Thursday, January 6, 2011

Food prices continue to rise

It's happening around the world, and there's no sign of an end to it any time soon:

Food prices have soared to record levels around the world, raising fears that poor countries could face a crisis similar to the one that led to rioting and rationing two years ago.

“We are entering a danger territory,” Abdolreza Abbassian, an economist at the United Nations’ Food and Agricultural Organization (FAO) told reporters Wednesday.

From the Globe. And what are the main reasons for this?
Prices for many agricultural commodities started rising last fall largely because of poor grain crops in Canada, Russia and Ukraine. They have spiked even higher recently because of dry weather in Argentina, a major soybean producer, and flooding in parts of Australia, which has wiped out many wheat crops. The price of wheat has jumped about 17 per cent in the last month while corn is up 11 per cent. Both are now close to two-year highs. Other food staples have been soaring as well, including canola, up 43 per cent last year, and sugar, which hit 30-year highs.
Now it's premature to say that this is clearly because of climate change; it's always a bit dodgy to attribute any particular weather event to climate change (or, for that matter, to claim it as a counterexample). However, I think it's safe to say that this sort of thing will become more common as the climate suffers further disruption.

Naturally, when countries suffer from poor crops, some of them will impose restrictions on the export of said crops. Governments generally want to ensure that their own people are fed first, after all. Well, some don't think this should be allowed:

The environment minister, Caroline Spelman, today risked incurring the wrath of many major food-growing countries by saying it should be illegal to halt food exports even at times of national crisis.

In a clear reference to Russia and the Ukraine, which temporarily halted exports of wheat and other grains in order to protect supplies for their own people during an unprecedented heatwave last year, she said no country should be allowed to interfere with the global food commodity market.

From the Guardian. Of course, Spelman presumably doesn't think that commodity speculators should be restricted from such interference; that's part of business after all. It's only when sovereign nations do so for the benefit of their own people that it becomes unacceptable.

Incidentally, thanks to NAFTA, Canada faces a similar restriction with regards to energy. If we face a shortage in the future (say a reduction in the flows of the Saskatchewan and Churchill rivers as a result of melting glaciers) and need to reduce our energy exports, any reduction in exports must be proportionate to a reduction in domestic consumption -- even if it means brownouts here. This makes no sense with energy, and it makes no sense with food either.

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