Connecting the Dots: The Phantom of Famine, Floods and Farce

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BP’s oil spill in the Gulf of Mexico is threatening to disrupt key ocean currents that keep the climate of the Northern Hemisphere temperate. It is also inflicting a wound on the ecosystem by poisoning and killing a large number of sea creatures and interfering with their breeding cycles.

At the same time, the global weather is turning extreme again – this time in the form of torrential rain and floods. In some countries the storms have come after harsh droughts. Such drastic changes destroy crops and affect our food supply, which in turn affect food prices. This would not be the first time the world has faced a food crisis, but now it comes two years into an economic recession that more are beginning to realise is a full-blown ‘depression’. As people reach their limits of desperation, they are more likely to take to the streets to voice their anger.

Our leaders, however, are showing no interest in covering the basic needs of the masses nor delivering economic justice. On the contrary, war is all they wish to bring, starting with the Middle East.

Food Crisis Redux

Climate change is leading to poor harvests and crop failures which in turn are leading to higher food prices. This is affecting the poorer countries disproportionately as most of the income of the world’s poorest people (and they number in the billions) goes towards food. The following excerpt discusses the case of sugar but the pattern is repeated for other crops:

Raw-Sugar Futures May Rally as ‘Weird Weather’ Curbs Supply

[…] “We have very low stocks of sugar around the world and we have a number of weather problems that are threatening to affect production,” Managing Director [of broker Kingsman SA] Jonathan Kingsman said today in a telephone interview from Lausanne in Switzerland. “It’s a combination that’s making people bullish.”

Prices have jumped 54 percent from a 13-month low reached on May 7 on signs that damage from drought in Russia and floods in Pakistan would spur imports. Russia said last week its output may be 20 percent smaller than forecast and Pakistan said Aug. 16 it may start buying raw sugar by December to make up for the deficit. Production in Indonesia, Southeast Asia’s largest buyer, may miss a target due to heavy rain, the government said Aug. 19.

“The weather is weird all over the place,” said Kingsman, who’s hosting a conference next week in New Delhi. “We have terrible floods in Pakistan, a mix of floods and dry weather in China and wet weather in Indonesia. If the problems get worse, then the market could explode on the upside.”

As we reported last month, Russia, the third largest exporter of wheat, has banned the exportation of all grains after an unusually hot summer caused forest fires that destroyed as much as a third of its cereal crops. The situation is dire as Russian Prime Minister Vladimir Putin has announced the ban will not be lifted before next year’s harvest. The dry weather also hurt crops in Kazakhstan, Ukraine, Argentina, the United States and the European Union. Floods in Canada, China, Pakistan and Indonesia had a similar effect. Crops affected include wheat, maize, soy and sugar. The world is clearly unprepared if India’s case is an example. This country’s huge amounts of grain reserves are rotting in storage.

It is instructive to remember what happened in 2008 when the world faced the same situation as the one now unfolding. As 37 countries experienced “serious food crises”, protests, strikes and riots erupted in Egypt, Haiti, Cameroon, Ivory Coast, Mauritania, Ethiopia, Madagascar, the Philippines and Indonesia. This time around, Mozambique has already seen clashes with the police where seven people have been killed and hundreds left injured after the price of bread rose by 25 percent at the beginning of September. Following “an enormous number” of inquiries over concerns “about a possible repeat of the 2007-08 food crisis”, the UN’s Food and Agriculture Organisation is discussing the shortages, pointing out that the situation is “quite serious” as “two years in a row without Russian exports creates quite a disturbance”.

In view of the shortages, it’s an interesting side note that an unnamed trader bought all of Europe’s cocoa in July. Did the mysterious speculator see a food crisis coming and estimate that cocoa – of all things – would be in high demand? Rather than cocoa, wheat derivative are a staple ingredient in many processed foods and, as such, an increase in wheat price affects the price of many other foods. In the UK, for example, shoppers are facing a 10 per cent rise in grocery bills as wheat and meat prices soar.

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