The Dangers of Food Prices

The World Bank has reported that food prices have reached dangerously high levels. They state that this could lead to political instability. The numbers are truly staggering; global Corn Futures have doubled in price since the summer. The U.S. Department of Agriculture predicted last week U.S. corn farmers will have just 675 million bushels of corn at the end of August, before next year's harvest begins. That sounds like a fairly large number, however, when calculated out, that results in an 18-day supply. These slim reserves, no matter the cause, leaves the world at risk with any event that could affect corn production.

The United States has yet to feel the crunch that many others across the globe have felt. We have a number of factors supporting our position, including the absorption of high prices by Food Distributors. The rest of the World is not so lucky. Between June and December, wheat prices climbed 54 percent in Kyrgyzstan, 45 percent in Bangladesh and 16 percent in Pakistan. These are nations who are already facing internal and external political pressures.

The big secret, that has not been so well kept, is that many of the protests and riots that led ultimately to the resignation of Hosni Mubarak, were initially sparked because of a burgeoning food crisis. The price of wheat, in Egypt, had risen 60 percent in the last year. This growth was unsustainable and at its breaking point drove the people to the streets. Governmental policy and ultimately Mubarak took the blame for the strife the people had to contend with.

History tells us that Egypt will not be the only nation to face such radical action from the people. Every nation has its breaking point and many nations across the globe are approaching theirs.  Governments, just like other entities do not have the ability to create food out of mid-air. They must find a way to purchase or trade for it. What we are seeing in the world today is a diminishing of reserves due to economic development across the globe, allocation of lands to non-food production, such as ethanol, and more dependence on governmental authorities for sustenance.

Just as Egypt is experiencing its revolution on the back of food riots, many revolutions in history were born from the desire for food and the inability to produce it. In my previous blog entry, Of Revolutions, I noted the failures of the 1848 Revolutions and how they arose from food riots. Radical ideologues stoked the passions of a desperate people into toppling governments. However, they did not have the structure and organization to take their revolution further and develop their own governments with the ability to cope with the needs of the people.

Observation suggests that many of the rioting groups in Egypt, in Tunisia, and other nations of the Middle East and Africa also lack political organization. In Tunisia and Egypt we have already seen governments all, but we have not seen the next step. We can hope that the people find a way to organize their thoughts, goals, and philosophies to ensure a peaceful transition, but that is a rare phenomenon in history.

Food prices will undoubtedly continue to rise in the coming weeks and months. Is there the infrastructure available in the world to produce enough food to feed the needs of the people of the world? Or will we continue to see people rise up against their governments and breed an environment of revolution exponentially greater than those the world have seen in the past. The Revolutions of 1848 were centered in Europe. The Revolutions of 2010-11 have already expanded beyond the boundary of a continent.