T
Taylor
Guest
We warned you
__________________________________________________________________
Global warming rage lets global hunger grow
By Ambrose Evans-Pritchard, International Business Editor
We drive, they starve. The mass diversion of the North American grain
harvest into ethanol plants for fuel is reaching its political and moral
limits.
"The reality is that people are dying already," said Jacques Diouf, of the
UN's Food and Agriculture Organization (FAO). "Naturally people won't be
sitting dying of starvation, they will react," he said.
The UN says it takes 232kg of corn to fill a 50-litre car tank with ethanol.
That is enough to feed a child for a year. Last week, the UN predicted
"massacres" unless the biofuel policy is halted.
We are all part of this drama whether we fill up with petrol or ethanol. The
substitution effect across global markets makes the two morally identical.
Spain's gain from wind power is plain to see
Read more of Ambrose Evans-Pritchard
The financial crisis in full
Mr Diouf says world grain stocks have fallen to a quarter-century low of 5m
tonnes, rations for eight to 12 weeks. America - the world's food
superpower - will divert 18pc of its grain output for ethanol this year,
chiefly to break dependency on oil imports. It has a 45pc biofuel target for
corn by 2015.
Argentina, Canada, and Eastern Europe are joining the race.
advertisementThe EU has targeted a 5.75pc biofuel share by 2010, though that
may change. Europe's farm ministers are to debate a measure this week
ensuring "absolute priority" for food output.
"The world food situation is very serious: we have seen riots in Egypt,
Cameroon, Haiti and Burkina Faso," said Mr Diouf. "There is a risk that this
unrest will spread in countries where 50pc to 60pc of income goes to food,"
he said.
Haiti's government fell over the weekend following rice and bean riots. Five
died.
The global food bill has risen 57pc in the last year. Soaring freight rates
make it worse. The cost of food "on the table" has jumped by 74pc in poor
countries that rely on imports, according to the FAO.
Roughly 100m people are tipping over the survival line. The import ratio for
grains is: Eritrea (88pc), Sierra Leone (85pc), Niger (81pc), Liberia
(75pc), Botswana (72pc), Haiti (67pc), and Bangladesh (65pc).
This Malthusian crunch has been building for a long time. We are adding 73m
mouths a year. The global population will grow from 6.5bn to 9.5bn before
peaking near mid-century.
Asia's bourgeoisie is switching to an animal-based diet. If they follow the
Japanese, protein-intake will rise by nine times. It takes 8.3 grams of corn
feed to produce a 1g of beef, or 3.1g for pork.
China's meat demand has risen to 50kg per capita from 20kg in 1980, but this
has been gradual. The FAO insists that this dietary shift is "not the cause
of the sudden food price spike that began in 2005".
Hedge funds played their part in the violent rise in spot prices early this
year. To that extent they can be held responsible for the death of African
and Asian children. Tougher margin rules on the commodity exchanges might
have stopped the racket. Capitalism must police itself, or be policed.
Even so, the funds closed their killer "long" trades in early March, causing
a brief 20pc mini-crash in grains. The speculators are now neutral on the
COMEX casino in New York.
Biofuel rules 'could make millions homeless'
Government is taken to court over fuel poverty
BA may still give investors the last laugh
What about the California state retirement fund (Calpers), the Norwegian
Petroleum fund, the Dutch pension giants, et al, pushing a wall of money
into the $200bn commodity index funds?
They have undoubtedly bid up the futures contracts, but the FAO says this
has no durable effect on food prices. These index funds never take delivery
of grains. All they do is distort the shape of the maturities curve years
ahead, allowing farmers to lock in eye-watering prices. That should cause
more planting.
Is there any more land? Yes, in Russia, Ukraine, and Kazakhstan, where
acreage planted has fallen 12pc since Soviet days. Existing grain yields are
2.4 tonnes per hectare in Ukraine, 1.8 in Russia, and 1.11 in Kazakhstan,
com-pared with 6.39 in the US. Investment would do wonders here. But the
structure is chaotic.
Brazil has the world's biggest reserves of "potential arable land" with 483m
hectares (it currently cultivates 67m), and Colombia has 62m - both offering
biannual harvests.
The catch is obvious. "The idea that you cut down rainforest to actually
grow biofuels seems profoundly stupid," said Professor John Beddington,
Britain's chief scientific adviser.
Goldman Sachs says the cost of ethanol from corn is $81 a barrel (oil
equivalent), with wheat at $145 and soybeans $232. It is built on subsidy.
New technology may open the way for the use of non-edible grain stalks to
make ethanol, but for now the only biofuel crop that genuinely pays its way
is sugar cane ($35). Sugar is carbohydrate: ideal for fuel. Grains contain
proteins made of nitrogen: useless for fuel, but vital for people.
Whatever the arguments, politics is intruding. Food export controls have
been imposed by Russia, China, India, Vietnam, Argentina, and Serbia. We are
disturbingly close to a chain reaction that could shatter our assumptions
about food security.
The Philippines - a country with ample foreign reserves of $36bn (Britain
has $27bn) - last week had to enlist its embassies to hunt for grain
supplies after China withheld shipments. Washington stepped in, pledging
"absolutely" to cover Philippine grain needs. A new Cold War is taking
shape, around energy and food.
The world intelligentsia has been asleep at the wheel. While we rage over
global warming, global hunger has swept in under the radar screen.
__________________________________________________________________
Global warming rage lets global hunger grow
By Ambrose Evans-Pritchard, International Business Editor
We drive, they starve. The mass diversion of the North American grain
harvest into ethanol plants for fuel is reaching its political and moral
limits.
"The reality is that people are dying already," said Jacques Diouf, of the
UN's Food and Agriculture Organization (FAO). "Naturally people won't be
sitting dying of starvation, they will react," he said.
The UN says it takes 232kg of corn to fill a 50-litre car tank with ethanol.
That is enough to feed a child for a year. Last week, the UN predicted
"massacres" unless the biofuel policy is halted.
We are all part of this drama whether we fill up with petrol or ethanol. The
substitution effect across global markets makes the two morally identical.
Spain's gain from wind power is plain to see
Read more of Ambrose Evans-Pritchard
The financial crisis in full
Mr Diouf says world grain stocks have fallen to a quarter-century low of 5m
tonnes, rations for eight to 12 weeks. America - the world's food
superpower - will divert 18pc of its grain output for ethanol this year,
chiefly to break dependency on oil imports. It has a 45pc biofuel target for
corn by 2015.
Argentina, Canada, and Eastern Europe are joining the race.
advertisementThe EU has targeted a 5.75pc biofuel share by 2010, though that
may change. Europe's farm ministers are to debate a measure this week
ensuring "absolute priority" for food output.
"The world food situation is very serious: we have seen riots in Egypt,
Cameroon, Haiti and Burkina Faso," said Mr Diouf. "There is a risk that this
unrest will spread in countries where 50pc to 60pc of income goes to food,"
he said.
Haiti's government fell over the weekend following rice and bean riots. Five
died.
The global food bill has risen 57pc in the last year. Soaring freight rates
make it worse. The cost of food "on the table" has jumped by 74pc in poor
countries that rely on imports, according to the FAO.
Roughly 100m people are tipping over the survival line. The import ratio for
grains is: Eritrea (88pc), Sierra Leone (85pc), Niger (81pc), Liberia
(75pc), Botswana (72pc), Haiti (67pc), and Bangladesh (65pc).
This Malthusian crunch has been building for a long time. We are adding 73m
mouths a year. The global population will grow from 6.5bn to 9.5bn before
peaking near mid-century.
Asia's bourgeoisie is switching to an animal-based diet. If they follow the
Japanese, protein-intake will rise by nine times. It takes 8.3 grams of corn
feed to produce a 1g of beef, or 3.1g for pork.
China's meat demand has risen to 50kg per capita from 20kg in 1980, but this
has been gradual. The FAO insists that this dietary shift is "not the cause
of the sudden food price spike that began in 2005".
Hedge funds played their part in the violent rise in spot prices early this
year. To that extent they can be held responsible for the death of African
and Asian children. Tougher margin rules on the commodity exchanges might
have stopped the racket. Capitalism must police itself, or be policed.
Even so, the funds closed their killer "long" trades in early March, causing
a brief 20pc mini-crash in grains. The speculators are now neutral on the
COMEX casino in New York.
Biofuel rules 'could make millions homeless'
Government is taken to court over fuel poverty
BA may still give investors the last laugh
What about the California state retirement fund (Calpers), the Norwegian
Petroleum fund, the Dutch pension giants, et al, pushing a wall of money
into the $200bn commodity index funds?
They have undoubtedly bid up the futures contracts, but the FAO says this
has no durable effect on food prices. These index funds never take delivery
of grains. All they do is distort the shape of the maturities curve years
ahead, allowing farmers to lock in eye-watering prices. That should cause
more planting.
Is there any more land? Yes, in Russia, Ukraine, and Kazakhstan, where
acreage planted has fallen 12pc since Soviet days. Existing grain yields are
2.4 tonnes per hectare in Ukraine, 1.8 in Russia, and 1.11 in Kazakhstan,
com-pared with 6.39 in the US. Investment would do wonders here. But the
structure is chaotic.
Brazil has the world's biggest reserves of "potential arable land" with 483m
hectares (it currently cultivates 67m), and Colombia has 62m - both offering
biannual harvests.
The catch is obvious. "The idea that you cut down rainforest to actually
grow biofuels seems profoundly stupid," said Professor John Beddington,
Britain's chief scientific adviser.
Goldman Sachs says the cost of ethanol from corn is $81 a barrel (oil
equivalent), with wheat at $145 and soybeans $232. It is built on subsidy.
New technology may open the way for the use of non-edible grain stalks to
make ethanol, but for now the only biofuel crop that genuinely pays its way
is sugar cane ($35). Sugar is carbohydrate: ideal for fuel. Grains contain
proteins made of nitrogen: useless for fuel, but vital for people.
Whatever the arguments, politics is intruding. Food export controls have
been imposed by Russia, China, India, Vietnam, Argentina, and Serbia. We are
disturbingly close to a chain reaction that could shatter our assumptions
about food security.
The Philippines - a country with ample foreign reserves of $36bn (Britain
has $27bn) - last week had to enlist its embassies to hunt for grain
supplies after China withheld shipments. Washington stepped in, pledging
"absolutely" to cover Philippine grain needs. A new Cold War is taking
shape, around energy and food.
The world intelligentsia has been asleep at the wheel. While we rage over
global warming, global hunger has swept in under the radar screen.