Monday, May 26, 2008

rising prices

There has been a lot of news about oil shortages, and the prices of oil have risen by a lot. We've all noticed this. For example, in 1998 gas prices were about 70 cents/litre. Now, in 2008, prices have been an average of between $1.22 and $1.35/litre. For some people, it's become just too expensive to drive a car. This makes us all angry. We curse at the gas stations, we shake our fists at the pumps, and we grudgingly climb on our bicycles or walk to work, grumpy and nostalgic for the "good ol' days" of cheap oil.

This blog isn't going to be about gas prices. We can live without gas.

We can't live without food.

However, that is exactly what people around the world, especially poorer, developing countries, are facing. Over the past few years the prices of wheat, corn, rice and other basic foodstuffs have doubled or tripled, with much of the increase taking place just in the last few months. Last year wheat prices rose 77% and rice 16% (check out the chart). These were some of the sharpest rises in food prices ever. This year the rise has accelerated, as since January, rice prices have soared 141%, and the price of one variety of wheat shot up 25% in a day. A day!

Josette Sheeran, the head of the UN's World Food Programme, the largest distributor of food aid, is worried.

“For the middle classes it means cutting out medical care. For those on $2 a day, it means cutting out meat and taking the children out of school. For those on $1 a day, it means cutting out meat and vegetables and eating only cereals. And for those on 50 cents a day, it means total disaster.”
The poorest are selling their animals, tools, the tin roof over their heads—making recovery, when it comes, much harder.

Just over 1 billion people live on $1 a day, the benchmark of absolute poverty; 1.5 billion live on $1 to $2 a day. According to Bob Zoellick, the president of the World Bank,

"food inflation could push at least 100 million more people into poverty, wiping out all the gains the poorest billion have made during almost a decade of economic growth."
Hundreds of millions of people were starving and malnourished last year; the only change is that as the scope of the crisis has grown.

Now… here’s some reasons why:

First, there has been a run of bad weather in key growing areas. In particular,
Australia, normally the world’s second-largest wheat exporter, has been suffering from an epic drought. This is just exports. In the poorest countries in Africa there have already been riots, as people can no longer afford to buy food.

Next, people are eating a heck of a lot of meat as a lot more people in emerging economies have become rich enough to start eating it. It takes 700 calories of grain to produce a 100 calorie piece of beef. More people eating beef means more grain going to animals. (I’ll touch on why raising beef is bad for the overall environment later).

The third reason is big: oil is very expensive. A lot of energy goes into producing fertilizer, running tractors and transporting farm products to consumers. Rising oil prices forced up agricultural costs. Oil is expensive because it’s getting harder to find, making it a rare commody.

So we’ve moved on to the big-daddy reason for the food crisis:

Lets focus on grain biofuels for now. Changing crops into fuel was the big environmentally friendly move which was supposed to wean us all off crude oil and onto cleaner, greener ethanol. Not so fast. According to the
New York Times, “producing a gallon of ethanol from corn uses most of the energy the gallon contains.” Shoot, not so efficient. So lets try sugar cane like
Brazil… and cut down the Amazon? Hmm. Biofuel isn’t the solution it promised to be. It's also taking up all the land normally used to grow food, making less space for food growing. This means the grains that go into biofuels are not going to hungry people. Thus, there is less food to put on the table. There is less food available for those who need it. Already high prices go up because there is a shortage. Supply and demand raises already unreachable prices.

So people are selling their homes and starving because … we have failed to aid those who have had crop failures, we eat too much meat, we’re addicted to oil, and we’ve taken away food crops to feed our oil addiction.

Check out this
National Geographic video. It makes me want to cry.

PS> click hyperlinks to view my sources.

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