The food crisis, the price of oil and my weekly shopping bill

I don't pretend to know a huge amount about the current food crisis (see previous post 'Sheltered from a Crisis') and what's caused it but some of the things I do know have made me really angry about the way the world works. Below I've laid out some of the reasons, as I understand them, for the current food crisis. Reading them you'll understand - if you don't already - why some of these things make me so frustrated and angry, and ultimately I know make God angry.

Why is there a food crisis?

The current crisis is the result of a massive increase in the price of grain and a shortage of supply, both of which have fed into each other to create a rapidly escalating worldwide food crisis which is driving 'the bottom billion' further into poverty and starvation (UN). There have been a number of long-term factors leading to rising worldwide food prices over the last few years. More recently the massive price increases (especially in wheat and rice) have been caused by drought and investors hoarding supplies, triggering worldwide panic-buying, which in turn has pushed grain prices to their current heights.

Long and Medium-term factors:

Increased demand for food worldwide.
Economic growth in China and India has lead to a significant rise in meat consumption (closer to a Western-style diet). Meat production requires 4-10 times as much grain to produce the same amount of food. [This has been happening for a while and no one quite agrees about how importanta factor it is in this current crisis.]

Biofuel production
Food crops, especially corn and soya are being diverted to biofuel production. This year a third of America's (highly subsidised) corn crop will go to the biofuel industry. The Bush administration has pushed the development of corn-ethanol as a domestically-available alternative to petrol (the US enthusiasm for biofuel isn't about saving the planet but rather saving America. Biofuel isn't seen as an environmental -or even economic- answer to the fossil fuels question, but ultimately as the answer to the always-pressing national security issue of oil availability and cost). The UN estimates that the diversion of corn to biofuels has already contributed 10% to the current rise in food prices, while the IMF estimates it at 20-30% (FT).*

The end of cheap food?
US and European farm subsidies have long kept the price of commodities such as wheat and soya artificially low. For example, between 1995 and 2005 American taxpayers supported US agriculture by $165bn, most of which went to the huge US-based trading giants such as Cargill and ADM (The Guardian). Low prices have led to under-investment in agriculture elsewhere, something which the rise in prices may actually help to remedy in time.

The price of oil
The increase in the price of oil (it has doubled in the past year) has lead to a steep rise in the price of fertiliser, (assisted by increased demand from the US biofuel industry). Transport prices have also increased. These have increased the cost of growing and transporting crops.

Medium to Short-term factors:

Extreme weather conditions
Severe drought in Australia over the last few years has significantly decreased their wheat and rice production (National Geographic).

Artificial shortages due to stockpiling and export restrictions.
With prices climbing, there's plenty of incentive for those at every point of the food production chain to stockpile commodities, from traders to store-owners. Investors seeking a profit have driven up prices further by buying up the market for future sale. In recent months rice-producing countries have also responded to the rise in food prices by taking steps to protect their own markets. India and Vietnam, the world's second and third largest rice producers, have introduced export restrictions. This stockpiling by producers as well as middlemen has limited supplies of rice and driven up prices still higher (Business Week).

Financial speculation on food prices.
Rising commodities prices (and a slow-down in other markets) has dramatically increased the appeal of food futures to speculators. Speculators buy and sell stocks or commodities in order to benefit from fluctuations in price (without any interest in the product itself). Food futures contracts are agreements to buy or sell a given amount of food by a certain future date at a predetermined price. In trading futures speculators are gambling on the future price of food - i.e. that these will continue to rise. The speculators argue they are not driving the market, but cannot deny that the rising demand for commodities futures has amplified the price increases. In the past five years, the number of futures contracts for wheat has quadrupled (foreignpolicy.com).

So is this worldwide food crisis why my weekly shopping bill has increased so much?

The surprising answer might actually be 'no, not really'.

Although shoppers in Western countries have seen significant increases in the price of bread, rice, dairy products, eggs and so on, these have not in any way reflected the real worldwide increase in the cost of food. The supermarkets would like us to thank them for this, claiming to have insulated consumers with reduced profit margins. This may be true to a small degree but it's worth remembering that the real reason we have seen such a small increase in prices in comparison to world food prices is because such a small proportion of the price we pay for our food actually goes to pay for the ingredients. For example, if a loaf of bread costs £1 and 10p of that goes to pay for the flour, then a doubling in the price of flour will cause only a 10% rise in the price of bread (to £1.10). In fact the European Commission has argued that the near-doubling of the price of wheat should have led to only a 3% rise in the price of bread (FT) rather than the 10% we've seen (giving you an indication of the real proportion of the cost going on ingredients).

While they're certainly having an effect, supermarket food prices are affected surprisingly little by movements in food prices worldwide (although those buying direct from wholesalers, such as restaurants, are insulated much less. Indian restaurants have been hit particularly badly by the rising price of rice and subsequent shortages). In fact, the main factor currently driving up prices in Western supermarkets are increases in energy, labour and transport costs caused by the dramatic rise in the price of oil (which is also a major contributor to the worldwide crisis). And oil is not likely to get any cheaper. It looks like the days of cheap food are over - and no one knows quite what to do about it.**

* Corn-based ethanol is hugely controversial, even without taking the food considerations into account. Many have claimed that the energy required to grow and convert corn to ethanol is greater than the energy gained from the fuel (although it does reduce the consumption of oil overall). This MIT study attempts to bring some balance to the discussion. However it seems likely that the rising price of corn and soya have affected more than the price of food. Some claim that the rise in prices has led to increasing deforestation in places like the Amazon rainforest as farmers clear land for growing soya beans.

**I should add 'except God'. So perhaps it's time these world leaders got praying...

Everything you need to know in 7 minutes

Everything you need to know about the Democratic race for president in 7 minutes. Genius.


Via Marbury.

Sheltered from a crisis

These figures on the food crisis are quite incredible. The price of wheat has risen 130% since March last year. The increase in the price of rice has had huge effects worldwide.

Some of the effects to be caused by the crisis include a new craze for eating spaghetti in Liberia, families in Bangladesh surviving on one meal a day, 100 million extra families plunged into poverty, and food riots in Haiti, Cameroon, Indonesia and Egypt.

Read the BBC's Q&A on the crisis.

If ever there was a good reason to become a vegetarian, this is one.

No Lions...

I really enjoyed this story in the Guardian about the Maasai Warriors running in the London Marathon and their thoughts on England.

We heard about showers before, in a briefing about the country. It said be careful - when the shower is hot it is really hot, and when cold, really cold. This is true.

The Telegraph also has some great quotes from the guide to England they were given.

From West Wing to the Real Thing

... so states the headline of an article on Barack Obama in today's Guardian. I'm glad I'm not the only person getting confused between The West Wing and the real world of US Politics!

It turns out that Matthew Santos, the 'next' president in The West Wing, was in fact modelled on Barack Obama - way back in 2004. As the article states, "the result is a bizarre case of art imitating life - only for life to imitate art back again."

In the TV show, Santos begins as the rank outsider up against a national figure famous for standing at the side of a popular Democratic president. There are doubts about Santos's inexperience, having served just a few years in Congress, and about his ability to persuade voters to back an ethnic minority candidate - even as his own ethnic group harbour suspicions that he might not identify with them sufficiently.

But the soaring power of his rhetoric, his declaration that the old divisions belong in the past and his sheer magnetism, ensure that he comes from behind in a fiercely close primary campaign and draws level with his once all-commanding opponent. Every aspect of that storyline has come true for Barack Obama. Axelrod, now chief strategist for the Obama campaign, recently joked in an email to Attie: "We're living your scripts!"

The Telegraph also found a list of 'delicious parallels' between The West Wing and the US Presidential Election.

Could this be how it ends? :-)

Matthew Santos' stirring convention speech (from 'The West Wing'):

Web of Conflict

I found this infographic on relationships in the Middle East hugely useful in understanding some of the roots of the current conflict in Lebanon and the tangled web of influence and hostility in the region. I don't think I had quite grasped how much hatred and distrust exists, not only between Jews and Arabs, but between the different Islamic groups and regional powers.

Found via Information Aesthetics, which has a selection of further infographics on the conflict.

Abdul Rahman

I was struck by the story of this man, Abdul Rahman, who has been in the news recently, an Afghan Christian under trial for his life.

There is a short video of his confession of being 'a Jesus follower' on the website of the Afghan Christian News.

This man inspires me, standing up and declaring his faith in Jesus, despite the very real possibility of being hanged for his confession. It reminds me that we put our trust in the one who saves; He is only one who holds the power of life and death over us.

I want to pray for Abdul that he holds firmly to this truth, whatever happens. I ask for him to stand tall and be confident in God's presence. And I pray that he brings something of the love and saving grace of Jesus Christ to the prison where he is held, and to the country that wants to kill him.

friend or food?

Here's a heart warming story!

Snake befriends snack

Also, check out the link on that page to the story of the lioness and baby antelope - amazing!

On the cover of Time Mag

Interesting choices...TIME Magazine has named Bono and Bill and Melinda Gates as their Persons of the Year. The articles are well worth a read (although you'll have to look at an advertisment before they let you at them!), and include a fascinating look at the political influence of Bono. I was intrigued to read about the relationship between the three of them and the way they're able to use their combined talents and resources as leverage in the sphere of global health.

Pullman talks nonsense on Narnia

Like Hilary, I have been reading the debate on the BBC website regarding Philip Pullman's comments on the forthcoming Narnia films.

I've never taken part in one of these 'Have Your Say' moderated debates before and thought i'd have a go at adding my views. I wonder if they'll be 'printed'?

Just in case they're not, I thought i'd put them here instead..:-)

"It's fascinating to hear such a range of views on a subject I didn't realise was so in question. Narnia is a fictional world, and the book tells a fictional story, but like all good stories it contains both the familar and unfamilar. In his books CS Lewis retells the 'big story' and in this sense it's neither a (teaching) parable or a evangelistic tool, but reflects reality as he saw it. Thus the clear parallels between his tale and the Christian story of love and sacrifice and resurrection. Pullman's curious comments about the lack of love in the books remain a mystery...as someone previously commented, Aslan's death reveals a story centred on love: 'What greater love than this, that a man should lay down His life for His friend.'"

Strange days

What a strange couple of days for London.

I was surprised yesterday by an unexpected strength of feeling about the Olympics announcement, a curious patriotic pride and triumph. I didn't expect us to win but when the announcement came I felt as if I was celebrating an almost personal victory, albeit a quietly-stated one.

Then today, it was with a calm shock that I listened to my year 8's talking about bombs in London. Surely not. But they wouldn't think to make up something like that, would they? I checked the news on my PC and was almost surprised to find out that it was true. I refused to panic or get excited and insisted that we continue with the lesson, despite cries to turn on the television in my lab. In continuing with normal life, I felt as if I was resisting, fighting back somehow. As I checked the BBC news I remember thinking, with a disconnected clarity, that the number of casualties seemed very low and surely there were a lot of gaps in the picture. I was on a split lunch lesson and when the bell came I rang home. Mum confirmed that everyone was fine and Bren had cycled to work in Hackney this morning.

She spoke, in a way I've heard repeated a few times this afternoon, (for example, on this digest of London blogs on the TimesOnline website) of the way in which Londoners would not be cowed by today's events and would go on regardless. As I spoke to her, I heard an echo of Blitz resilience come down from my Grandma, who speaks proudly yet frankly of the way in which Londoners went on with their lives as bombs dropped around them.

A blogger is quoted on the Times page saying:
"There is no other nation on earth that can absorb crisis with such calmness and professionalism as Britain..The terrorists’ anger towards us pales into insignificance with our determination to beat them. And we will."
Tony Blair echoed this determination in his speech which I saw repeated several times in the afternoon.

I feel so disconnected from events in London, and yet in me there's a strong pang of solidarity with my home city. I feel more like a Londoner than ever.
I'm finding it hard to picture familar places, like Liverpool Street station, closed and somehow defiled. The static familar images of my home seem violated, although I'm acknowledging in myself a lean towards the melodramatic here. Perhaps I'm overcompensating, because in some ways I'm struggling to feel anything, a sense of shock combined with distance has combined to give a slightly numb edge to my reflections.

In some ways, I'm trying not to imagine it.. I've spent too many hours in those packed underground carriages to want to picture being trapped down there in such confusion. On the other hand, stories of people making their way home across London this evening, an exodus by foot and boat, have the appeal of an adventure, of the making-do camaraderie that descends in such times. All in all, mixed feelings, or lack of. I feel a simultaneous need to talk about it yet not to brood on it, and there's lots to say, yet nothing really to add.