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Global Food Crisis Called ‘Ticking Time Bomb’

food crisis overshadowed by financial crisis

March 1, 2009
By Mark Pattison
Catholic News Service

WASHINGTON (CNS) — The global food crisis was called a “ticking time bomb” at a Feb. 24 forum during the annual Catholic Social Ministry Gathering in Washington.

Although prices for cereal grains have dropped since their spike last spring, the crisis has not gone away, according to Rajul Pandya-Lorch, chief of staff at the International Food Policy Research Institute and the head of the institute’s initiative, Vision 2020 for Food.

Instead, she said, the food crisis has been overshadowed by the global financial crisis.

The spike in prices was brought about by unregulated speculation in food commodities, Pandya-Lorch said.

While regulations ordinarily limit purchases of cereal grains to 11 million bushels, the U.S. financial houses Morgan Stanley and American International Group, better known as AIG, used loopholes to buy more than 2 billion bushels of grain, keeping it off the market and sending prices soaring. Rice more than tripled in price, and wheat and corn doubled, she said.

Another driver in food price hikes was the use of food for biofuels. Cereal grain use last year was up 5% for food, Pandya-Lorch said, but up 38% for energy.

The price spikes whipsawed producers and consumers alike. Because the price of oil also had spiked, producers found it harder to maintain leases on equipment in order to do more planting and take advantage of the higher prices, Pandya-Lorch said, and poor consumers, especially in developing countries, found themselves spending 50% to 70% of their income on food.

Yet cheap food is not an automatic solution to the food crisis, she said. “People think low food prices are good for the poor in the developing world. They’re not,” Pandya-Lorch declared.

Low prices lead to a flood of cheap imported food from high-yield agricultural nations, creating a disincentive for local farmers to grow their own crops since they cannot compete on price.

A new dynamic in last year’s food price upheavals was a shortage caused by growing demand, according to Pandya-Lorch. Past shortages have been primarily caused by insufficient production.

Even so, the rate of increased yields is declining to about 1% to 2% a year, she noted. In the early 1990s, the rate of increase had been 1.5% to 3%, and in the early 1980s the rate of increase had been 3% to 5%, depending on the type of grain.

The use of grain as animal feed also removes food from the marketplace. It takes 2 pounds of grain to produce 1 pound of chicken, she said, but 6 pounds of grain to produce 1 pound of beef.

Steve Hilbert, an African affairs policy adviser for the U.S. bishops’ Office of International Justice and Peace, called for calmer markets and the closing of regulatory loopholes.

“We have to say you can’t treat food commodities as you would copper,” Hilbert said.

The Catholic Social Ministry Gathering, which drew 550 participants, was co-sponsored by 18 agencies, including five agencies of the U.S. Conference of Catholic Bishops: the Catholic Campaign for Human Development, the Secretariat of Cultural Diversity in the Church, the Department of Justice, Peace and Human Development, Migration and Refugee Services, and the Secretariat of Pro-Life Activities.

Other co-sponsors were the Association of Catholic Colleges and Universities, Catholic Charities USA, the Catholic Daughters of the Americas, the Catholic Health Association, Catholic Relief Services, the Conference of Major Superiors of Men, JustFaith, the Ladies of Charity, the National Catholic Partnership on Disability, the National Catholic Rural Life Conference, the National Council of Catholic Women, the National Pastoral Life Center, the Roundtable Association of Diocesan Social Action Directors, and the Society of St. Vincent de Paul.

http://www.catholicnews.com/data/stories/cns/0900904.htm