(NEW YORK) MintPress — It seems that gravity can be defied when it comes to the price of oil and, more recently, food. This summer’s jump in maize, wheat and soya bean prices, driven by the record-breaking drought in the United States, was the third spike in the last five years.
And a recent report from Oxfam said the U.S. should expect further droughts in the coming decades. “The U.S. experienced $14 billion disasters in 2011, a historical record, including a blizzard, tornadoes, floods, a hurricane, a tropical storm, drought and heat waves, and wildfires,” it said.
“The current year has already seen wildfires, a windstorm, heat waves in much of the country, and the most severe drought in half a century.”
Indeed, from June to July, maize and wheat rose by 25 percent each, and soybeans increased by 17 percent. The latest data from the World Bank showed that food prices overall rose 10 percent between June and July and have now exceeded the previous peak in early 2011.
“Food prices rose again sharply threatening the health and well-being of millions of people,” said World Bank Group President Jim Yong Kim. “Africa and the Middle East are particularly vulnerable, but so are people in other countries where the prices of grains have gone up abruptly.”
In fact, according to the organization, poor people in developing countries spend 50 to 80 percent of their income on food, which means higher and even more uncertain food prices make it difficult for them to eat, let alone spend money on other basic needs.
Controversy over contributing factors
Aside from Mother Nature, contend experts in the field, there are other causes of the food price hikes that can be controlled.
In a recent article in the Guardian, “The Era of Cheap Food May Be Over,” economics editor Larry Elliott wrote, “The current assumption seems to be that the world can have a rising population, ever-higher per capita meat consumption, devote less land to food production to help hit climate change targets and eschew the advances in science that might increase yields.
“This is the stuff of fantasy,” he added.
He calls for the development of hi-tech industrial farming to produce more meat, or finding ways to reduce the rising demand for meat-based diets so the lower yields from organic agriculture are sufficient.
But not everyone agrees with Elliott’s own assumptions. Timothy A. Wise, Director of the Research and Policy Program at the Global Development and Environment Institute, argues that it’s been shown that rising demand for meat-based protein, especially in China and India, is not the main cause of recent food price hikes.
Instead, Wise believes the real problem comes from the impact of biofuels, Their use has expanded since the Renewable Fuel Standard program was created under the Energy Policy Act of 2005.
The Environmental Protection Agency is responsible for imposing mandates to ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel. It required 7.5 billion gallons of renewable fuel to be blended into gasoline by 2012.
The regulations were developed in collaboration with refiners and renewable fuel producers.
According to the International Energy Agency, biofuels have the potential to meet more than a quarter of world demand for transportation fuels by 2050.
Alarming tradeoff
But that would come at a significant human cost. In an interview with MintPress News, Wise points out that in the U.S. ethanol consumes 40 percent of the country’s corn, which amounts to 15 percent of global production of corn.
“It’s a huge shock to demand in a market that’s already thin,” he says. “The expansion of its use has happened fairly quickly over the last five or six years, and it’s been stimulated by government programs and mandates.
“There’s just no space to accommodate a demand shock that great. It’s making our cars compete with people for food,” he continues.
Estimates vary widely on the impact, but a recent report by the National Academy of Sciences concluded that 20-40 percent of the price increases in 2008 were due to the expansion of biofuels.
Wise and many others are calling for an automatic waiver of the Renewable Fuel Standard mandates if food supplies get tight. The EPA currently has the right to make them more flexible but “it has hoops to jump through” to do so, says Wise.
He recalls one incident in which activists called on the EPA to temporarily revise the mandates, but by the time it managed to do so the crisis had passed.
Not surprisingly, there is a powerful lobby that involves some big players, mainly the petroleum industry — the American Petroleum Institute (API) has spent more than $3 million annually since 2005 on lobbying efforts — and commodities trading firms.
“It’s time to use agriculture for food,” maintains Wise. “Use it for cars only if there is enough for people.”
Wise also calls for an expansion of food reserves, the lack of which he says is the result of government policies to let the market take its course. That has led to the inability to respond to a drought as severe as the current one.
And he wants government regulation of financial speculation in commodity markets, saying the “financial sharks” are circling as prices rise and playing the volatility for their gain.
In addition, says Wise, greater attention must be paid to addressing waste. A whopping one-third of food is wasted along the way. Public investments in water systems, storage, roads and markets could save some of that.
Finally, Wise advocates expanding sustainable small-scale food production through “sustainable intensification.”
Otherwise, says Wise, “We’re going to continue to see ethanol out-competing hungry people for scarce supplies.”