Lester Brown predicted this food-fuel trade-off years ago, but the dilemma has been exacerbated by the decline of the US dollar. This points to the complexities around globalization and how it can perversely effect sustainability.
Wheat prices have reached a record high, as reported in USA Today, Wheat harvests record prices on tight supplies, 9/29/2007. The article confirms many of the themes central to Brown Plan B 2.0:
"Wheat for December delivery closed at $9.33 a bushel in Chicago, more than double the price from a year ago. Drought in Australia and poor crops in other nations helped drive U.S. and world supplies to the lowest levels in decades. U.S. wheat stocks are pegged at 362 million bushels in 2007-08, the tightest since 1973-74.
"The wheat rally is part of a longer run-up in prices, including corn and dairy products. Food prices, measured by the consumer price index, rose at a 5.6% seasonally adjusted annual rate through August, compared with a 2.1% rise in 2006. Cereals and bakery products rose 5% in the same period at a seasonally adjusted annual rate.
"Food processors also face higher fuel and transportation costs. Illinois-based Sara Lee, which announced an increase in bakery-product prices this spring, began implementing a second 5% price increase earlier this month and will have to increase prices again if wheat stays above $8 a bushel. General Mills cut packaging sizes to cope with input costs.
"The domestic wheat harvest is down about a third from its 1981 peak, as growers have moved to other crops with higher yields. That's recently been exacerbated by government subsidies for corn-based ethanol."
As dollar loses value and as grain prices soar due to competition with fuels, US aid to poor countries effectively shrinks. The New York Times reports in As Prices Soar, U.S. Food Aid Buys Less, 9/29/2007:
"Soaring food prices, driven in part by demand for ethanol made from corn, have helped slash the amount of food aid the government buys to its lowest level in a decade, possibly resulting in more hungry people around the world this year.
"The United States, the world’s dominant donor, has purchased less than half the amount of food aid this year that it did in 2000, according to new data from the Department of Agriculture."
The outcry can be heard in the USA Heartland, like the Topeka Capital Journal in an article Farm bill ignores dire need for grain reserve by George Naylor 10/18/2007 that states:
"You can't pick up a newspaper these days without confronting anxious headlines blaring about the rising crisis in food costs. From Mexicans protesting sky-high tortilla prices to Italians boycotting pasta, the entire planet faces a growing dilemma of how to adequately feed its growing populations. The U.S. Department of Agriculture projects that world grain supply will plunge to a 53-day equivalent by the end of this crop year, the lowest level since 1960. But you wouldn't even know there was an emerging global food crisis if you listened to the United States Congress."
This theme has been picked up by the business press, such as the on-line Money and Markets in an eye-opening column by Sean Brodrick, USDA Drops an Agricultural Bombshell! that states:
"The USDA dropped a bombshell last week — reporting that U.S. wheat stockpiles may fall to the lowest level in 59 years! As disturbing as that is, it is 100% bullish for grain prices, especially given soaring worldwide demand for agricultural products.
"Global stockpiles have already fallen to 26-year lows. World stocks of grain — that is, the food held in reserve for times of emergency — are now sufficient for just over 50 days. This is already lighting a fire under prices on your grocer's shelves. But if you think you've seen high prices, just wait … you ain't seen nothin' yet."
"What really shocks me — and should scare you — is that stockpiles are dwindling even as yields are growing enormously!"
The global market price of oil stands as a critical indicator by which we track the unfolding global crisis. My sources all prognosticate on the impact of, say, $50 or $60 per barrel of sweet crude -- while current (10/5/2007) prices hover above $80. Note the NYT 10/5/2007:
"Now, however, the economy may be starting to sputter as damage from the weak housing market drags down growth. If payrolls drop significantly, will high-price crude oil begin to cause pain in a way that it hasn’t in nearly three decades?"
Typically, the price on the global market drops if the USA hits an economic recession, but this historical pattern might be interrupted by strong global demand. The feedback loop of USA recession is to lower global oil prices, which stimulates a rebound in the USA economy. What if that feedback loop is interrupted? The USA, with its weak dollar, has perhaps become eclipsed as the global economic powerhouse, a watershed event with historical implications. The NYT continues:
“Our relative importance in the global markets is diminishing,” said Larry Goldstein, president of the Petroleum Industry Research Foundation in New York. An American economic slowdown, he said, “won’t have a visible impact on high oil demand and it won’t have a visible impact on high oil prices.”
The persistent and rapid economic growth in China will fall in around itself as the environmental resources collapse, dragging down growth and building resistance in China. This is a major theme in Brown, Plan B 2.0. The New York Times has published a series on this dilemma, Choking on Growth. Part I, assesses the staggering dimensions of pollution, degradation, and depletion caused by China's double-digit economic expansion inAs China Roars, Pollution Reaches Deadly Extremes, 8/25/2007:
"But just as the speed and scale of China’s rise as an economic power have no clear parallel in history, so its pollution problem has shattered all precedents. Environmental degradation is now so severe, with such stark domestic and international repercussions, that pollution poses not only a major long-term burden on the Chinese public but also an acute political challenge to the ruling Communist Party. And it is not clear that China can rein in its own economic juggernaut."
Note that some experts claim that China now exceeds the USA in emission of greenhouse gases. The article explains how China has been unable to alter this trajectory at the regional level, where implementation must occur.
"Experts once thought China might overtake the United States as the world’s leading producer of greenhouse gases by 2010, possibly later. Now, the International Energy Agency has said China could become the emissions leader by the end of this year, and the Netherlands Environment Assessment Agency said China had already passed that level."
Note: The inability of China to modify its material growth and its consequences provides a major reason to conclude that world sustainability is unlikely to succeed. The effects, including greenhouse gases, petroleum demand, and food imports, will exacerbate trends identified in our class discussion. The larger point is that China looms as a critical player in the global future -- and they are playing by different rules and within a different objective context. |
Part II of the New York Times series, Beneath Booming Cities, China’s Future Is Drying Up, 9/28/2007, describes how China's water resources are being rapidly depleted:
"For three decades, water has been indispensable in sustaining the rollicking economic expansion that has made China a world power. Now, China’s galloping, often wasteful style of economic growth is pushing the country toward a water crisis. Water pollution is rampant nationwide, while water scarcity has worsened severely in north China — even as demand keeps rising everywhere."
Water shortages threaten food self-sufficiency, long a primary goal of China. In particular, wheat production has been curtailed:
"One example is grain. The Communist Party, leery of depending on imports to feed the country, has long insisted on grain self-sufficiency. But growing so much grain consumes huge amounts of underground water in the North China Plain, which produces half the country’s wheat. Some scientists say farming in the rapidly urbanizing region should be restricted to protect endangered aquifers. Yet doing so could threaten the livelihoods of millions of farmers and cause a spike in international grain prices."
Brown regards water as the critical resource that will constrain growth in China (41-45) as Chinese grain imports soar, along with global food prices and hunger. China's grain production reached its peak, 392 million tons, in 1998 and has been consuming its reserves through 2004, when it began to import grain, driving up world prices for wheat -- now at a record high.
Note: In August, 2007, a young Chinese college student visited my lake in New Hampshire. The lake water is certified as being well above what is required for the highest reservoir rating. The Chinese student could not imagine swimming in the lake, assuming that it must be polluted. We could not persuade him otherwise. |