by Alex Evans | Oct 30, 2007 | Climate and resource scarcity
Regular readers will know that we’ve been watching food prices rise steadily over the last few months with increasing concern – see the Scarcity category of posts for the backstory, and also this excellent in-depth analysis piece that the FT published last week. Today, the Food and Agriculture Organisation’s head, Jacques Diouf, had some blunt words in an interview with the FT:
“Many [countries] will have to take hard decisions because of the impact of food prices. In some countries there will be price controls, some will scrap import tariffs on food to minimise the impact of rising costs and others will increase food subsidies … If prices continue to rise, I would not be surprised if we began to see food riots,” Mr Diouf said, noting that in the past year, Mexico, Yemen and Burkina Faso had all witnessed social unrest over high food prices.”
Concern at FAO is clearly rising steadily; last week, the FT quoted the head of its grain trading division as saying that “the world is gradually losing the buffer that it used to have to protect against big swings [in the market]. There is a sense of panic.” But Diouf has a plan:
At the FAO’s annual meeting in Rome next month, Mr Diouf will propose a “high-level conference on world food security” that would aim to agree on measures to cool down rising food prices.
Interesting idea – and welcome to see Diouf seeking to raise the political temperature on food prices. But it still leaves the question: how much can an FAO summit on its own really achieve? Step back for a moment and consider what’s actually driving the increase in food prices. Here are Jenny Wiggins and Javier Blas last week in the big FT analysis piece mentioned earlier:
Some of the price rises are the result of temporary problems, such as drought in Australia, and diseases, such as blue-ear in Chinese pigs. But there is a more permanent increase in demand from Asia, as richer populations in China and India demand more protein, and from the biofuel industry, which is on course to consume about 30 per cent of the US corn crop in 2010 – developments that will underpin prices for the medium term. The FAO estimates that those structural new trends will help to push the cost of agricultural commodities in the next decade between 20 and 50 per cent above their last 10-year average.
Problem is, these challenges – droughts, affluence in China and India, demand for biofuels driven by high energy prices – lie well beyond FAO’s sphere of influence. Even if ministers attending the forthcoming FAO summit agreed to cap food costs, it’s highly unlikely they’d be able to deliver it, given the sprawl of drivers at play – just as environment ministers have a bad habit of signing glitzy treaty declarations that then (with a few exceptions like the Montreal Protocol on ozone depleting substances) comprehensively fall down during the implementation phase.
But none of this is to deny that there genuinely is a problem – and one that we can expect to get a lot worse once long term scarcity trends like climate change and water depletion get stirred into the mix. So what should Mr Diouf do?
Here’s a starter for ten. Instead of going all out for a meaningless summit declaration full of warm words, big targets, no new funds and no compliance mechanism, Diouf should start the slow, painstaking process of building shared awareness of the fact that we have a major geopolitical scarcity problem in the post. While the first stirrings of the problem are already clear, he should recognise that building consensus on the nature of the problem could take a decade or more; just consider the fact that eighteen years elapsed between the IPCC’s establishment in 1988 and 2006 when consensus on the reality of climate change really coalesced.
The first step, then, is simply to get the key agencies talking to each other. Anyone who’s spent any time working in international bureaucracies knows that the most fundamental fact about them is that they are organised in silos that don’t talk to each other. The problem is bad enough within individual agencies or government departments; it’s even more serious when two rival agencies work on the same area. But even that is still simple compared to trying to build a relationship between agencies that barely know each other exists.
That’s where we are today with the international agencies who will have to manage the geopolitics of scarce oil, scarce water, scarce food and scarce atmospheric space. Lots of staff at IEA won’t even know what FAO stands for; and vice versa.
So Diouf should go ahead and organise his summit. But he should also organise a retreat for 50 key staff from 50 key agencies relevant to the management of scarcity, and start building the shared awareness that they’ll need in the next few years: mapping the most vulnerable countries, how food scarcity could exacerbate conflict flashpoints, figuring out how currency fluctuations could affect the situation, running scenarios for $150 a barrel oil, reading William Cline’s CGD research on how climate change will affect developing country agricultural productivity, working out what kind of developing country governance frameworks have proved effective at managing local scarcity, devising ways of building scarcity awareness into peacekeeping operations (as DPKO are doing with Darfur)… the list is endless.
Building the barest bones of a common language that all the relevant players can speak may seem a modest first step, especially as the clamour for kneejerk responses builds. But it is an indispensable one too.
by Alex Evans | Oct 1, 2007 | Climate and resource scarcity, Economics and development, Global system
Hurrah – Dani Rodrik has a blog. Rodrik is a great international development thinker and a co-author – together with Nancy Birdsall and Arvind Subramanian – of my favourite development think piece of 2005, which was absolutely required reading in DFID when it came out.
Anyway, Rodrik’s just been blogging about food prices and poverty, where he observes the existence of two camps cheerfully talking past one another. On one hand, advocates of the Doha Development Round trumpted that higher food prices from agricultural liberalisation will benefit the poor. On the other hand, people worried about the effect of biofuels on food prices (like me) argue that higher food prices will be bad news for the poor. But Rodrik points out that:
The real answer of course is that it depends on whether a poor household is a net seller or buyer of food (that is, whether it grows more or less food than it consumes). This means that the rural poor generally tends to benefit from higher food prices, whereas the urban poor generally get hurt. How large the impact is depends, in turn, on the size of the food account as a share of total expenditures or income of a household. And whether the change is good or bad for a nation’s poor as a whole depends on the geography of poverty in a country.
So as an economist loves to say, it depends. But it depends in predictable ways on household and country characteristics.
A fair point. But Rodrik overlooks the gorilla in the room: climate change. As we’ve argued here before, the effect of biofuels is just one driver of rising food prices – along with other factors like weather variability, water scarcity, rising demand in China and India and so on. While biofuels is the the key driver among these for now, it’s climate change that is likely to become the real biggie over time.
And the thing about climate change, as IPCC assessment reports make clear, is that while climate change will likely lead to higher food prices, farmers in the poorest countries are likely to become worse rather than better off – since they’ll be hardest hit by the effects of climate change. William Cline, an expert at the Center for Global Development, has a new book out about this which should be required reading in donor agencies:
Developing countries, many of which have average temperatures that are already near or above crop tolerance levels, are predicted to suffer an average 10 to 25 percent decline in agricultural productivity by the 2080s, assuming a so-called “business as usual” scenario in which greenhouse gas emissions continue to increase, according to the study. Rich countries, which typically have lower average temperatures, will experience a much milder or even positive average effect, ranging from an 8 percent increase in productivity to a 6 percent decline.
Individual developing countries face even larger declines. India, for example, could see a drop of 30 to 40 percent. Some smaller countries suffer what could only be described as an agricultural productivity collapse. Sudan, already wracked by civil war fueled in part by failing rains, is projected to suffer as much as a 56 percent reduction in agricultural production potential; Senegal, a 52 percent fall.
by Alex Evans | Sep 17, 2007 | Climate and resource scarcity, Global system
The FT notes that:
- Oil touched an all-time high at the end of last week, reaching $80.36 at one point, as traders reacted to last week’s OPEC decision to raise crude output by 500,000 barrels a day from November as “too little, too late”;
- Wheat hit a record last week as well, making it to $9.11¼ a bushel on Wednesday after the US Department of Agriculture warned that global stockpiles would shrink to a 30 year low;
- Corn prices were still going up last week even after USDA forecast a record US crop, thanks to the global explosion in corn consumption – for biofuels as well as food; and
- Gold touched $717 a troy ounce, a 17 month high, on Friday – driven by investors going for safety and a predicted further weakening in the dollar.
Most media commentary over the last week has suggested that US, eurozone and UK interest rates will decline as central banks seek to inject liquidity to the markets. But if real world scarcity trends in agriculture and energy keep pushing raw material prices upwards, then that could make for a painful countervailing force on interest rates – putting central bankers between a rock and a hard place on growth versus inflation. Stagflation, anyone?
by Alex Evans | Aug 29, 2007 | Climate and resource scarcity
The Guardian today has a lengthy piece by John Vidal on “the looming food crisis”:
A “perfect storm” of ecological and social factors appears to be gathering force, threatening vast numbers of people with food shortages and price rises. Even as the world’s big farmers are pulling out of producing food for people and animals [in order to grow crops for biofuels instead], the global population is rising by 87 million people a year; developing countries such as China and India are switching to meat-based diets that need more land; and climate change is starting to hit food producers hard. Recent reports in the journals Science and Nature suggest that one-third of ocean fisheries are in collapse, two-thirds will be in collapse by 2025, and all major ocean fisheries may be virtually gone by 2048. “Global grain supplies will drop to their lowest levels on record this year. Outside of wartime, they have not been this low in a century, perhaps longer,” says the US Department of Agriculture.
We first posted on this subject on Global Dashboard back in March, and Vidal’s right to be worried. Here’s a link to the one page table we published a few months back showing how the major scarcity trends reinforce one another – and how it’s absolutely the issue of food security we really need to be worrying about.
What’s alarming isn’t just the scale of the challenge, but the extent to which managing it requires a degree of policy coherence both within and between governments that just isn’t there.
by David Steven | Jul 31, 2007 | Conflict and security
The Rocky Mountain Institute’s Amory Lovins first described the idea of ‘brittle power’ in a book published twenty-five years (!) ago. Modern energy systems, he warned, were highly vulnerable to shocks, ‘easily shattered by accident or malice.’
In a recent interview with the excellent Grist magazine, Lovins describes his efforts to promote a more resilient energy system in Iraq:
Some of us have made three attempts at [bringing decentralized power to Iraq] and there’s a fourth now under discussion. The first three attempts, the third of which was backed by the Iraqi power minister, were vetoed by the U.S. political authorities on the grounds that they’d already given big contracts to Bechtel, Halliburton, et. al to rebuild the old centralized system, which of course the bad guys are knocking down faster than it can be put back up.
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