Systemic Risk (Food Crisis Edition)**Updated**

The food crises is getting worse, and it could even happen that Amartya Sen’s observation that there has never been a famine in a country that had both a free press and a functioning multi-party democracy will appear to break down.

This is because the world economy exists in many places outside of either a multi-party democracy or a functioning free press, and those islands of functioning democracies with a free press may be cast about by forces that are outside of their control. These food riots have, for example, received very little press coverage in the USA. So perhaps Sen’s observation is still correct, it’s just that due to globalization it operates at a different scale. The world needs a functioning free press.

**Well, the press does seem to be taking note of the deepening crises, and I’ve added link to a CNN article that is typical of the coverage. The points are being made that this is a world wide phenomena, and that ethanol production, if not a culprit in the present round of food riots, will make the future food outlook even more grim. It should be obvious that ethanol production, to the extent it raises prices for food is deeply immoral. Furthermore, it is extremely stupid, as it gives those who are suffering, seeing their children dieing each day for want of food, a focal point for their hatred of the first world. **

Two things to be done by those who care:

  1. Derail ethanol production, which has unnecessarily linked the food economy to the oil economy; and
  2. Eat much less meat, which requires massive amounts of grain to produce equivalent amount of food protein. Beef is by far the worst offender, requiring much more grain to produce a pound of beef than a pound of chicken.

These are so extremely easy to do, but with the press shirking its basic responsibility to inform the public, can they alone be blamed for the moral failure of the West to address this crises? The press is clearly not doing its job here.

Here are the gory details:

Why Food Costs Are Climbing
By Eric Reguly
The Globe and Mail
Saturday 12 April 2008
As food prices surge, starvation looms for millions. Experts call for emergency action but admit there’s no quick fix.

Rome – Fatal food riots in Haiti. Violent food-price protests in Egypt and Ivory Coast. Rice so valuable it is transported in armoured convoys. Soldiers guarding fields and warehouses. Export bans to keep local populations from starving.
For the first time in decades, the spectre of widespread hunger for millions looms as food prices explode. Two words not in common currency in recent years – famine and starvation – are now being raised as distinct possibilities in the poorest, food-importing countries.
Unlike past food crises, solved largely by throwing aid at hungry stomachs and boosting agricultural productivity, this one won’t go away quickly, experts say. Prices are soaring and stand every chance of staying high because this crisis is different.
A swelling global population, soaring energy prices, the clamouring for meat from the rising Asian middle class, competition from biofuels and hot money pouring into the commodity markets are all factors that make this crisis unique and potentially calamitous. Even with concerted global action, such as rushing more land into cultivation, it will take years to fix the problem.
The price increases and food shortages have been nothing short of shocking. In February, stockpiles of wheat hit a 60-year low in the United States as prices soared. Almost all other commodities, from rice and soybeans to sugar and corn, have posted triple-digit price increases in the past year or two.
Yesterday in Rome, Jacques Diouf, director-general of the United Nations Food and Agriculture Organization, said the cereal-import bill for the poorest countries is expected to rise 56 per cent this year, on top of the 37 per cent recorded last year. “There is certainly a risk of [people] dying of starvation” unless urgent action is taken, he said. “I am surprised I have not been summoned to the Security Council to discuss these issues.”

Other UN officials have been equally blunt. Sir John Holmes, the UN’s top humanitarian official and emergency relief co-ordinator, said this week that soaring food prices threaten political stability. The UN and national governments are especially worried about potentially violent situations in Africa’s increasingly crowded urban areas. Rioting triggered by absent or unaffordable food could cripple cities. “The security implications should not be underestimated as food riots are being reported across the globe,” Mr. Holmes said.

A story from CNN:

Riots from Haiti to Bangladesh to Egypt over the soaring costs of basic foods have brought the issue to a boiling point and catapulted it to the forefront of the world’s attention, the head of an agency focused on global development said Monday.

“This is the world’s big story,” said Jeffrey Sachs, director of Columbia University’s Earth Institute.

“The finance ministers were in shock, almost in panic this weekend,” he said on CNN’s “American Morning,” in a reference to top economic officials who gathered in Washington. “There are riots all over the world in the poor countries … and, of course, our own poor are feeling it in the United States.”

World Bank President Robert Zoellick has said the surging costs could mean “seven lost years” in the fight against worldwide poverty.

“While many are worrying about filling their gas tanks, many others around the world are struggling to fill their stomachs, and it is getting more and more difficult every day,” Zoellick said late last week in a speech opening meetings with finance ministers

In the United States and other Western nations, more and more poor families are feeling the pinch. In recent days, presidential candidates have paid increasing attention to the cost of food, often citing it on the stump.

The issue is also fueling a rising debate over how much the rising prices can be blamed on ethanol production. The basic argument is that because ethanol comes from corn, the push to replace some traditional fuels with ethanol has created a new demand for corn that has thrown off world food prices.

Jean Ziegler, U.N. special rapporteur on the right to food, has called using food crops to create ethanol “a crime against humanity.”

“We’ve been putting our food into the gas tank — this corn-to-ethanol subsidy which our government is doing really makes little sense,” said Columbia University’s Sachs.

Former President Clinton, at a campaign stop for his wife in Pennsylvania over the weekend, said, “Corn is the single most inefficient way to produce ethanol because it uses a lot of energy and because it drives up the price of food.”

Of course, they really get it wrong when they equate the Renewable Fuels Association with “an environmental group”:

Some environmental groups reject the focus on ethanol in examining food prices.

“The contrived food vs. fuel debate has reared its ugly head once again,” the Renewable Fuels Association says on its Web site, adding that “numerous statistical analyses have demonstrated that the price of oil — not corn prices or ethanol production — has the greatest impact on consumer food prices because it is integral to virtually every phase of food production, from processing to packaging to transportation.”

Analysts agree the cost of fuel is among the reasons for the skyrocketing prices.

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Systemic Risk (Food Crisis Edition)**Updated**

2 thoughts on “Systemic Risk (Food Crisis Edition)**Updated**

  1. “The press is clearly not doing it’s job here.”

    Misdiagnosis based on flawed assumption. It’s job is to serve those who own it, not to inform people. The press always does it’s job.

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