The world food crisis has two faces. Here in the United States, shoppers stare in disbelief at the rising price of milk, meat, and eggs. But elsewhere on the globe, anguish spills into the streets, as in Somalia last week when tens of thousands of rioters converged on the capital to protest for food.
The strain on U.S. consumers, grappling with the sharpest increase in grocery prices in years, is small compared with the starvation that toppled Haiti's government, ignited riots around the world, and is deepening the tragedy of Myanmar's cyclone survivors. And yet the connection between the developed and developing worlds will be crucial to solving what one United Nations official has called a "silent tsunami" of food prices that has plunged 100 million people deeper into poverty. To stem the misery, relief officials are calling both for emergency aid and for changes in policy worldwide.
Solutions will not be easy to sort out, since the dramatic food price escalation has numerous causes. Skyrocketing oil prices have strained every stage of food production, from fertilizer to tractors to transport. At the same time, demand for grain has never been higher, not only to feed the rising affluence of populous China and India but also to fuel cars and trucks as the world turns to ethanol and biodiesel. Supply, meanwhile, is being squeezed by a years-long drought in Australia, a major grain exporter, and experts worry that climate change may be a factor. In all, there could not be a worse time for investors to pour money into agricultural commodities, but they have, in reaction to the weakening U.S. dollar accelerated by Federal Reserve interest rate cuts. Around the world, panicked governments have responded to high commodity prices by slapping restrictions on exports—thus only worsening the food shortage.
Addressing this unparalleled confluence of events will require extraordinary leadership. U.S. farmers, who labored through years of anemic prices, now question how the use of their corn for ethanol could possibly be blamed for the shortage of a different grain—rice—in far-off Central Asia. Past approaches to foreign aid and trade have been politically expedient but have not helped poor countries become self-sufficient. And the U.N., already coping with a 55 percent rise in food aid costs, now confronts a new crisis, as it ships food to Myanmar.
That disaster makes only more urgent the need for world leaders to act. The ideas they weigh will not ease the global food strife quickly, but they can lay the groundwork for a planet with enough resources for its growing and increasingly connected inhabitants. Among them:
Take a Pause on Biofuels
Producing fuel from crops—corn in the united States and rapeseed, palm, and soy oil in Europe—accounts for between one quarter and one third of the spike in global commodity prices, says the International Food Policy Research Institute. Governments have heavily subsidized the industry as an energy alternative, but now one U.N. food official labels these policies "criminal" and has called for a five-year biofuels production moratorium.
Yet the United States won't be able to just shut off the corn ethanol spigot; billions of dollars have been invested in increasing U.S. ethanol capacity nearly fourfold since 2001. Reversing that policy would not only cause trouble in the Farm Belt; it would cut off an important source of fuel. The International Energy Agency estimates that global production of biofuels met about one third of the 900,000-barrel-per-day increase in worldwide demand for oil.
Some are looking at slowing down rather than halting the ethanol juggernaut. Texas Republican Sen. Kay Bailey Hutchison is leading the call for a freeze in the mandate to blend 9 billion gallons into fuel this year, a level to grow to 36 billion gallons by 2022. To ease any transition, agricultural economist Lester Brown, founder of the Earth Policy Institute and an outspoken ethanol policy critic, suggests a solution familiar to farmers: Use subsidies to steer production.
"Do with ethanol distillers what we've done with grain producers for decades," says Brown. "If we want them to produce less grain, we would say that in order to be eligible for support price, you should have to cut back your acreage 15 percent this year, and farmers did that. They understood the USDA was trying to balance world supply and demand. You could do the same thing with ethanol distilleries." Brown says the government could modify policy so that the blenders of ethanol collect the subsidy only if they reduce production. He says, "We're the only country who can now do something in the short term to restore some semblance of stability to the world food economy."