Tag Archives: Price Rise

How Climate Change Caused the Quinoa War

The last time I wrote about quinoa, I had yet to try it. All around me though, there was a buzz around this wonder food. Even then, it was unsettling to know that while there was a huge demand for quinoa abroad, back in Bolivia, the high prices for this crop was forcing consumers to move over to other options including novelties (to them) like soda and white bread. Now, there is a new twist to this story: climate change has lead to warmer temperatures in quinoa growing areas so now more land can be used for this purpose. This has sparked conflicts among farming communities eager to grow more quinoa and take advantage of the high prices they can get.

I did eventually bring home and cook quinoa and we all enjoyed it. But it also brought into focus the troubled future of food where there is increasing pressure on the food system to feed the growing population while climate change forces us to change the way we grow food.

Change Comes to Retail Food Industry in India

Most Indians have always bought their fruits and vegetables at the stall at the corner of the road, or the nice store that would deliver even a bunch of cilantro or a bunch of carrots to your home if you were in a fix. The supply chain that brought this produce to the market was haphazard at best. Now, all that is set to change, with the Indian government deciding to allow foreign investment in the retail sector, upto 51% for multi-brand retailers like Walmart and Carrefour. There will be various conditions that they will have to satisfy, such as a minimum amount invested in 5 years, support for rural infrastructure and jobs etc. How all these plans work out remains to be seen but the retail scene for food will change drastically. The new policy is expected to dampen inflation, bring in more efficiency and productivity and reduce wastage. Matthew Yglesias pointed out that it will probably result in the top 1% getting extremely rich but so along as the families around the median and the extremely vulnerable are not squeezed, the policy should be a positive one. I am not so sure ,mostly for the food sector. All the people involved in growing, transporting and bringing this food to the family table ( and they number in the millions)will be affected as this policy is put in place. In time, they may benefit but the initial impact will be hard. At a time when there is mounting hunger , malnutrition and concerns about the impact of climate change on agricultural productivity ( specially in South Asia), this new policy will add another variable to an already volatile situation. Caution and a long term perspective should be the way to go in this regard.

The Real Farm Subsidy Story

The Environmental Working Group has just published its report on farm subsidies in the US based on data from the year 2009. Before getting to the analysis itself, it is important to note that the report is based on 2009 numbers because the USDA demonstrates a troubling lack of transparency when it comes to giving out information. What emerges is a clear picture of a subsidy program gone astray. First off, the recipients of these payments are not required to even work on or won a farm. Indeed, the biggest beneficiaries of a program intended to help farmers are actually big agribusinesses, particularly in the south. How uneven is the distribution of this pie? The top 10% of the beneficiaries of this program received 55% of the total payments. Even this cursory reading will reinforce what we know already: small farms which are more vulnerable to the vagaries of prices and weather are not befitting from direct payments at all. This program is merely handing out cash to big players in crops like corn, wheat and soy. Remember that fruits and vegetables are not even covered by this program. So if we are looking to overhaul the food system, eliminate junk and encourage healthy eating, subsidy reform seems like a really good place to start. The EWG data presentation is detailed, fascinating and even available by state here.

Trading in Hunger

Worldwide, food inflation is a worry.The rising prices have been attributed to failing harvests, rising population and increased demand for food, increased consumption/changing consumption patterns in emerging economic powers, the demand for ethanol etc. But a key factor that is not often mentioned is speculation in agricultural commodity prices which often cause severe fluctuations in the price of staple foods like corn, wheat, or soy, for the consumer. When we click a button to execute a trade and then look at the profits afterward, we may sometimes lose sight of the fact that food is not like any other commodity and trading in food is often the same as trading in hunger. It would seem obvious that there is a need to ban or at least limit trading in essential food commodities. Like other contentious issues such as subsidies, however, there is a lack of political will and consensus in making this happen. More on this here.

Adapting to Climate Change

 

A new study ,which analyses data on changes in weather and agricultural production in different countries estimates, that the effects of warmer temperatures has lead to a 20% increase in global prices for maize and wheat. The debate on the factors responsible for these changes may continue but the impact of changing climate patterns is already evident to farmers. In the Midwest, farmers are already investing in machinery, seeds and farm practices that will help them deal with the short term variations in weather. More efforts are required to develop crops that can with stand the long term trend of global warming. It is estimated that a 1 degree Celsius rise in temperature causes a 10 percent fall in crop yield. How will the 2012 Farm Bill provide for these challenges? Funds are required for research into creating strains of crops that will be able to withstand excess heat and flooding, for conservation of existing resources and also for providing counter cyclical insurance to farmers as they grapple with uncertain weather conditions. There needs to be a recognition of the problem and also an openness to scientific methods which can help us face this challenge. In the current economic conditions, obstacles are to be expected.

Seeds of Change

They say every cloud has a silver lining and with this long downturn it seems like the clouds have been here forever. But,even in these difficult times, there is some good news. Rising food and healthcare costs are forcing people to rethink the way they live. Farmer’s markets are thriving and people are trying to grow their own produce. The next step is the revival of (almost) lost skills like canning, pickling and preserving produce. That is how people used to live in the past: enjoy produce when it is fresh and also prepare for the rest of the year. But grocery stores continue to be a source of produce for many and I wonder if this trend will impact what we pay in the store for fruits and vegetables?

Note: the link above is to the New York Times article on the changes in produce growing in rural Kentucky. There is some issue with the link that I am trying to fix at the moment, you could go straight to the new York Times site to read it in full.

Food Price Rise Report

The USDA’s  Economic Research Service analysis on rising food prices is now available online here.