Global Food Supply

In this article in MacLean’s Magazine the problem of SD is nicely tied in with the current problems in global food supply.

It talks about a couple of (interrelated) issues:

1. An increasing demand for oil – we’re all aware that this resource is becoming scarcer and harder to find, and therefore (part of the reason) causing oil prices to go up. The resulting increase in oil price has an immediate impact on food production. Included in the cost of food for instance are harvesting and transportation costs. In addition, fertilizers are made using natural gas (which has become more expensive as well), which adds to the increase in costs.

2. Added to this is the growing demand of world population in general coupled with a growing middle class in emerging countries such as India and China who demand high quality, high protein foods. For instance: between 1990 and 2006 the average amount of meat consumed in China increased by 2.5 times. This adds to the upward pressure on food prices since it takes several kilograms of grain to produce one kilogram of meat.

The Food and Agriculture Organization of the United Nations (FAO) has published several reports in the past few months indicating that the higher global prices of food staples is likely to stay around. Higher prices are already causing problems for people worldwide, especially in developing countries, but also in developed countries, such as Italy, where people protested against a 20% increase in the price of pasta.

Interestingly, a lot of effort (and: valuable hectares) goes into generating bio-fuels. The US has a subsidy program worth US$6 B annually to stimulate the production of ethanol, leaving less agricultural surface for the production of edible foods.

The tone of the article seems to be: “Caught between a rock and a hard place”. Not enough oil to sustain the global growth and not a real alternative at the moment; at the same time not enough space to produce a sufficient amount of bio-fuels without jeopardizing food production?

Paul

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One comment on “Global Food Supply
  1. fsingcaster says:

    Paul

    An interesting article indeed. I would note that while it is true that oil is becoming harder to find, serious litterature points out that this is relative to earlier times and that there is no crisis looming anytime soon in terms of known reserves (also, as prices go up, extracting remaining oil from old depots becomes cost-efficient – I don’t remember exactly how much oil is normally left behind when wells are closed, but I believe it is at least 20-30m percent – and then there are the oil sands et al). However, as producers have not increased production levels in sync with increase demand, this has resulted in the perceived scarcity that we are now witnessing (and the price increase, of course). Which brings up a very interesting issue – If prices keep rising in any relevant fashion, how long will the West’s high-minded “not-in-my backyard” attitude last? As an example, during the last few years, there has been significant talk of, and opposition to, drilling in Alaska in both the US and Canada (witness the recent US decision to protects polar bears under their Endangered Species Act, which many have seen as a way to stop any prospects of Alaska drilling – from a Canadian perspective, well with the tar sands business to protect, why not…); will that last long still if things do not stabilize or improve? This may prove very interesting. Also, wrt to the biofuels subsidies impact on corn production allocations, I remember reading something about this early last Fall, so this is not exactly new and was quite thus predictable. This is a good example of what intense lobbying (in the US, but also Canada) and politics can lead to (not to mention of government distortion of markets). I suppose it is possible that some really had good intentions, however, they may not have had their priorities straight.

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