OUR DAILY BREAD?

As fuel prices creep upwards, as we are waiting to get hit by price rises from the energy cartel, the next hard blow to our wallets will come in the form of rising food prices. The poor summer across the northern hemisphere (either too wet or too dry) is impacting on global food prices which have risen by 10% in the month of July, which has raised the fears of soaring prices for the planet's poorest, as noted by the World Bank.

Oxfam has noted that when extreme weather events drive local or regional price spikes, the people living in poverty face a double shock as they have to cope with higher prices, just like the rest of us. The difference between the developed and developing world is that this often comes at a time when the direct effects of extreme weather events have often already depleted their assets, destroyed their crops and stripped them of their livelihoods.

Back in 2011 the emergency in the Horn of Africa and the 2012 Sahel food crisis clearly showed how this combination can lead to hunger on a mass scale. The small-scale subsistence farmers and the pastoralists ended up getting hit hard in both regions, where the loss of livestock and crops reduced available food stocks and also reduced the value of people’s assets so that they were unable to afford to buy food

The World Bank has warned that the affects of the US heat wave and drought in parts of Eastern Europe were partly to blame for the rising food costs. Key grains such as corn, wheat and soybean saw the most dramatic price increases, something that will hit those countries that import grains particularly badly. Between June to July (2012), corn and wheat prices rose by 25% and soybean prices increased by 17%. The World Bank noted that only rice prices fell by some 4%.

In the USA, the worst (and widespread) drought for fifty years has wrought havoc on the corn and soybean crops while simultaneously in Russia, Ukraine and Kazakhstan, the wheat crops have been badly damaged. To make matters worse, the World Bank noted that the continued use of corn to produce ethanol biofuels (which absorbs around 40% of US corn production) played a key role in the sharp rise in the price of US maize.

While we (the food consumers) will all loses out, the impact on developing countries in North and Sub-Saharan Africa and the Middle East who will be the most exposed to price rises because significant quantities of their food is imported and food bills make up a large proportion of average household spending, will be harsher. .

Already maize prices had increased by 113% over the past quarter in Mozambique, and the price of sorghum had risen 220% in South Sudan. Last time this happened (back in 2008) there was widespread unrest. Other potential factors could make a potentially bad situation worse and force grain prices still higher. The World Bank is concerned about a combination of food exporters pursuing panic policies, a severe El Nino, poor Southern hemisphere harvests and strong increases in energy prices.

The World Bank's Food Price Index (which tracks the price of internationally traded food commodities) was six percent higher than in July 2011 and one percent up from the previous peak, which was back in February 2011. Why is this important? Well aside from the fact that the most vulnerable in poorer countries will lose out? While we won’t starve, in the developed world as food (and fuel) prices go up, our purchasing power goes down (and we spend less), something that will hit the wider economy.

FOOD INSECURITY?

Grain Traders are looking East at Russia where a commission on food security been set up in response to dry weather that has halved grain yields in some areas. The worlds food markets are awash with talk that Russia may respond to the developing crisis by limiting or stopping exports (as it did some two years ago). The United States is already facing one of the worst droughts for 50 years, and the prices of many grains and food crops have soared on world commodity markets.

The recent rise in food prices will have a major impact on food security, it will affect all of us as individuals and whole countries in the developed and the developing world. Many of the world’s poorest peoples spend over half their income on food. So the recent price rises for cereals and other staple food stuffs will force them to cut back on the quantity or quality of their primary foodstuffs. This will result in food insecurity and malnutrition, with potentially tragic implications in the short and long term.

Undernourishment increases disease and mortality, lowers productivity and can have severe lifelong effects, particularly for children. Price spikes also hit poorer households when it comes to meeting important non-food expenses, e.g. education and health care. Global food price hikes affect low-income, food importing countries, and put pressure on their limited financial resources. High food prices have a very negative impact on food security when prices spike suddenly or reach extremely high levels.

Yet food security issues can affect both food producers and food purchasers - high prices send an important message to food producers. Half the world’s undernourished people, are small farmers, livestock producers and fishermen. For them, high prices are an opportunity and a threat. They can act as an incentive to produce more for the market and make more food available while improving access to richer foodstuffs, as poor farmers’ incomes rise.

That said, higher prices are also a threat, as many poor farmers are net food buyers e.g. they spend more on food than they make by selling their produce, Also many of them face serious obstacles when it comes to producing more food and getting more of their produce to the marketplace.

The World Bank stated that the 2010 to 2011 food price spike pushed approximately 44 million people into poverty. Yet for some 24 million food producers, rising food process have actually been a ticket out of poverty – admittedly potentially a relatively short-term one, as their numbers were swamped by the 68 million that have fallen below the extreme poverty line.

Now food security or food insecurity is not new, back in 1996, the World Food Summit defined food security as existing “when all people at all times have access to sufficient, safe, nutritious food to maintain a healthy and active life”. The World Health Organisation (WHO) has acknowledge that the concept of food security is defined as including both physical and economic access to food that meets people's dietary needs as well as their food preferences. All very fine and dandy you may say, but, what does that have to do with us?

Well, a quite a lot , the UK produces 73% of ‘indigenous-type foods’, and is around 60% self-sufficient when exports and local consumption are set against production. UK consumers spend an average of £420 per household on food each year and then throw away some 4.1M tonnes of food nationally (2011). Each day we bin some 4.4 Million apples, 5.1 Million potatoes, 2.8 Million tomatoes and 1.6 Million bananas. Back in 2009 Wrap data suggested some £12 Billion pounds worth of food was binned every year in the UK, or around £680 for the average family when drinks and liquid food is included.

At the end of the day, rising food prices will bring little real benefit to our own or more distant food producers when they are being short changed by the Supermarkets (and some of their suppliers). Food producers are important and they need a fair deal and so do we (the food consumers) which is something to think about as we are confronted by the increased cost of our basic foodstuffs on the supermarket shelves.