By Anthony Faiola
From the Washington Post:
The globe's worst food crisis in a generation emerged as a blip on the big boards and computer screens of America's great grain exchanges. At first, it seemed like little more than a bout of bad weather.
In Chicago, Minneapolis and Kansas City, traders watched from the pits early last summer as wheat prices spiked amid mediocre harvests in the United States and Europe and signs of prolonged drought in Australia. But within a few weeks, the traders discerned an ominous snowball effect -- one that would eventually bring down a prime minister in Haiti, make more children in Mauritania go to bed hungry, even cause American executives at Sam's Club to restrict sales of large bags of rice.
As prices rose, major grain producers including Argentina and Ukraine, battling inflation caused in part by soaring oil bills, were moving to bar exports on a range of crops to control costs at home. It meant less supply on world markets even as global demand entered a fundamentally new phase. Already, corn prices had been climbing for months on the back of booming government-subsidized ethanol programs. Soybeans were facing pressure from surging demand in China. But as supplies in the pipelines of global trade shrank, prices for corn, soybeans, wheat, oats, rice and other grains began shooting through the roof.
At the same time, food was becoming the new gold. Investors fleeing Wall Street's mortgage-related strife plowed hundreds of millions of dollars into grain futures, driving prices up even more. By Christmas, a global panic was building. With fewer places to turn, and tempted by the weaker dollar, nations staged a run on the American wheat harvest.
Foreign buyers, who typically seek to purchase one or two months' supply of wheat at a time, suddenly began to stockpile. They put in orders on U.S. grain exchanges two to three times larger than normal as food riots began to erupt worldwide. This led major domestic U.S. mills to jump into the fray with their own massive orders, fearing that there would soon be no wheat left at any price.
"Japan, the Philippines, [South] Korea, Taiwan -- they all came in with huge orders, and no matter how high prices go, they keep on buying," said Jeff Voge, chairman of the Kansas City Board of Trade and also an independent trader. Grains have surged so high, he said, that some traders are walking off the floor for weeks at a time, unable to handle the stress.
"We have never seen anything like this before," Voge said. "Prices are going up more in one day than they have during entire years in the past. But no matter the price, there always seems to be a buyer. . . . This isn't just any commodity. It is food, and people need to eat."
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Related: Global food shortage linked to biofuel use
From the Guardian:
The global rush to switch from oil to energy derived from plants will drive deforestation, push small farmers off the land and lead to serious food shortages and increased poverty unless carefully managed, says the most comprehensive survey yet completed of energy crops.
The United Nations report, compiled by all 30 of the world organisation's agencies, points to crops like palm oil, maize, sugar cane, soya and jatropha. Rich countries want to see these extensively grown for fuel as a way to reduce their own climate changing emissions. Their production could help stabilise the price of oil, open up new markets and lead to higher commodity prices for the poor.
But the UN urges governments to beware their human and environmental impacts, some of which could have irreversible consequences.
The report, which predicts winners and losers, will be studied carefully by the emerging multi-billion dollar a year biofuel industry which wants to provide as much as 25% of the world's energy within 20 years.
Global production of energy crops is doubling every few years, and 17 countries have so far committed themselves to growing the crops on a large scale.
Last year more than a third of the entire US maize crop went to ethanol for fuel, a 48% increase on 2005, and Brazil and China grew the crops on nearly 50m acres of land. The EU has said that 10% of all fuel must come from biofuels by 2020. Biofuels can be used in place of petrol and diesel and can play a part in reducing emissions from transport.
On the positive side, the UN says that the crops have the potential to reduce and stabilise the price of oil, which could be very beneficial to poor countries. But it acknowledges that forests are already being felled to provide the land to grow vast plantations of palm oil trees. Environment groups argue strongly that this is catastrophic for the climate, and potentially devastating for forest animals like orangutans in Indonesia.
The UN warns: "Where crops are grown for energy purposes the use of large scale cropping could lead to significant biodiversity loss, soil erosion, and nutrient leaching. Even varied crops could have negative impacts if they replace wild forests or grasslands."
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