Local Grains and Shortages

afghan-wheat-farmers.jpg

Currently, local grains are the hardest part of eating locally in my particular food-shed. Vegetables and fruits can be had, even in winter, though a bit monotonously. Root vegetables are starchy and a good source of carbohydrates. I can get meat and dairy from the farmers’ market year-round, and I can use butter as a cooking fat. The only thing that is notably absent are grains. There’s Hudson Valley tofu at my local food co-op, but I haven’t found any wheat, millet, rye, barley, or any other type of grain readily available locally. There’s fresh beans in the summer, but no dried beans. Rice in New York is out of the question, and there isn’t any amaranth or quinoa, either. Wheat is still grown in New York, but I don’t have a local supplier. I would like to; aside from benefit of supporting my local farmers and food economy, the shorter the supply chain, the less vulnerable it is to shortages, and the more resistant it will be to price increases due to the increased costs of transportation, processing, and fertilizers, all of which are oil-dependent.

Why do I mention this? Over the last several months, the prices of staple grains have risen dramatically, much more so abroad than in the U.S. There have been grain riots, mandatory halts to exporting, price controls, and military guards for grain shipments.

Mexican Corn Protests

International Herald Tribune, February 26, 2008:

Wheat futures vaulted above $12 a bushel for the first time Tuesday.

Wheat prices have surged 34 percent since the start of year, pushed higher by growing world demand, tight supplies and bad weather that has pummeled crops in Canada, Argentina and India. U.S. exporters are selling wheat a record pace to meet demand, rapidly depleting stockpiles. The Department of Agriculture expects U.S. wheat inventories will total 272 million bushels by the end of May — the lowest level in more than five decades.

“Everybody is coming to the realization that the shortage of wheat is not going away,” said Elaine Kub, a commodities market analyst at DTN. “There’s no relief coming from anywhere in the world until June,” when the U.S. wheat harvest begins.

Unprecedented demand for agricultural products from fast-growing countries including China and India has exacerbated the supply crunch for wheat, which has more than doubled in price since last year.

A Global Need for Grain That Farms Can’t Fill, New York Times, March 9, 2008:

Everywhere, the cost of food is rising sharply. Whether the world is in for a long period of continued increases has become one of the most urgent issues in economics. Many factors are contributing to the rise, but the biggest is runaway demand. In recent years, the world’s developing countries have been growing about 7 percent a year, an unusually rapid rate by historical standards.

The high growth rate means hundreds of millions of people are, for the first time, getting access to the basics of life, including a better diet. That jump in demand is helping to drive up the prices of agricultural commodities. Farmers the world over are producing flat-out. American agricultural exports are expected to increase 23 percent this year to $101 billion, a record. The world’s grain stockpiles have fallen to the lowest levels in decades.

In contrast to a run-up in the 1990s, investors this time are betting — as they buy and sell contracts for future delivery of food commodities — that scarcity and high prices will last for years. If that comes to pass, it is likely to present big problems in managing the American economy. Rising food prices in the United States are already helping to fuel inflation reminiscent of the 1970s.

Now prices have more than tripled, partly because of a drought in Australia and bad harvests elsewhere and also because of unslaked global demand for crackers, bread and noodles. In seven of the last eight years, world wheat consumption has outpaced production. Stockpiles are at their lowest point in decades.

Around the world, wheat is becoming a precious commodity. In Pakistan, thousands of paramilitary troops have been deployed since January to guard trucks carrying wheat and flour. Malaysia, trying to keep its commodities at home, has made it a crime to export flour and other products without a license. Consumer groups in Italy staged a widely publicized (if also widely disregarded) one-day pasta strike last fall.

Make Bread Not War, Egypt President Tells Army, Yahoo News, from Agence France-Presse, March 17, 2008:

Egyptian President Hosni Mubarak has mobilised the army’s ovens to deal with the country’s massive bread shortages amid rising social unrest, official media reported on Monday. Mubarak has told the army and the interior ministry, which control bakeries usually used to make bread for the troops, to increase their production in order to “put an end to the bread crisis,” Al-Ahram daily said.

Egypt is in the grip of a serious bread crisis brought on by a combination of the rising cost of wheat on world markets and sky-rocketing inflation. Four people have been killed in fights that broke out in bread queues in recent weeks, a security official told AFP. Mubarak said that the phenomenon of bread queues “must disappear.”

While most bread in Egypt is subsidised, the price of non-subsidised bread has risen by more than 26 percent over the last year.

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High Rice Cost Creating Fears of Asia Unrest, New York Times, March 29, 2008:

Rising prices and a growing fear of scarcity have prompted some of the world’s largest rice producers to announce drastic limits on the amount of rice they export.

The price of rice, a staple in the diets of nearly half the world’s population, has almost doubled on international markets in the last three months. That has pinched the budgets of millions of poor Asians and raised fears of civil unrest.

Shortages and high prices for all kinds of food have caused tensions and even violence around the world in recent months. Since January, thousands of troops have been deployed in Pakistan to guard trucks carrying wheat and flour. Protests have erupted in Indonesia over soybean shortages, and China has put price controls on cooking oil, grain, meat, milk and eggs.

Food riots have erupted in recent months in Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen. But the moves by rice-exporting nations over the last two days — meant to ensure scarce supplies will meet domestic needs — drove prices on the world market even higher this week.

This has fed the insecurity of rice-importing nations, already increasingly desperate to secure supplies. On Tuesday, President Gloria Macapagal Arroyo of the Philippines, afraid of increasing rice scarcity, ordered government investigators to track down hoarders.

Several factors are contributing to the steep rice in prices. Rising affluence in India and China has increased demand. At the same time, drought and other bad weather have reduced output in Australia and elsewhere. Many rice farmers are turning to more lucrative cash crops, reducing the amount of land devoted to the grain. And urbanization and industrialization have cut into the land devoted to rice cultivation. In Vietnam, an obscure plant virus has caused annual output to start leveling off; it had increased significantly each year until the last three years.

Until the last few years, the potential for rapid price swings was damped by the tendency of many governments to hold very large rice stockpiles to ensure food security, said Sushil Pandey, an agricultural economist at the International Rice Research Institute in Manila. But those stockpiles were costly to maintain. So governments have been drawing them down as world rice consumption has outstripped production for most of the last decade. The relatively small quantities traded across borders, combined with small stockpiles, now mean that prices can move quickly in response to supply disruptions.

Tensions Rise as World Faces Short Rations, New York Times, from Reuters, March 30, 2008

Plundered by severe weather in producing countries and by a boom in demand from fast-developing nations, the world’s wheat stocks are at 30-year lows. Grain prices have been on the rise for five years, ending decades of cheap food. Drought, a declining dollar, a shift of investment money into commodities and use of farm land to grow fuel have all contributed to food woes. But population growth and the growing wealth of China and other emerging countries are likely to be more enduring factors.

In Mexico, tens of thousands took to the streets last year over the cost of tortillas, a national staple whose price rocketed in tandem with the price of corn (maize). Global food prices, based on United Nations records, rose 35 percent in the year to the end of January, markedly accelerating an upturn that began, gently at first, in 2002. Since then, prices have risen 65 percent. In 2007 alone, according to the U.N. Food and Agriculture Organization’s world food index, dairy prices rose nearly 80 percent and grain 42 percent.

“The recent rise in global food commodity prices is more than just a short-term blip,” British think tank Chatham House said in January. “Society will have to decide the value to be placed on food and how … market forces can be reconciled with domestic policy objectives.”

Many countries are already facing these choices. After long opposition, Mexico’s government is considering lifting a ban on genetically modified crops, to allow its farmers to compete with the United States, where high-yield, genetically modified corn is the norm.

In the next decade, the price of corn could rise 27 percent, oilseeds such as soybeans by 23 percent and rice 9 percent, according to tentative forecasts in February by the OECD and the U.N.

Waves of discontent are already starting to be felt. Violent protests hit Cameroon and Burkina Faso in February. Protesters rallied in Indonesia recently and media reported deaths by starvation. In the Philippines, fast-food chains were urged to cut rice portions to counter a surge in prices.

These price increases and shortages have me somewhat worried. Seeing the vulnerability of the global supply chain of staple grains to supply disruptions makes me very glad that I have an excellent farmers’ market nearby.

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One response to “Local Grains and Shortages

  1. Hi there. It turns out that there is a wonderful local source for local grains here in the mid-Hudson Valley. Wild Hive Farm in Clinton Corners is milling local grains and baking wonderful things with them. I am a part of Wild Hive Farm and I just happened to come across this info so as far as local grains, problem solved. Now you can again focus on educating the greater public on why not to buy conventional organics that are still being monocropped and are also being shipped so far, negating the whole basis for spending more on something organic. Oh, and the grains we use are also organic.

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