Corn Exports Shrivel as U.S. Ethanol Demand Grows

Technology Review has a look at the double whammy the US drought and ethanol production are applying to corn exports - Corn Exports Shrivel as U.S. Ethanol Demand Grows.

As an increasing amount of U.S. corn is being used to meet rising ethanol demand, the United States—the world’s dominant producer and exporter of corn—is exporting less.

The first chart shows how the use of U.S. domestic corn has changed over time. The portion of U.S.-grown corn used to make fuel reached 40 percent last year, and will be about the same this year, according to the U.S. Department of Agriculture. At the same time, the worst drought in half a century throughout the Midwest corn belt has led to severely shrunken forecasts for this year’s United States corn crop, raising concerns that exports will further decrease, intensifying the risk of an international food crisis.

The second chart shows the annual U.S. corn exports since 2005. Though the number of U.S. acres planted with corn was the highest since the late 1930s, this year, U.S. exports have been on a steady decline, dropping from over 60 percent of the world’s corn exports in 2005 to less than 40 percent last year.

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Yemen’s multiple proxy wars a recipe for a famine

Crikey has a look at the famine in Yemen, exacerbated by high prices for diesel - Yemen’s multiple proxy wars a recipe for a famine.

For decades throughout the 20th century, the idea of famine had two dominant uses in the West.

The first was proof of the Christian ideal that “the poor you will always have with you”, thus re-affirming the eternal need for charity, and the limited usefulness of political struggle — the second was to reaffirm a vaguely or explicitly racialist and Malthusian notion that the dusky-skinned two thirds of the world really couldn’t manage themselves that well, and were doomed to over-breeding and starvation. Before the Second World War, China was the locus for this concern/panic — in various famines until the 1949 revolution, children would be exchanged between families to be eaten, or sold in the marketplace.

After the war, attention switched to India, and then in the 1970s and ’80s, to Ethiopia and the rest of Africa. The story was static, and endlessly repeated — skeletal children, milk powder, guilt, appeals, etc. The global extravaganza of Live Aid in 1985 was probably the acme of this well-meant but bone-headed view of starvation — appropriately enough celebrated by a song in which a phalanx of stars wondered if animist and Muslim peoples even knew it was Christmas time at all.

But by this time another view of famine was beginning to permeate the liberal West, with the 1981 publication of Amartya Sen’s Poverty and Famines, which deployed an array of theories to argue that famines almost always occurred in regions where there was plenty of food — and that even when there was a will to alleviate the famine, the absence of democratic and open political structures made such alleviation impossible.

Sen’s example was the Bengal Famine of 1943 — something that Commonwealth readers rarely hear of in tales of WW2, because 3 million Indians died due to the incompetence, indecision and outright racism of the British authorities. Sen’s argument made an impact where more radical left-wing accounts of the political nature of famine had been dismissed — but many were still unwilling to concede one of his core points, that one of the great barriers to alleviating famine was the market itself.

Sen’s argument has made it impossible for Western news to report famine in the way it once did, but it’s a close run thing. Fragments of reasons a region might suddenly descend into desperate starvation are aired, but there remains a basic inability to tell a connected story. The default position remains the Pieta, the starving child in arms.

Which brings us to the Yemen famine, which has suddenly hit the headlines, after bubbling in the background of the news for months. Ten million people — nearly half of the country’s population — are at risk of starvation, yet the food shortage is not affecting whole regions or areas equally. The burden is falling overwhelmingly on the poor, with people starving while nearby markets are full.

Though there’s been a persistent food shortage since the global food price rise in 2008 — and in fact food has always been short for the poor in the country — the situation has been made urgent by several coincident factors. A drought has persisted for more than three years, and is at its worst this summer, leading to a lack of work for millions of rural labourers. It’s also Ramadan, which, perversely, as a month of daylight fasting, raises food prices — since the fasting is followed by night-time feasting.

Added to these woes, Yemen is starving because it has become a site for multiple proxy wars — the Shia-based Sadah uprising from the north-west, a South Yemen uprising (based around the territory of the old Soviet-era Marxist state), and the Arab Spring general insurgency against the 30-plus-year reign of President Salleh, and last but not least a proxy war between al-Qaeda and US drone attacks.

The result is a country in which substantial networks not merely of trade, but also of inter-family support and charity have broken down, making the usual transfer between rich and poor all the more difficult, such as it occurs. To be fair, it has also been pointed out that the production of the intoxicant herb “khat” dominates agricultural production without providing any nourishment (though it also acts as an appetite suppressant), to the detriment of food production and household budgets.

But above all and beyond all this is the way in which Yemen is trapped in a global commodity system, with steadily rising prices for basic staple foods (of which Yemen imports 90%), and for diesel oil, which is used to pump water. At this point, with diesel oil unaffordable, many families are reliant on charity for a continued supply of water.

This crippling gap has led Oxfam to approach the problem in a simple way — they’re simply giving money to the poor, so that they can shop at market, and also acquire diesel. But the inevitable result of that will be a further bump in prices as the money swims into the system without expanded production, and the cycle begins again.

The Yemen famine then, is something we will begin to see more and more — a situation in which a poor and precarious country has its price signals swamped by global demand and remorselessly rising prices. With several decades of rising crop yields and low oil prices, now curtailed, it will be the nations who have not managed to get on the development ladder — or the poor parts of those who have — that will pay for the prosperity being enjoyed by a booming global urban and industrial class. In that case, the price signal becomes not a carrier of information, but a barrier to it, a la Sen — it tells us nothing about what is really required to be done, within any ethical system worthy of the name.

That story won’t be told in even the most searching reports on this famine, or the next, in the next place. We have come a long way from famine as an act of God, but we are not yet ready to recognise it as a product of global markets, or our role within it.

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A soaring food price fear

The Business Spectator has an article wondering if the drought in the US will cause another spike in food prices and social unrest - A soaring food price fear.

Markets are bracing for a surge in global political unrest, as the worst US drought in half a century sent corn and soybean prices soaring to record highs overnight.

The combination of scorching temperatures and a lack of rain has now pushed corn and soybean prices above the peaks they reached during the 2007-08 food crisis. Overnight, the corn futures price climbed above $US8 a bushel for the first time, while that of soybeans hit a record $US17.12 a bushel.

Although the wheat price has not yet hit record highs, it has jumped more than 50 per cent in the past five weeks, and is now above the level it hit after Russia’s crop failure in 2010, which prompted Moscow to impose a ban on grain exports.

Grain traders have been anxiously monitoring the effect of the drought, which is the worst since 1956 in terms of the areas affected. In its weekly crop report, the US government said that only 31 per cent of the corn crop was in “good to excellent condition”, a sharp drop from its estimate of 40 per cent last week. For soybeans, the estimate dropped to 34 per cent from 40 per cent.

But the devastating US drought will have massive global effects. The United States is the world’s largest exporter of corn, soybeans and wheat – supplying around one-third of these staple grains traded on the global market.

Already, some analysts are warning that the world could be in for a period of intense social and political instability similar to that seen in 2007-08 when soaring food prices sparked riots in dozens of countries. They note that last year’s political instability in the Arab world was partly caused by surging grain prices.

The effect of rising grain prices is most pronounced in poor countries, where people can spend up to three-quarters of their income on food. Because food is such an important part of consumer spending, surging food prices are quickly reflected in a jump in official inflation figures.

Rolling Stone has an article by Bill McKibben on the state of play in global warming analysis - Global Warming's Terrifying New Math.

If the pictures of those towering wildfires in Colorado haven't convinced you, or the size of your AC bill this summer, here are some hard numbers about climate change: June broke or tied 3,215 high-temperature records across the United States. That followed the warmest May on record for the Northern Hemisphere – the 327th consecutive month in which the temperature of the entire globe exceeded the 20th-century average, the odds of which occurring by simple chance were 3.7 x 10-99, a number considerably larger than the number of stars in the universe.

Meteorologists reported that this spring was the warmest ever recorded for our nation – in fact, it crushed the old record by so much that it represented the "largest temperature departure from average of any season on record." The same week, Saudi authorities reported that it had rained in Mecca despite a temperature of 109 degrees, the hottest downpour in the planet's history.

Not that our leaders seemed to notice. Last month the world's nations, meeting in Rio for the 20th-anniversary reprise of a massive 1992 environmental summit, accomplished nothing. Unlike George H.W. Bush, who flew in for the first conclave, Barack Obama didn't even attend. It was "a ghost of the glad, confident meeting 20 years ago," the British journalist George Monbiot wrote; no one paid it much attention, footsteps echoing through the halls "once thronged by multitudes." Since I wrote one of the first books for a general audience about global warming way back in 1989, and since I've spent the intervening decades working ineffectively to slow that warming, I can say with some confidence that we're losing the fight, badly and quickly – losing it because, most of all, we remain in denial about the peril that human civilization is in.

When we think about global warming at all, the arguments tend to be ideological, theological and economic. But to grasp the seriousness of our predicament, you just need to do a little math. For the past year, an easy and powerful bit of arithmetical analysis first published by financial analysts in the U.K. has been making the rounds of environmental conferences and journals, but it hasn't yet broken through to the larger public. This analysis upends most of the conventional political thinking about climate change. And it allows us to understand our precarious – our almost-but-not-quite-finally hopeless – position with three simple numbers.

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The Cause Of Riots And The Price of Food

Technology Review's Arxiv blog has a look at the correlation between food prices and social unrest - The Cause Of Riots And The Price of Food.

What causes riots? That's not a question you would expect to have a simple answer.

But today, Marco Lagi and buddies at the New England Complex Systems Institute in Cambridge, say they've found a single factor that seems to trigger riots around the world.

This single factor is the price of food. Lagi and co say that when it rises above a certain threshold, social unrest sweeps the planet.

The evidence comes from two sources. The first is data gathered by the United Nations that plots the price of food against time, the so-called food price index of the Food and Agriculture Organisation of the UN. The second is the date of riots around the world, whatever their cause. Both these sources are plotted on the same graph above.

This clearly seems to show that when the food price index rises above a certain threshold, the result is trouble around the world.

This isn't rocket science. It stands to reason that people become desperate when food is unobtainable. It's often said that any society is three square meals from anarchy.

But what's interesting about this analysis is that Lagi and co say that high food prices don't necessarily trigger riots themselves, they simply create the conditions in which social unrest can flourish. "These observations are consistent with a hypothesis that high global food prices are a precipitating condition for social unrest," say Lagi and co.

In other words, high food prices lead to a kind of tipping point when almost anything can trigger a riot, like a lighted match in a dry forest.

On 13 December last year, the group wrote to the US government pointing out that global food prices were about to cross the threshold they had identified. Four days later, Mohamed Bouazizi set himself on fire in Tunisia in protest at government policies, an event that triggered a wave of social unrest that continues to spread throughout the middle east today.

That leads to an obvious thought. If high food prices condition the world for social unrest, then reducing the prices should stabilise the planet.

But what can be done to reverse the increases. Lagi and co say that two main factors have driven the increase in the food price index. The first is traders speculating on the price of food, a problem that has been exacerbated in recent years by the deregulation of the commodities markets and the removal of trading limits for buyers and sellers.

The second is the conversion of corn into ethanol, a practice directly encouraged by subsidies.

Those are both factors that the western world and the US in particular could change.

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Meat Supply’s ‘Precipitous’ Drop to Spur Prices to Records, Rabobank Says

Bloomberg has a report on declining US meat production - Meat Supply’s ‘Precipitous’ Drop to Spur Prices to Records, Rabobank Says.

U.S. meat and poultry production may drop as much as 5 percent next year, sending beef and pork prices to a record amid climbing feed costs and shrinking herds, according to Rabobank International.

Producers are curbing output as tighter feed supplies boost costs, which will lead to a “precipitous fall” in available meat in 2012, David Nelson, a global strategist at Rabobank, said in a report. The drop is compounded by a drought that is forcing ranchers in the Southwest to cull herds and by surging demand for U.S. beef in developing countries, he said.
“There’s going to be less supply, so we’re going to have higher prices,” Nelson said in a telephone interview from Chicago yesterday. “It’s quite a shift.”

By late 2012, U.S. beef production may be running at rate of 7 percent below comparable levels this year, Nelson said. The spot-market price for fed steers sold to slaughterhouses may average a record $1.16 a pound in 2012, up from a projected $1.13 a pound this year, Nelson said in the report. Beef prices also will climb to an all-time high, he said.

U.S. per-capita consumption of beef will continue to drop, so the tightening supply of the meat may impact foreign buyers the most, Nelson said. The “relatively cheap dollar” is boosting demand for U.S. meat, Nelson said. The dollar is down 1.2 percent this year against a basket of six major currencies.

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Anatomy Of A Food Price Spike

Sustainablog has a look at the latest spike in food prices - Anatomy Of A Food Price Spike.

I have been posting updates on the most recent, global food price spike since February 2011 – most recently in June. Yesterday, the Food and Agriculture Organization of the UN (FAO) released its most recent data on the prices of food in international trade. As seen in the graph above, the overall index and its various components have declined slightly, but remain at very high levels.

People living in the developed world have seen some food price increases, but because we grow so much of our own food and spend a small part of our income on feeding ourselves, the impact is minor. This has the greatest effect on the lives of poor people in import-dependent countries.

What is actually most unsettling about this phenomenon is that nothing like it has occurred for decades, and yet we are in a second such spike. The first was in 2007/8, and the current spike has been in 2010/11.
Source: sustainablog (http://s.tt/13sjc)

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