Our global warming rage lets global hunger grow

Our global warming rage lets global hunger grow

Telegraph (UK) ^ | 1:58am BST 15/04/2008 | 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.

A demonstrator eats grass in front of a U.N. peacekeeping soldier

during a protest against the high cost of living in Port-au-Prince

"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.

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.

The 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.

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.

--

If you disagree with the theories and dogmas of Marxism or Scientific Socialism

then you are a tool of Capitalist interests. If you disagree with the theories

or dogmas of Catastrophic Anthropogenic Global Warming then you are a tool of

Capitalistic interests. Notice a pattern here? -- Captain Compassion

The object of life is not to be on the side of the majority but to

escape finding oneself in the ranks of the insane. -- Marcus Aurelius

"...the whole world, including the United States, including all that

we have known and cared for, will sink into the abyss of a new Dark

Age, made more sinister, and perhaps more protracted, by the lights

of perverted science." -- Sir Winston Churchill

Joseph R. Darancette

daranc@NOSPAMcharter.net