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Record Droughts, Floods and Fires Strain Food Markets´ Resilience

United States
New York Times
12/08/2010
Nathanial Gronewold


A string of devastating natural disasters many are attributing to climate change has sent food prices on a roller coaster ride, leading to fears of a wave of climate-induced food price shocks of the sort that sparked rioting in the developing world two years ago.

But international agriculture experts say those concerns are unfounded. Though they acknowledge dramatic spikes in wheat and corn, and new pricing pressure on rice, U.N. and other food policy experts say data show global food inventories are still healthy and that declining production in some parts of the world will be offset by bumper crops elsewhere.

"We shouldn't panic, and we shouldn't think that there's going to be another food crisis," said Manuel Hernandez, a researcher at the International Food Policy Research Institute.

Concern began when Russia recently announced a ban on wheat exports, citing a severe heat wave and drought that have charred that nation's wheat crop in the fields. Massive wildfires near Russia's breadbasket are further hampering farming.

Experts say that Russia, which was previously on track to becoming the world's largest exporter of wheat, has lost more than 20 percent of its crop to the drought.

News of the drought and export ban has sent wheat prices soaring -- wheat futures for September delivery flew from about $4.80 per bushel at the start of July to a high of about $8.40 earlier this month at the Chicago Board of Trade. Spiking wheat prices have sent futures prices for corn, soybeans, and oats all rising rapidly over the past month.

Following Russia's announcement of a trade ban, analysts at HSBC issued a warning that such knee-jerk policy responses could lead to a resumption of the price hike spiral and restrictive trade policies that sent many global staples doubling or tripling in price in a short time span in 2007 to 2008.

Potential for food crisis in Pakistan

Flooding in Pakistan and a series of deadly mudslides in central China further fueled the food price angst. Canada is expected to see its wheat crop fall by 20 percent this year due to adverse weather. And now Australia's government is warning its farmers of a pending locust plague that could devastate that major exporter's wheat production.

U.N. officials are warning of the potential for a food crisis erupting in Pakistan. About 1 out of 10 Pakistanis has been hard hit by the flooding, and the U.N. Food and Agriculture Organization estimates that about 1.8 million acres of cropland is now underwater there.

"The consequences for the local population's food security are acute, as food prices have already started to rise sharply," said FAO senior officer David Doolan. Pakistan was the scene of sporadic rioting in 2008 as anger and fear over soaring food costs spilled into the streets.

Pakistani wheat production will be hard hit by the flooding, Doolan warns. And no imports from Russia, a once-reliable regional supplier, will put Pakistan in sharper competition with North African nations for purchases of wheat from other parts of the globe.

But any pain brought by higher food prices will be concentrated in these regions, in particular the Middle East, North Africa and now Pakistan, IFPRI's Hernandez says. The chief reason for this is that U.S. farmers are anticipating a record crop this year that will offset even the sharp falls in Russia, Canada and possibly Australia.

"Last year, Russia exported 22 million metric tons of wheat. The U.S. alone has more than 36 million metric tons in inventory," he said. "People are trying to make this more serious than it actually is."

FAO officials at the agency's headquarters in Rome largely agree. They see the current price spike as a temporary phenomenon and expect global prices to fall once the record surplus is accounted for.

Hotter nights cut rice production

The markets now seem to be reacting to these soothing words. Though still high, September wheat futures prices have since slid from $8.40 per bushel to about $7 in trading yesterday, and market analysts expect a further downward trend in prices. Corn and oat prices have also fallen in turn.

But other key agriculture areas are not out of the woods yet.

In a paper published earlier this week in Proceedings of the National Academy of Sciences, data highlighted by FAO and other policy groups show that rising global temperatures could be curbing rice production in large swaths of Asia. Hotter than average nights, scientists say, have already cut rice output in several areas by 10 to 20 percent over the past 25 years. Researchers behind the study said they found a conclusive link between higher nighttime temperatures and lower rice yields.

Meanwhile officials are most concerned about the situation in Pakistan, where the government is struggling to get a grip on flood damage that has left millions homeless and out of work. The United Nations is calling it the worst disaster that nation has suffered in 80 years.

Though the death toll in Pakistan is much lower (1,300 confirmed dead), officials say infrastructure damage is on par with the 2004 Indian Ocean tsunami and January earthquake in Haiti. Several bridges, roads and electrical grids have been destroyed and whole towns swept away.

Yesterday, the United Nations' Office for the Coordination of Humanitarian Affairs (OCHA) launched an appeal for $460 million in international aid to help address the problem. As part of that package, the World Food Programme is calling on $163 million in food aid for hard hit areas of Pakistan.

"With a high risk of a food crisis, food assistance will be necessary for up to 6 million people across the country," OCHA chief John Holmes said.

Copyright 2010 E&E Publishing. All Rights Reserved.

 

The news content in this section is responsibility of the information agencies and does not necessarily reflect the position of the Government of Mexico on this or other related topics.

El contenido de las noticias que se presentan en esta sección es responsabilidad directa de las agencias emisoras de noticias y no necesariamente reflejan la posición del Gobierno de México en este u otros temas relacionados.

    

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