Food, Oil and the Environment are issues that are very much intertwined, here Nirmal shares some hard facts.....

[ROCHE CAIMAN 11/04/2008]Suddenly, prices of almost everything have been skyrocketing.  People everywhere are getting sticker shock.  What’s the problem? Our dependence on oil, a rise in consumerism in formerly “poor” countries, bad environmental practices, climate change, and speculation in money markets have all somehow come together and impacted the global economy.

The world is addicted to oil - a product that is actually a fossil and cannot be produced again. Whilst oil will run out at some point, its prices are also affected not only by what the suppliers, like OPEC, do but by speculators in oil futures in money markets.

The first casualty is the food we import. Food has become costlier because higher oil prices push up production and packaging costs. Transport becomes more expensive as well. Even the prices of locally produced food stuff have risen since utility bills have increased and fertilizers and pesticides based on petroleum derivatives are used.

Rising oil prices are also compelling countries to put agricultural crops such as, soya, palm oil and sugar cane into the production of  “environmentally friendly” bio-fuels - ethanol or biodiesel. This leads to shortages of these crops  and make them more  expensive. The gradual shifting of corn in the United States to biofuel production makes this crop dearer for livestock farmers. The farmers then start to  buy alternatives such as sorghum and wheat that are usually cheaper than corn- and drive the prices of these commodities up!

Bad environmental practices and climate-driven changes are also responsible for food price hikes. As I said last week, rice farming has been suffering from  poor environmental practices and climate change. Rice yields are falling and rice stocks are at their lowest in more than 30 years. Droughts in Australia and flooding in Argentina, both of  which are major livestock producers,  have greatly affected production and prices of butter, milk and meat. Failing fisheries and drops in fish catches are causing hardship as fish becomes scarcer and pricier in many countries.

 Another phenomenon that Lester Brown of the WorldWatch Institute warned of is the growing affluence of India and China and the rapid rise in their consumption of foodstuffs such as meat and dairy products. Years ago in a paper entitled “Who will Feed China”, Brown warned that if China adopted the same consumption patterns of the West, the world would suffer from huge shortages, prices hikes and other more serious problems.

In general food prices increased about 35 percent in 2007 compared to the previous year. But for some products the increases are far higher. Last year, dairy prices rose 80 percent and grain 42 percent. Families in developing countries spend more than half their income on food. The poor in Africa and elsewhere are therefore particularly at risk. In fact, food riots have erupted in Burkina Faso, Cameroon, Egypt, Ivory Coast, Mauritania, Mozambique and Senegal. The unrest may very well spread.

Agricultural practices and infrastructure need to be radically upgraded. There needs to  be improvements in everything from irrigation to storage. But in the end it is environmental sustainability that needs to be examined. The growth in many economies is based on heavy dependence on fossil fuels, unsustainable exploitation of ecosystems and rapid consumption of resources. At some point something has to give.  [ENDS]

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