global initiative on food security in the wake of violence linked to price rises
French push for EU food response
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UN special rapporteur Jean Ziegler accused the EU of agricultural dumping in Africa.The European Union has set a target of providing 10% of its fuel for transport from biofuels by 2020, which its own environment advisers have said should be suspended.
There are fears that the use of farmland to grow crops for biofuels has reduced the scope for food production.
The EU is well aware of the risks of soaring food prices and, only last week, Development Commissioner Louis Michel warned of the crisis leading to a "humanitarian tsunami" in Africa.
France will take over the presidency of the EU in July and, in a statement on Friday, four ministers made it clear that the violent response to price rises in Haiti could easily be replicated in 30 other countries.
Protests because of a big increase in the cost of rice have led to a number of deaths in Haiti as well as the fall of the government.
Bush officials defend ethanol as food prices rise
A key goal of the Bush administration has been to boost supplies of renewable fuels to reduce the country's dependence on foreign energy.
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Ethanol makers will consume about one-quarter of the 13.1-billion-bushel U.S. corn crop this year, according to the Agriculture Department, a forecast that is increasingly alarming world governments and food aid workers.
But corn prices are rocketing to record highs, which will raise prices for a variety of products as corn is widely used as feed for livestock. Corn for delivery in May rose 15-1/4 cents to $6.07 a bushel at the Chicago Board of Trade Tuesday.
Asked about the food crisis and how it related to biofuels, U.S. Secretary of State Condoleezza Rice said the two were related but there were a host of other issues involved, such as high transportation costs of food.
Rice in the Commodity Marets is "Hot" right now
Here's three charts of most recent numbers. There's some interesting information here:
The first chart is who consumes the most rice. No major surprises there:
Rice Consumption by Nation
But then we move on to who produces how much:
Rice Production By Nation
Now, we are starting to see some "issues". Some consumers on the 1st list, have no measurable production capability (on the 2nd list). And other nations have some large gaps between their consumption and their production.
So let's take a look at the rice exporting nations:
Rice Exports By Nation
Now, we have some serious issues. By my count, at least five of those exporting nations have put some form of export controls/tariffs on their food exports, rice in particular.
And the latest is that 2 of the top 3 (Thailand and India; #1 and #3 respectively) have both just "indicated" (from the government, no less) that they expect that a new "base price" of $1,000 per ton will be the minimum price for rice exports. For comparison, at the end of 2007, price was around $360 a ton. This last week in Thailand, rice hit $760 a ton.
Exporters are literally having to break existing supply contracts left and right because the farmers and millers they buy from are simply refusing to supply the rice already contracted for at lower prices.
Btw, two of the bigger rice importers (Indonesia and Iran) are already squawking about prices and terms. Iran in particular.
That's going to be a fun set of negotiations to watch. Because truth of the matter is that the most open source of supply for rice right now is the US.
Complex problem that is expanding rapidly
We always notice a problem after it gets to a point where it becomes extremely challenging to deal with. Our government and others normally ignore the warning signs that point to trouble whether it is global warming, peak oil, or food shortages (translated as food prices) and call those who point them out as representing poor scientific method, and attempt to kill their credibility on Fox News. Then when the problem explodes beyond the manageable we react. Numerous experts pointed out the false profits who preached using corn for ethanol, but that is only one factor contributing to this problem.
The rapid inflation of oil and food prices has now touched many Americans, but not the ones who make policy or the ones who enjoy the SWJ for the most part. Unfortunately we won't feel it until there are riots in our streets, new grass root political parties form, etc.. Equally important (or perhaps more important in the short term) the food inflation is touching huge swaths of the population in South and Southeast Asia, South America, etc., where the population has enjoyed an increasing standard of living for years, now the rug is getting pulled out from under their feet. This will potentially serve as a catalyst for civil unrest and government initiated price controls (a short term fix that will probably make the problem worse in the long run). This is a great rallying call for some insurgent leaders who will exploit anything that makes the government appear illegitimate.
This is a global problem and will require a global response, which means we'll have to cooperate with organizations that we have marginalized in recent years. I think the second and third order effects on our political, social and economic systems will be greater than most assume.
Nice Thoughts, but unlikely....
Originally posted by Bill Moore:
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This is a global problem and will require a global response, which means we'll have to cooperate with organizations that we have marginalized in recent years. I think the second and third order effects on our political, social and economic systems will be greater than most assume.
Don't see it happening. Certainly not with any high level of UN involvement. The whole UN "Oil For Food" program fiasco will immediately reappear in all it's full blown glory, and there isn't a US pol out there ready to grab for that one again, particularly with the US probably going to have to be a major source of food supply for any such effort. A total non-starter.
The other part of the problem is that honestly, both China and OPEC have had more of an negative influence on the overall psyche of the Commodities Marketplace than most people realize. It's an attitude like "So rice is a grand a ton. Oil's $120 a Bbl. You want Cheap rice? Then cheap rice = cheap oil. Otherwise ante up & pay the price".
And China comes across as willing to do business with virtually anybody. And it's been coming across to the general public as paying off for them. Now, if you look closely, it's not necessarily true, because China has quite a number of very serious issues. But the Marketplace is becoming increasingly desensitized to these issues in the developing nations. It's becoming a very harsh environment out there.
Just look at Zimbabwe as an example. If these "global organizations" want to really make a difference, get rid of Robert Mugabe and his thugs and get "Africa's Breadbasket" back into the food production business again. Because that's just going to be one of the type of steps required to realistically create long term price and supply stability in the commodities markets.
Here's an excellent example of why working with the UN...
over food shortages is a complete non-starter:
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UN Expert Calls Biofuel 'Crime Against Humanity'
By Edith M. Lederer, Associated Press
posted: 27 October 2007 09:40 pm ET
UNITED NATIONS (AP) -- A U.N. expert on Friday called the growing practice of converting food crops into biofuel "a crime against humanity,'' saying it is creating food shortages and price jumps that cause millions of poor people to go hungry.
Jean Ziegler, who has been the United Nations' independent expert on the right to food since the position was established in 2000, called for a five-year moratorium on biofuel production to halt what he called a growing "catastrophe'' for the poor.
Scientific research is progressing very quickly, he said, ''and in five years it will be possible to make biofuel and biodiesel from agricultural waste'' rather than wheat, corn, sugar cane and other food crops.
Link
Now, think of this "stupidity" from a political viewpoint here in the US (like in the Midwest). Explain to me exactly how you are going to get (a) Max Baucus (D-MT); (b) Tom Harkin (D-IA); Evan Byah (D-IN), or virtually any other US Senator from the Midwest (Democrat or Republican) to advocate working with the UN, and in effect just handing their potential opponents an issue over dissing their farming base of supporters.
You aren't going to get a one of them to support you, because imagine telling a farmer that because they support Ethanol, they are part of committing a "crime against humanity" - just because they FARM for a living.:mad:
I mean, how stupid can you get???
Ethanol production from corn just isn't an efficient idea. Ethanol from sugar cane is much better (than corn) from a production standpoint. But talking smack to the farming community is a sure-fire way to make sure you get nowhere fast.
/rant off
You know, I just love this thread
It brings to mind how often I fail to expand my mental horizon's in considering strategic implication's.
Wonder how those non-state actor's did in counting on this type of thing?
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That's going to be a fun set of negotiations to watch. Because truth of the matter is that the most open source of supply for rice right now is the US.
Biofuel Summits and a Smiggin of Politics
Interesting this Bio Fuel web page and reading what took place just days prior to the St. Petersburg, Russia bio fuels summit last week. Russia's Itera Group just dumped 256 million into a project to produce bioethanol in Clearfield, Pennsylvania and further intend to build yet another plant in Louisiana by 2009 :eek:
Now the UK will perform the two-step with PM Brown having just addressed the UN on "tackling hunger "a moral challenge" for everyone", he's now set to address pro-bio fuels at the Madrid Summit today. The answer is apparently both calling for an agricultural revolution "involving technology that would help farmers in developing countries grow higher-yielding crops".
Interesting Marketplace these days...
All sorts of little pieces out there, goings on..
The Philippines purchases rice through a national government body (NFA; National Food Authority) for imports. They just went out for a tender for 500k metric tons (approx. 2400 lbs per metric ton), due 05.05.2008, and it looks like they only got around 350k out of the requested 500k from the previous tender.
The Philippines is actually looking to change the methods they use to buy rice because of the escalating costs.
Now this next part is just beyond words:
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Japan, the world's biggest net food importer, will ask the World Trade Organization as early as next week to introduce rules to stop countries restricting grain exports, Hiroaki Kojima, deputy director for international economic affairs at Japan's Agriculture Ministry, said on April 22.
Persuading the WTO to intervene may be tough for Japan, which protects its agriculture with subsidies and import tariffs as high as 700 percent on farm products. Developing nations are pressing Japan to cut the duties and open its market in the Doha Round of trade talks.
LInk to Article
The really interesting part in the Commodities market is that the futures market is now showing a rise in the dollar against other currencies. It's seemingly having no real effect on base commodity (food) prices, though.
Also, this whole re-thinking of Ethanol subsidies by the political chattering classes is nice, but it's really only going to have an effect on corn and/or soybeans, and that's if any subsidy cutback actually is passed into law (odds are against). Reason is that it's not all of the sudden going to affect either wheat growing areas, or rice growing areas.
If the farming community doesn't plant corn, they rotate and plant soybeans. Crop rotation cycles has more to do with it than ethanol subsidies.
Today, the real fight is a battle over (a) Cut ethanol subsidies back home here so it's more corn/soybeans for food, or (b) Spend our money we allocate for food purchases in foreign markets, instead of here in the US. If we buy here in the US, we support our markets, but then we have to pay higher transportation rates to get the food to it's intended location.
That's the real behind the scenes fight going on right now, and it's a no-holds-barred fight. Funny thing is, if we spend that money in overseas markets, we'll probably end up lowering our commodity food prices here back home, because right now, the federal government purchases are just working as a little extra 'spike' in commodity food prices. In the past, it's been more of a 'floor' - now it's functioning as a jack to raise the ceiling.
The above is a short term 'fix'. We still need to address the whole corn production for Ethanol or for food issue.
Another aspect to this entire discussion is that the big AG operations (Monsanto, Dow AgroScience, Pioneer, Syngenta, Bayer Crop Science, and any number of others) are having a major benefit dropped in their laps, which is a renewed push for increasing acceptance of biotechnology in crop production.
For the Ethanol vrs. food debate, see the NCGA National Corn Growers Assoc. website for their (obviously biased) viewpoint, but they make a very valid point on their website:
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“It’s Not Food, It’s Not Fuel, It’s China” (05-02-08)
A change in Chinese meat consumption habits since 1995 is diverting eight billion bushels of grain per year to livestock feed and could empty global grain stocks by September 2010, according to a new study from Biofuels Digest
Link to the article
I guess my biggest problem is with the MSM as they cover the whole "food crisis", which is that they are big into hype and emotion (and with "gotcha journalism" being a requirement), and totally clueless on how to deal with the real underlying issues, much less explain the costs and benefits of the potential solutions.
UN food body 'should be scrapped'
Senagal's President Abdoulaye Wade dismissed the UN's food agency as a "waste of money" days after the UN announced an emergency plan to bring soaring world food prices under control.
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His comments came as Nigeria braced for a national strike by bakers over the cost of flour and sugar.
Some global food prices have nearly doubled in the past three years, provoking riots and other protests in Africa, Asia and Latin America.
Last week the UN unveiled a $200m (£100m) package to boost food production in the worst-affected countries.
Mr Wade said on Senegalese radio and television that the FAO's work was duplicated by other organisations that operated more efficiently.