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Why your grocery bill is about to hurt

Charlie Gillis
MACLEAN'S

After five years watching the cycles of feast and famine in West
Africa, Margie Morard had some clearly formed ideas about what drives
food prices in her part of the world. War, floods, droughts — these are
the things that used to determine the cost of bread in Freetown or
Timbuktu, says the representative for British Oxfam, who monitors food
security in 10 countries lying southwest of the Sahara Desert. That and
myopia. In sub-Saharan Africa, boom harvests tend to result in
cash-hungry farmers flooding street markets with cheap corn and rice,
while lean years see brokers ruthlessly hoard grain in anticipation of
a big payday. The extremes can produce heartbreaking scenes of
deprivation, says Morard; widespread begging, gaunt children with
distended stomachs, families on the move in search of food. But at
least they tend to be predictable.

Then, last summer, a dynamic
took hold that neither fickle weather nor the greed of cynical
middlemen could adequately explain. In the dust-blown streets of
Mauritania, the cost of a bag of wheat flour doubled within a few short
weeks. In Niger, a country already riven by poverty and rebellion, the
price of staples like corn and soya sailed into the stratosphere, as
they did in neighbouring Mali and Burkina Faso. Odd, because it hadn't
been a particularly poor harvest year. And hunger quickly fermented
into anger. By November, food riots were breaking out in Nouakchott,
the Mauritanian capital, as residents found themselves priced out of
basic supplies. "This is putting people in a very tight bind," said
Morard from her office in Dakar, another city that saw street protests,
also over food, in November. "It's affecting all of West Africa."

West Africa, it turns out, and the rest of the world. With
the global supply of cereal grains falling to 40-year lows, and with
consumption trending ever upward, the earth's supply of food is
suddenly under pressures unknown in half a century. Two weeks ago,
wheat prices hit an all-time high of US$18.53 a bushel, while corn,
driven in part by demand from the biofuel industry, climbed to $5.34 a
bushel, more than double the average price before 2007. The political
repercussions have been swift, and in some cases violent. In Mexico,
about 70,000 people hit the streets to protest the doubling and
tripling price of tortillas. Chinese officials are warning that rising
rice and corn prices could lead to civil unrest in rural areas. Even
the food-rich West is starting to feel the pinch. In September, rising
pasta prices, a direct function of the soaring value of wheat, sent
Italians flooding city squares in Rome, Milan and Palermo to
demonstrate. In the United States, the skyrocketing cost of chicken and
cattle feed is hitting the pocketbooks of consumers at all points of
the economic spectrum. Milk, eggs and filet mignon are all going up. So
is Kraft Dinner.

This escalation has been sudden enough to
start a heated debate about exactly how much cause there is to panic.
Is the recent price bump due, as some argue, to passing or localized
phenomena, like Australian droughts or the biofuel fad? Or is it rooted
in longer-term forces that augur sustained and potentially distastrous
shortages? After all, many of the conditions necessary to make the food
armageddonists' predictions come true are now upon us. Water is scarce,
fossil fuels are prohibitively expensive, fish stocks are near collapse
and the world adds 80 million people every year. To that, you can now
add global warming, which agronomists say is drying up vulnerable
countries where farmlands depend on rain.

And then there's
China. With ever greater purchasing power, Asian consumers are moving
toward the higher-protein, better-tasting, meat-laden diet westerners
have enjoyed for decades. Producing all that beef, pork and eggs
requires vast quantities of grain that might otherwise be used to feed
people. "On the amount of grain fed each year to cattle in the United
States, you could feed 850 million people as vegetarians," says David
Pimentel, a Cornell University agricultural scientist who studies the
global food economy. "That's not a value judgment. It's a fact."

The
result has been a lesson in the interconnectedness of the modern food
economy. In Canada, where the soaring loonie has cushioned the effect
of climbing costs, the price of bread is still up nearly 10 per cent
over last year, while flour has doubled in value since last summer. In
Britain, grocery prices are up 6.6 per cent over 2007, and Europe has
seen similiar inflation — pasta prices have climbed 20 per cent and
more expensive grain is making it difficult for dairy farmers to make
ends meet. Even those entrusted to keep an eye on food supplies appear
to have been caught off guard. Just 18 months ago, the Food and
Agriculture Organization of the United Nations (FAO) was dismissing
concerns about the world's grain reserves plunging to near-historic
lows, telling Canada's National Farmer's Union "the global supply and
demand balance is not in danger." By Jan. 11, the agency had performed
the PR equivalent of a flat-wing spin, declaiming an "unforeseen and
unexpected" decline in supply that created a "very serious risk that
fewer people will be able to get food."

Read the full article online at Macleans.ca.