Rock and Hard Place for World’s Poorest

By David L. Brown

There is a Chinese proverb that begins “The best time to plant a tree is twenty years ago.” Much can be gleaned from this aphorism about the present state of the world food crisis. The “solution” to the emerging problem, we are told, is to simply turn on the power of science and develop new crops that can feed the hungry masses. But to be of use today, that is a “tree” that must have been planted at some time in the past.

And the trouble is that agricultural scientists already have been laboring long and hard for decades to boost farm productivity. We have planted plenty of metaphorical trees and it is of no use to expect that we can start all over again as if there were a blank slate of opportunity to re-create the Green Revolution.

In the April 19-25 edition of The Economist, the emerging world food crisis was featured as the cover story under the heading “The silent tsunami: The food crisis and how to solve it.” Unfortunately, the inside article, headlined “The new face of hunger,” is long on “crisis” and short on solutions.

For one thing, the writers put a comforting interpretation on the whole thing. After reporting “some of the sharpest rises in food prices ever,” the magazine ominously adds: “But this year the speed of change has accelerated. Since January, rice prices have soared 141%; the price of one variety of wheat shot up 25% in a day.”

That is pretty strong stuff, but then the articles goes on to state:

The prices mainly reflect changes in demand—not problems of supply, such as harvest failure. The changes include the gentle upward pressure from people in China and India eating more grain and meat as they grow rich and the sudden, voracious appetites of western biofuels programmes, which convert cereals into fuel. This year the share of the maize (corn) crop going into ethanol in America has risen and the European Union is implementing its own biofuels targets. To make matters worse, more febrile behaviour seems to be influencing markets: export quotas by large grain producers, rumours of panic-buying by grain importers, money from hedge funds looking for new markets.

Soothing words indeed in the face of alarming rises in food prices. It’s not “problems of supply,” but all due to demand. Well, yes, and one might expect a magazine that calls itself after the very art of economics to know that supply and demand are linked like Siamese twins. When demand goes up, supply must either rise to fulfill the increased demand, or prices will go up until the excess demand is quenched. It is the latter that is happening now, and the reason is that food supply cannot be so easily or quickly increased, or perhaps not increased at all.

This poses a problem, because we are dealing with human lives here. As food becomes more dear, it is pricing the poorest people in the world out of the market. Supply cannot meet the rising demand, and unless it can vast numbers of people will face famine. It is an economic Catch 22.

The Economist actually does recognize that there are serious difficulties. The article notes that “Ideally, a big part of the supply response would come from the world’s 450 [million] smallholders in developing countries, people who farm just a few acres.” It goes on to note the advantages of this approach, but concludes:

Unfortunately, no smallholder bonanza is yet happening. In parts of east Africa, farmers are cutting back on the area planted, mostly because they cannot afford fertilisers (driven by oil, fertiliser prices have soared, too). This reaction is not universal. India is forecasting a record cereal harvest; South African planting is up 8% this year. Still, some anecdotal evidence, plus the general increase in food prices, suggests that smallholders are not responding enough. “In a perfect world,” says a recent IFPRI report, “the response to higher prices is higher output. In the real world, however, this isn’t always the case.” Farming in emerging markets is riddled with market failures and does not react to price signals as other businesses do.

You see, there is more to it than can be addressed by idealistic “solutions.” The fact is that the increased demand is the result of continued growth in human population. That has been made possible by the era of cheap petroleum and industrial agriculture that is now coming to an end. Without cheap and abundant oil, there can be no cheap and abundant food. And unfortunately for them, about a third of the world’s people have been able to exist only thanks to cheap and abundant food, much of it heavily subsidized by governments and shipped to the needy through food aid packages.

Here is a graph that shows the relative price increases of basic grains just since the beginning of 2007:

cfb199.jpg

Ponder the figure quoted above for the price of rice and what it means to a poor family that has been barely hanging on with a subsistence diet. I will repeat it in case you weren’t paying attention: The Economist says that “since January, rice prices have soared 141%.” That is since this January, 2008, or about 110 days before the time the article was published. That is not a minor blip, but truly a world-changing event. And as the above graph shows, rice has nearly tripled just in the last year.

What we are witnessing is the end of an era, an era of human expansion that has been accelerated in the last half-century or so by a combination of factors, including medical intervention, cheap food, rapid exploitation of resources, and a dollop of good fortune. The human race has drawn down the Earth’s environmental capital like a gambling addict running amok in Vegas.

To we fortunate residents of the First World, food has been a relatively small part of the family budget, perhaps in the range of 15-20% for most families — and that is to support consumption at a level that only monarchs could have enjoyed in past eras. For those living in the Third World, and especially the bottom third of humanity, food has been a much larger expense, perhaps 50% or more in many cases. And that budget was never being spent for carryout, sirloin steaks, and restaurant feasts, but for the most basic staple grains such as rice or wheat. You may have noticed that pictures of food aid workers at work do not show them distributing pizzas, steak dinners or Bar-B-Que. No, what you have seen are sacks of rice or flour that have been supporting the hungry poor of the world. It is for those staples that the poorest humans, many earning less than a dollar a day, have been spending a large share of their income.

So what happens if you are spending half your income for rice, and the price of that rice has tripled in a year? Well, let’s take for example a person who earns a whole dollar a day and was previously spending 50 percent of that for the staple food. That’s 50 cents a day. Assume the staple was rice, which has tripled in cost in about the last 12 months, and what do you have? Why the cost of food for that poor individual has risen from 50 cents to $1.50, half again more than the person’s total income. Add another 50 cents for the other expenses the individual has been paying and his total budget has soared to twice his earnings. Keep in mind that people in this category were likely living on a marginal, malnourished diet to begin with and you can see that the present food crisis is an absolute catastrophe for those poorest humans.

Suppose that the poor in question are subsistence farmers who grow their own food and perhaps earn a bit from excess production, as many do. Well, as The Economist points out, the cost of fertilizer is also soaring along with agrochemicals, fuel, and seed. As the costs of inputs rise, the poorest farmers cannot afford even to plant the crops. If they do succeed in harvesting something, they likely need to sell the crop to pay for the cost of inputs, and that puts them right back to square one with too little to feed themselves. The extra money will all have gone into the pockets of Saudi oil sheiks and agri-business companies.

Now that cheap food has come to an end there are no obvious solutions at hand. We have already played the “Green Revolution” card. It is the fruit of those investments in agricultural science that has allowed us to get to where we are, with a world population over 6.5 billion and still rising.

I have in front of me a book that has been in my library for more than 40 years, and the title could be right out of today’s news. It is “The Hungry Planet: The Modern World at the Edge of Famine,” by Georg Borgstrom. It was published in 1965. Here is the first paragraph from the end paper blurb:

The Hungry Planet is a chilling report on man’s failure to live up to the simplest obligation of human survival: making sure of the next meal. Georg Borgstrom, a leading international authority on food utilization and world nutrition, points out that, even to feed the present world population adequately, we would have to double our food production overnight. With supreme ingenuity we might achieve and sustain this goal within forty or fifty years. But by that time, at the current rate of growth, our population will have doubled.

Well, forty or fifty years is now and Borgstrom’s predictions can be examined with the eye of a Monday morning quarterback. Here are some relevant statistics:

World grain production in 1965 was 905 million tons. Production peaked at 2,044 million tons four years ago and had dropped to 1,984 million tons in 2006, according to USDA estimates. Borgstrom’s suggested target of doubling agricultural output was achieved through the “supreme ingenuity” of the so-called Green Revolution, but the increase has peaked. In 2006, production had fallen short of demand in six of the latest seven years.

Now what about population? Borgstrom noted an estimated 3.25 billion humans on the Earth at the time he wrote his book. Today there are more than 6.5 billion. Again, he was right on target with his predictions.

So where do we go from here? The Economist may be right that the present food crisis is not due to a lack of supply, but rather of increased per-capita demand. That is all very well, but it doesn’t change the facts for those in the poorest third of the human population.

Do you think for one moment that Chinese are going to give up their new-found higher standard of living in order to accommodate the starving multitudes of poorer nations? Do you think the French will give up their croissants, the Japanese their sushi, the Germans their wurst, the Russians their vodka and borscht, or the Italians their pasta so that others may avoid starvation? And what about here in America? Do you, personally, plan to go hungry two days a week so that others may not starve? Well, some of us may make a few gestures, but the will just isn’t there for those of us in the First World and especially in the economic middle to make major sacrifices. Sure, we could donate some money to help — but money will not buy food that is not there. This is a rock-and-a-hard-place time for the bottom third of humanity.

Unfortunately, we are at that point where the equation between human population and Earth’s natural resources cannot be pushed much further on the resource side. Something else must give, and it will be human numbers that must adjust. Unfortunately, that adjustment must take place in the short term, rather than through natural attrition.

Let’s return to the proverb I quoted at the start of this essay, which begins “The best time to plant a tree is twenty years ago.” It concludes: “The second best time is now.” Well, in the case of the food crises that are presently unfolding, “now” is just entirely too little, too late. And besides, as I have pointed out, we have already done most of what could be done, yielding the Green Revolution and the continued increase in human numbers.

We have written much about Peak Oil and the predictions of M. King Hubbert the petroleum geologist who devised the famous Hubbert curve that graphed the rise and fall of petroleum resources. His projections for U.S. production proved spot-on, and the world peak is being reached now or may already have been passed. Here is an example of the Hubbert curve for oil:oilpeak.jpg
Now it is interesting to note that almost any finite resource can be tracked in much the same manner. The resource will be utilized until the law of diminishing returns drives supplies to a peak, after which continued depletion will take place. We have seen this in the case of ocean fisheries, which have long ago peaked and are sliding down the back side of the depletion curve. We are seeing it now for staple grains, which may have peaked and are certainly beginning to falter even as population continues to rise.

And now, we can imagine a new “Hubbert curve” for population and all that such a vision implies. Look at the graph above and imagine that instead of oil, those colored bands represent numbers of human beings. Besides Peak Oil, we can now begin to contemplate the approaching event that could be called Peak Population. It is an inevitable result of the way things work in the hard and cruel real world.

I have written several times here on Star Phoenix Base about the phenomenon of Overshoot-and Collapse, a demonstrated fact of nature. It has caused the failure of past civilizations, but never before has it occurred on a global basis. As a result of the continued rise of human numbers beyond what the Earth can support, overshoot has occurred. Now we are glimpsing the collapse that must surely follow in its wake, as sure as thunder follows the lightning.

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