Warfare: Food Supply/Access

[Watcher In The Middle]

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:

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:

“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.

[Stan]

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.

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.

[Stan]

World Food Crisis: Jewel in whose crown?

"The much-vaunted political and economic model the world has so readily adopted and whose virtues so many have for so long expounded, simply does not work."

... The market-based economy is based on fundamentals too easily swayed by speculation and Social Democracy would have all the ingredients for a perfect mix, but for the fact that it is neither democratic, nor is its social component minimally sufficient to meet the needs of the citizens of the world. The current food crisis is a shining example of the disaster this model has become.

However, how telling it is of today’s international community that the United Nations’ World Food Programme is currently struggling with a shortfall of some 755 million USD in funding, in a world more intent on wasting hundreds, if not thousands, of billions of dollars on wanton acts of butchery such as we see in Iraq than on providing public services on a global scale. Such is the wonderful capitalist-monetarist system the world has embraced as its economic and social Manna.

More than a feather in the cap, the world food crisis is a shining jewel in the crown of an economic and political system whose only raison d’être was from the beginning to be a thorn in the side of Socialism and which did not rest until trillions of dollars had been wasted in sabotaging the model.

Then there's this tidbit of hope, or is it ?

Russia may prevent global food crisis

... the entrepreneurial zeal transforming the Russian agricultural landscape will only restore some equilibrium to a dynamic market. So, while wheat at $12 a bushel might prove to have been a temporary blip, $4.50 a bushel is unlikely to be seen any time soon - even if it rains again in Australia one day.

[Beelzebubalicious]

Great. Just what we need - to become dependent on Russia for food and energy. I'm sure they're also stockpiling women for the growing gender deficit...

[Stan]

Great. Just what we need - to become dependent on Russia for food and energy. I'm sure they're also stockpiling women for the growing gender deficit...

Hey Eric ! There are some intriguing links at the Moscow Times, and it wasn't too long ago that Nashi Summer camps were advertising pro-creation

Anyhoo, back to the thread. Now here's a unique opinion from Konstantin Sonin, a professor at the New Economic School and a columnist for Vedomosti.

You should not worry too much about the 1.5 billion Chinese people. If the increase in prices is caused primarily by the increase in meat consumption in China, this means that the quality of life has improved there. If things had gotten worse for them because of their increased meat consumption, they would have ceased to eat meat. In that case, prices would have dropped, and they would have gone back to living as before.

You also should not worry about the people in the United States or Europe. All the U.S. government has to do to solve the problem is to reduce subsidies to its farmers, including payments for non use of farmland, and prices will drop substantially. To be sure, the agriculture lobby in the United States is very powerful, and even touching the issue is dangerous for Congressmen, but the overwhelming majority of Americans are not producers of grain, but consumers.

At some point, the rise in food prices will pressure the government to stop fulfilling the lobbyists' requests to limit agricultural supply. In this case, an increase in competition and production among producers will lead to sharply lower grain prices.

For countries that significantly depend on food imports -- including Russia -- this logic does not apply.

[Stan]

Consider the case of Uganda. The country’s rice output has risen 2½ times since 2004, according to the Ministry of Trade.

Uganda’s importers, seeing the shift, have invested in new mills in the country, expanding employment and creating competition for farmer output, thereby improving prices. New mills, meanwhile, lowered the cost of bringing domestic rice to market. While people in developing countries across the globe are clamoring about the sharp rise in food prices, Ugandans are still paying about the same for rice as they always have. And Uganda is poised to start exporting rice within East Africa—and beyond.

The secret of Uganda’s homegrown success? Ignoring decades of bad Western advice.

[Watcher In The Middle]

From Foreign Policy article:

One of the leaders of Uganda’s rice revolution is Gilbert Bukenya, the country’s vice president and its leading advocate for the commercialization of agriculture. I first met Bukenya at his home on the shores of Lake Victoria, where he laid out the basic philosophy. “By farming smarter, Ugandans not only can grow more, they can earn more money,” he told me. An advocate of food self-sufficiency, Bukenya wants Ugandans to eat more homegrown rice, boosting local farmers and rice millers while at the same time freeing hard cash for other uses. Bukenya has long promoted a new African rice that grows in “uplands” (as opposed to wetland “paddies”) and requires less water.

Embracing a new variety is only part of the working-smarter formula. Once rice output began to expand, Bukenya and other Ugandan politicians played another card: They stumped for a duty of 75 percent to be imposed on foreign rice. The legislature passed the duty, which stimulated domestic rice production further.

There's the real meat of the article. The pols didn't create restrictions on imports until AFTER the output started to expand. Vital point, there, that at least IMHO, the article didn't do sufficient justice to. That's a lesson our pols here in the US need to learn.

You have to expand supply first, then you have got all sorts of options available to you. Good for Uganda for what they are doing - it's working for them, and probably will continue to do so. Now the key for them is to keep expanding/improving their infrastructure (roads, rail, mills, ports, storage facilities), so they can not just feed their own population, but also process exports.

Looks like they have some good, thoughtful leadership in place. Just be wise enough to use the tariffs on imported goods sparingly.