|
May 30, 2008
Source:
The Global Crop Diversity
Turst
Crop Diversity Topics - Analysis and Reflections no. 13 - 2008
http://www.croptrust.org/documents/newsletter/newsletter_no13-2008.htm
Tulips are not food. Both tulips
and food are commodities, however, and commodity prices are
notoriously cyclical as demonstrated during the tulip mania of
the early 17th century in Holland, when a single bulb of a
prized variety could fetch as much as eight times the average
annual income of a Dutchman.
Price is a function of supply and demand, sometimes spiced by
marketplace speculation. If we want food prices to return to
their previous “acceptable” levels – when food was generally
affordable except, let us not forget, for the 800 million people
FAO defined as poor and hungry - we need to do something about
either supply or demand or both.
Demand is a tough one. Population is growing. And in many
countries, developed and developing, prosperity is driving meat
consumption up. Each carnivore among us consumes not just more
meat but indirectly much more grain than a vegetarian. A kilo of
beef can take 8 kilos of maize to produce. So, on the demand
side, we could reduce the world’s population. We could all
become vegetarians. We could just all stop eating! Hmmm. Or we
could look at the supply side of the equation.
The world can produce ample supplies of cheap food assuming we
have cheap labor, cheap energy, cheap fertilizer (based on cheap
natural gas), plentiful water, good predictable climates,
cooperative pests and diseases, and a robust agricultural
research system to supply farmers with reliably productive crop
varieties.
Houston, we have a problem
Cheap energy? Lots of water? Great climate? We don't have any of
these things, except perhaps for cheap labor, a dubious blessing
at best. Indeed, many of these situations are getting worse, as
we have repeatedly warned in Crop Diversity Topics, beginning
with issue number one when we spoke about water availability for
agriculture.
Two stories from different parts of the world reveal more about
the long-term trend in food prices than most analyses:
- For some thirty years,
Saudi Arabia has tapped into a deep, large, ancient aquifer
(non-replenished by rain or streams) to irrigate its wheat
fields. Now the aquifer is running dry. Quickly. In eight
years the Kingdom will be forced to stop growing grain and a
largely grain self-reliant country will become one of the
largest importers in the world. Imagine the impact on demand
in the global market, and prices.
- China is also struggling
with water shortfalls of some 40 billion cubic meters
annually. This supply-demand gap could be bridged through
desalinization, but that would require 3% of the world's oil
output. The more likely scenario – and the prediction of
experts - is that China, recently a major exporter, will be
importing the equivalent of 40% of US maize exports in just
two years.
Only one conclusion can be drawn
from these and dozens of other similar stories hidden in the
back pages of newspapers around the world: prices, while
cyclical, are likely to trend higher. Demand backed up by
foreign reserves is rising. And on the supply side, Argentina,
Cambodia, China, Egypt, India, Thailand and Vietnam have all
installed export controls. More money will be chasing less grain
in international markets. Unless someone somehow picks up the
slack, prices will rise.
Usually, the cure for high prices is… high prices. In the medium
term, and perhaps even sooner, the marketplace will probably
work its magic and prices will subside. Already, there are
reports from the US, Canada, Europe, Thailand and Vietnam that
farmers are responding with increased plantings. Astonishingly,
the UK's Independent tells us poppy growers – as in opium - are
shifting to wheat in some areas. If you ever needed evidence
that farmers respond to price signals, there it is!
But, in the long term we cannot solve agriculture's production
problems by shifting out of one crop and into another or even by
cutting down trees to create more cropland. We will not solve
agriculture's energy and water problems by building bigger pumps
when the real problem is what's left at the bottom of the well.
And we will not have the luxury of ignoring pests and diseases
or climate change. Prices are going to fluctuate up and down,
but mostly up it seems.
The long-term solution lies in addressing the underlying causes
of today's high prices and tomorrow's higher prices.
The clear and present danger isn't just high food prices. It's
that the first cyclical downturn in prices will be greeted with
cries of relief and a rush to the door as politicians and
commentators declare this crisis yesterday's news and move on to
the next crisis.
The food crisis will be over, right?
Not quite. The food price crisis might take a holiday. Media and
political interest might subside. But the underlying factors
that are propelling us towards chronic supply/demand imbalances
will not have been resolved. We have a major systemic problem to
address. Prices are the effect. They can dip even within the
context of a long-term upward trend, what the people at the
Chicago Board of Trade would call a "secular bull market" in
agricultural commodities.
The current food price crisis presents us with a rare
opportunity to mobilize the resources to address the long-term
problems of supply. We must not be fooled into thinking that the
virtually inevitable upcoming price declines are anything more
than the lull before the next storm.
Preparing for the storm
Our task in the agricultural community and at the Global Crop
Diversity Trust is to prepare for the storm that is gathering on
the horizon. Our job is to get agriculture ready! At the Trust,
and in collaboration with partner institutes, we are:
- Collecting remaining
diversity from the field before it is lost due to
climate change, development or replacement by new
varieties - we'll need this diversity for the options it
will provide for plant breeders and farmers;
- Conserving crop
diversity - securely and permanently in seed banks
meeting international standards and in the Svalbard
Global Seed Vault – without diversity agriculture can't
survive;
- Screening collections
for traits essential to meet climate change, water,
energy and food security challenges;
- Developing new
information technologies and systems to facilitate plant
breeders and researchers in finding the genetic traits
they need to make crops more productive and resilient;
- Moving newly found
traits into breeding lines that can be used to create
productive, "climate-ready" crops.
You can't get agriculture ready
without crop diversity. It really is that simple. So this is the
Trust's agenda, to ensure that agriculture is able to avert the
next food crisis, adapt to climate change, and meet the
challenges that expensive energy and chronic water constraints
will pose. |
|
