Thursday, September 10, 2009

Jockeying for Food

As the world’s food security unravels, a dangerous politics of food scarcity is coming into play: individual countries acting in their narrowly defined self-interest are actually worsening the plight of the many. The trend began in 2007, when leading wheat exporting countries such as Russia and Argentina limited or banned their exports, in hopes of increasing locally available food supplies and thereby bringing down food prices domestically. Vietnam, the world’s second-biggest rice exporter after Thailand, banned its exports for several months for the same reason. Such moves may reassure those living in the exporting countries, but they are creating panic in importing countries that must rely on what is then left of the world’s exportable grain.

In response to those restrictions, grain importers are trying to nail down long-term bilateral trade agreements that would lock up future grain supplies. The Philippines, no longer able to count on getting rice from the world market, recently negotiated a three-year deal with Vietnam for a guaranteed 1.5 million tons of rice each year. Food-import anxiety is even spawning entirely new efforts by food-importing countries to buy or lease farmland in other countries.

In spite of such stopgap measures, soaring food prices and spreading hunger in many other countries are beginning to break down the social order. In several provinces of Thailand the predations of “rice rustlers” have forced villagers to guard their rice fields at night with loaded shotguns. In Pakistan an armed soldier escorts each grain truck. During the first half of 2008, 83 trucks carrying grain in Sudan were hijacked before reaching the Darfur relief camps.

No country is immune to the effects of tightening food supplies, not even the U.S., the world’s breadbasket. If China turns to the world market for massive quantities of grain, as it has recently done for soybeans, it will have to buy from the U.S. For U.S. consumers, that would mean competing for the U.S. grain harvest with 1.3 billion Chinese consumers with fast-rising incomes—a nightmare scenario. In such circumstances, it would be tempting for the U.S. to restrict exports, as it did, for instance, with grain and soybeans in the 1970s when domestic prices soared. But that is not an option with China. Chinese investors now hold well over a trillion U.S. dollars, and they have often been the leading international buyers of U.S. Treasury securities issued to finance the fiscal deficit. Like it or not, U.S. consumers will share their grain with Chinese consumers, no matter how high food prices rise.

HOW FAILE D STATE S Threaten Everyone
When a nation’s government can no longer provide security or basic services for its citizens, the resulting social chaos can have serious adverse effects beyond that nation’s own borders:
•  Spreading disease
•  Offering sanctuary to terrorists and pirates
•  Spreading the sale of drugs and weapons
•  Fostering political extremism
•  Generating violence and refugees, which can spill into neighboring states

Side Bets in the Game of Food Politics
Anxious to ensure future grain supplies, several nations are quietly making deals with grainproducing countries for rights to farm there. The practice tightens supplies for other importing nations and raises prices. Some examples:
•  China: Seeking to lease land in Australia, Brazil, Burma (Myanmar), Russia and Uganda
•  Saudi Arabia: Looking for farmland in Egypt, Pakistan, South Africa, Sudan, Thailand, Turkey and Ukraine
•  India: Agribusiness firms pursuing cropland in Paraguay and Uruguay
•  Libya: Leasing 250,000 acres in Ukraine in exchange for access to Libyan oil fields
•  South Korea: Seeking land deals in Madagascar, Russia and Sudan

Source of Information : Scientific American(2009-05)

No comments: