World population growth, which peaked at two percent per year around 1970, dropped below 1.2 percent per year in 2010. But because the world population has nearly doubled since 1970, we are still adding 80 million people each year,” said the magazine.
A third factor affecting food availability and especially prices is the burning of food for fuel. Ethanol mandates in the U.S. have taken millions of bushels of corn out of the food supply, and as more ethanol is mandated in the future, there will be even less of it available for consumption and food production.
“In the United States, which harvested 416 million tons of grain in 2009, 119 million tons went to ethanol distilleries to produce fuel for cars,” said Foreign Policy. “That’s enough to feed 350 million people for a year. The massive U.S. investment in ethanol distilleries sets the stage for direct competition between cars and people for the world grain harves