Remember the global food crisis of 2008, when a sharp increase in the price of corn had a snowball effect on other commodities? The combination of drought and the decision by the U.S. government to make a major push to promote biofuels (primarily through corn) unleashed a wave of market speculation that brought prices to unprecedented levels. Here is what The New York Times said on April 10, 2008.
Last year, the food import bill of developing countries rose by 25 percent as food prices rose to levels not seen in a generation. Corn doubled in price over the last two years. Wheat reached its highest price in 28 years. The increases are already sparking unrest from Haiti to Egypt. Many countries have imposed price controls on food or taxes on agricultural exports.
Read full New York Times editorial.
|(photo courtesy of Alternative Heat, Creative Commons)|
Extended hot and dry conditions have hammered in the breadbasket of the U.S. (Iowa, Illinois, Missouri, Indiana, Kansas, Nebraska, Wisconsin) this summer, at a crucial period of development in the corn and soybean crops.
The U.S. Drought Monitor reports that 88 percent of this year’s corn crop and 77 percent of the soybean crop are now affected by the most severe drought since 1988. This has led to predictions of much smaller-than-anticipated production, which could eventually result in higher prices.
Corn prices in July rose to around $9 a bushel, a 50 percent increase from June, while soybeans are selling at a record high of $17 a bushel as a result of drought-related losses in crop yields.
Fortunately, a slight change in the weather in the Midwest corn- and soybean-producing offered a glimmer of hope in early August, as cooler temperatures and rain brought temporary relief to crops. Read Aug. 8 article from Reuters.
But the damage has been done, and we are sure to see some increase in prices. “The increased prices may benefit farmers in the short run,” said Danielle Nierenberg, director of the Worldwatch Institute’s Nourishing the Planet project, “but consumers will experience the aftermath of price increases in the form of more money spent on poultry, beef, pork, and dairy products.”
And prices are not necessarily controlled by simple supply and demand for a commodity. As I mentioned earlier in this post, there is that other factor called price speculation.
But the the Worldwatch Institute argues that we should take the opportunity to consider the long-term picture.
Climate change is making it increasingly important to protect local agriculture in the United States and address the issues underlying its vulnerability to natural disasters, such as drought. “Fixing our broken food system is about more than just food prices,” said Nierenberg. “It’s about better management of natural resources, equitable distribution, and the right to healthy and nutritious food.”
The Nourishing the Planet project highlights 12 agricultural innovations that can help make U.S. and global agriculture more drought resilient, as well as sustainable.