Food Prices May Soar to Crisis Levels

Record-high food prices have already caused hunger and political unrest across the globe, and several trends indicate that the world is headed toward a food security crisis, Earth Policy Institute president and World on the Edge author Lester Brown said in a teleconference today.

Aquifer depletion, severe soil erosion and rising temperatures are causing instability in grain production worldwide, Brown said. Three of the world's big four wheat producers--China, the United States, and Russia--are currently experiencing severe drought and potentially low yields. China, the leading wheat producer, is suffering the worst drought in its winter wheat-growing region in 60 years and could easily see its wheat harvest drop from 115 million tons last year to 110 million tons or less this year, he said. When 1.4 billion Chinese with rapidly rising incomes turn to the world market for grain, it will be the United States' "nightmare."

"China's our banker now," Brown said. "Like it or not, we're going to be sharing our grain harvest with China from now on. And the competition is going to drive grain prices to levels we've not imagined before."

Population growth, demographic changes and the use of grain to make ethanol are all conspiring to make the situation worse. The world will have some 80 million more mouths to feed this year, and 3 billion people are moving up the food chain, eating grain-intensive meat. Last year, 30 percent of the U.S. grain harvest went to ethanol distilleries.

"The water issue is a real sleeper," Brown said. In 18 countries containing half the world's people--including China, Russia and the United States--overpumping for irrigation is depleting aquifers. Saudi Arabia--which had been self-sufficient in wheat production--announced that its acquifer is largely depleted. Syria and Iraq have also seen their aquifers depleted, and Egypt's wheat yields have been flat for the past six years. "The bottom line," Brown said, "in the Arab Middle East, grain production has peaked and begun to decline." In India, 175 million people are being fed with grain produced by overpumping, "which by definition is a short-term phenomenon," Brown said. The comparable number for China is 130 million people.

During the last half of the 20th century, the United States kept grain in bins and kept cropland out of production to stabilize supply and prices. When a severe weather event led to poor harvests, the USDA could simply put idle cropland back into production to make up for it. "We don't have any idled capacity in the United States--or, indeed, in the world anymore," Brown said. "What we need now is a new source of price stabilization. We need to be talking about an international food reservoir where grain could be accumulated and managed internationally. ... We're not even having that dialogue. I think we're in a potentially dangerous situation, and we haven't even realized how dangerous it is."

Scary stuff for the world. And the bottom line for food shoppers? "It may be somehow possible to avoid a rise in world food prices in the months ahead," Brown predicts, "but at this point it seems unlikely."