Is Famine Inevitable?

Paul Krugman's "Grains Gone Wild" column may have boasted one of the most hilarious titles ever in the annals of agrichemical economic analysis, but the situation is far from funny: Our food situation is on the precipice of failure. And all it's going to take to get past the tipping point is the slightest of mistakes -- or manipulations.

Much of our current recessionary intrigue has been aided and abetted by market speculation, from the oil and food sector all the way to the White House itself. For the last seven years, the Bush administration has placed climate crisis on the back burner in existential pursuit of resource wars and an "American way of life" that has turned from a dream of Hummers, housing and bling into a nightmare of price hikes, foreclosures and layoffs. Mission accomplished.

But someone will have to pick up the pieces, which are going viral fast. In that chaos, food has stopped being our other energy problem and become a chief terror of the future. And considering increasing prices, decreasing dollars and a world that will soon house many more people but feed even less of them, we're probably in for a famine or two before all is said and done.

Price Hikes

"Rising food prices do not have one simple cause," explains Bettina Luescher, chief spokesperson for North America's chapter of the United Nations World Food Programme. "They are caused by several factors, all combining to a perfect storm. But they are rooted in increased energy prices, competition between biofuels and food, rising demand from economic growth in emerging economies, and increasing climatic shocks such as droughts and floods."

"The majority of the increase in the cost of food is tied to the rising cost of petroleum used to produce agrochemicals and fuel to produce food staples," adds Patrick Woodall, senior food policy analyst at Food and Water Watch. "Additionally, the rising demand for ethanol energy crops, primarily corn in the United States, has tightened up the supply of arable land, which has contributed to the increasing price of all food commodities. The increased commodity prices mean that each food aid dollar buys less food than in previous years, not including the cost of transporting the food from the American heartland to international hot spots like Darfur, Afghanistan and the Congo."

The point would be probably an obvious one: There's no way we can keep going like this. Add in the transition from vegetarian to animal-based diets in India and China, and at this rate we're looking at food shortages, severe environmental repercussions and, perhaps, the eventual return to a common vegetarianism broken up by the odd meat meal -- which is where China and India were before they went hypercapitalist. It's the ultimate feedback loop.

And it's seriously lucrative. Global demand has provided companies like Potash, Monsanto, Mosaic and Agrium with huge returns. Jim Cramer and other Wall Street chatterheads are pushing agrichem as safe havens in a volatile market juggled around by hedge funds, private equity groups and other major players.

But even Potash has admitted that stores are already pressed to the breaking point. "If you had any major upset where you didn't have a crop in a major growing agricultural region this year, I believe you'd see famine,'' Potash CEO William Doyle told Bloomberg TV. But, he reminded, conscious of his role in the expensive affair, "you won't have a global shortage of food because you don't have enough potash."

Alarmists may bray, but Doyle is no alarmist. And he's right.

"The 2007 agricultural and food staple output in America ran at full-tilt production," Woodall says, "with increased acreage under cultivation and high yields for many food crops. The current high-price environment would only get worse if there were significant downturns in production because of weather or declining yields or disease. Even small declines in production could drive basic food prices beyond the reach of billions of people."