“We apologise for recent price increases,” reads the sign over the bread counter, “but they are due to global factors beyond our control.” This is not a Third World food stall but an upscale supermarket in Brussels, capital of the European Union, whose farming system was once notorious for the mountains of surplus grain it produced.
Those mountains are now gone. The world is down to its lowest grain stocks for decades, and food prices are up around the world.
There were street riots over the price of basic foods in Mexico and India last year, and in Jakarta, Indonesia, last week. China and Russia have slapped controls on food prices to prevent unrest and inflation. Low-income Americans are feeling the pinch of 10 per cent increases for bread, 19 per cent for milk. Italians boycotted pasta for a day last September in protest at a 7 per cent price hike.
Advertisement
Get set for more, and worse. The recent rises are down to the high price of oil. Food production the world over requires massive amounts of oil for everything from manufacturing fertiliser to shipping grain. It is no accident that as oil hit $100 a barrel last year, maize prices stood at a record $4 a bushel. Prices are unlikely to fall any time soon, says Lester Brown of the Earth Policy Institute, a Washington DC think tank, who has long predicted what is now happening.
Brown, like most observers, also blames the surge in biofuel production, driven by US policy and high oil prices. That boosts demand for grain and oilseeds, pushing up food prices across the board. But there is a more fundamental problem too: there is just not enough land to grow all we need for food and fuel.
Market theory suggests that high prices should lead to increased supply, with more yield per hectare and more hectares planted. Trouble is, there are few unused hectares. “I don’t think acreage will increase,” says Snow Barlow, head of agriculture at the University of Melbourne, Australia. There is some scope for improving yield – but will it be enough?
That’s doubtful. Even as prices for food are rising, so is demand. Population growth adds 200,000 new mouths a day. In addition, says Joachim von Braun, head of the International Food Policy Research Institute in Washington DC, growing prosperity in China, India and elsewhere is boosting demand for meat and other animal products, and it takes 2 to 6 kilograms of grain to produce every kilogram of milk, meat or eggs.
Putting these trends together, basic grain production is predicted to have to increase 2.5 per cent per year for the next 40 years to meet projected demand for food and fuel. Most of this will have to come from yield increases. Yet for decades yields have grown by an average of only 1.5 per cent per year, and as climate change bites it will be hard even to maintain current yields, Barlow says.
The answer should be agricultural R&D. This was what produced the grain mountains of previous years – but that glut led to research cutbacks. Funding for agricultural R&D shrank throughout the 1990s in rich countries, says Julian Cribb of the University of Technology in Sydney, Australia. That should now change. College students take note: now would be a good time to major in agronomy.
