First posted on
Green Mountain Daily.com
Soaring prices on grains and rice could be the worst wave of economic shafting we'll see.
Statistics are projecting something of a perfect storm:
400% - Rise in the price of spring wheat over the last year
75% - Average world food price rise since 2005
16 million more people at risk of food insecurity for every percentage point rise in the price of staple foods
33% - Amount of maize harvested in US this year that will go to produce biofuels
That's worldwide, not just our tanking dollar. Experts say it doesn't have much to do with population, but in distribution. Droughts in Australia and the emerging middle class in China (who are adding much more meat to their diet) are factors, but the sheer amounts of crops biofuels will consume are staggering.
From The Australian:
"The most contentious development among these is the rise in biofuels, and the use of food for fuel has attracted widespread criticism. Global biofuel production doubled between 2000 and 2007, from 21.8 billion litres in 2000 to 72.7 billion in 2007. The US has a target of 163.6 billion litres of biofuel by 2022."
That ain't chicken feed.
The Australian continues: "The US produces 43 per cent of the world's biofuel, mostly from corn; Brazil produces 32per cent from sugar; and the European Union 15 per cent, largely from oilseeds. More than 40 countries have implemented policies to encourage the use of biofuels."
From the UK Globe and Mail: "Starting next week, Britain will require gasoline and diesel sold at the pumps be mixed with 2.5-per-cent biofuel, rising to 5.75 per cent by 2010 and 10 per cent by 2020, in line with European Union directives. Ontario's ethanol-content mandate is 5 per cent. As the content requirements rise, more and more land is devoted to growing crops for fuel, such as corn-based ethanol. In the EU alone, 15 per cent of the arable land is expected to be devoured by biofuel production by 2020."
And from Canada, the CBC reported on the stress to the meat industry: "High feed prices are a problem across the country, from the concentrated feedlots in Alberta to hundreds of smaller farms, like the one Bob Murphy has operated for four decades in the small eastern Newfoundland town of Brigus.
"When the Canadian dollar went from - I don't know what it was - 90 cents to $1.10, the price of cattle dropped 20 cents a pound, in a matter of six weeks," Murphy said.
"So, you know, that just ... well, it ruined my year."
"Murphy said the (price of) feed - which farmers use to fatten up their animals before slaughter - is now killing them (the farmers).
"I know a guy who [has] a thousand head on feed in P.E.I.," Murphy said. "So, just figure it out, how much they're losing. If they're losing $200 or $300 a head, how long can you stay in business doing that?"
Cattle farmers are trying to reduce the cost by shortening the "finishing time", the time cattle are grain-fed to bulk them up, resulting in thinner cattle and meat that isn't top quality.
The United Nations' World Food Programme (WFP) warned two weeks ago that it will be forced to ration food aid. Factor in the high petroleum costs of transporting any relief and the costs are doubled and trebled. This situation is volatile. Last week there were fatal food riots in Haiti, ongoing violent food-price protests in Egypt, Burkino Faso, Morocco and the Ivory Coast. These follow many riotous protests in Senegal and Mauritania earlier this year. Rice is so valuable throughout Africa it is now transported in armoured truck convoys (hijackings and killings had escalated). Armed soldiers now guard fields and warehouses. Export bans are being instituted. Argentina and India have introduced bans and/or added taxes on exported products such as wheat, dairy products and meat. Russia has frozen the prices of staple foods. Manufacturers in China and Thailand will have to negotiate food price increases with their governments from now on. Algeria and Saudi Arabia have increased food subsidies across the board to producers and distributors.
Here in the good ol' USA, Bush has decided that the amounts of exported grains will remain the same to China, regardless of the possibility that Americans may soon be paying $2 or more for a pound of flour. When bread becomes a luxury, we're in deep doo-doo.
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