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What a Renewed Global Food Crisis Could Mean

What a Renewed Global Food Crisis Could Mean

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Published by kelly_brezovski
The suggested Apocalyptic upcoming food crisis is on everyones mind. Read carefully and check out the other links for more information that could help your friends and families.
The suggested Apocalyptic upcoming food crisis is on everyones mind. Read carefully and check out the other links for more information that could help your friends and families.

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Categories:Types, Research
Published by: kelly_brezovski on Jan 21, 2012
Copyright:Attribution Non-commercial


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 ==== ====The upcoming food crisis will happen all around the world, in some countries it is alreadyhappening. Read these articles in regards to the Food crisis carefully, I have and you should too.http://tinyurl.com/prepareforfoodcrisis ==== ====Back in 2007, before terms like subprime mortgages and credit default swaps entered ourvernacular, the world's policymakers found themselves facing a far more basic, if equally complexglobal crisis-one involving food. At the time, news of ration line riots flooded headlines, while pundits entertained apocalypticvisions of an underfed future. Many nations erected monolithic trade barriers to protect domesticsupplies, while surging oil prices and speculative investors only drove food indices even higher. By the end of 2008, of course, the global financial crisis had effectively dampened demand, andlower oil prices allowed food commodity markets to stabilize. The world's attention then turned tothe financial sector and stimulus plans, and the once ominous specter of an international foodshortage suddenly receded into the background. Now, however, the specter of another food crisis has reared its ugly head, once again. In recent months, a plummeting US dollar has increased the cost of foodstuff imports for manynations, while severe climate and natural disasters in Russia and Pakistan have jolted globalsupply chains. Kenya, Uganda, Nigeria, Indonesia, Brazil and the Philippines have already warnedof impending food shortages in the next year. In the matter of a few months, grain prices jumpedso precipitously that, in late September, the Intergovernmental Group on Grain, sponsored by theUN's Food and Agriculture Organization (FAO), called an emergency meeting. When the session concluded, the FAO announced that the chances of slipping into anotherinternational food crisis remained slim, but warned that import-dependent countries would likelysee a substantial increase in commodity prices. A month later, World Bank president RobertZoellick echoed and expanded upon this sentiment, saying that food price volatility would likelylast for another five years. "There is growing concern among countries about continuing volatility and uncertainty in foodmarkets," Zoellick told the Guardian in late October. "These concerns have been compounded byrecent increases in grain prices. World food price volatility remains significant and in somecountries, the volatility is adding to already higher local food prices." For all this uncertainty, today's commodity market tumult has yet to metastasize into a full-blowninternational crisis. Food price indices, while high, are still well below the per-bushel levels of 2007and 2008. And, aside from a brief outburst in Mozambique, the political seas of consumerdiscontent have been relatively placid. 
Nevertheless, some economies have already begun to feel the pinch. And perhaps none moreacutely than Egypt's wheat market. Egypt's Wheat Worries In July, a monumentally severe heat wave struck much of Russia, inciting widespread fires anddroughts, and devastating the country's wheat crop. In the wake of the disaster, Russiaimplemented an export ban on wheat in the hopes of securing a healthy domestic supply throughthe end of the year. The news came as something of an alarm to Egypt, the world's largest wheat importer andscheduled recipient of 540,000 tons of Russian wheat, due for delivery by the end of this year.With this order suddenly cancelled, Egypt found itself scrambling to diversify its import portfolio tomake up for its Moscow-sized trade gap. Eventually, the US, France and a host of foreign suppliers stepped up to fill the void, and, in mid-September, Egyptian trade minister Rachid Mohamed Rachid confirmed that the country hadsecured enough supplies of wheat to avoid any immediate shortages. That should come as a major relief to the average Egyptian consumer, who, according to thecountry's General Authority for Supply Commodities (GASC), consumes about 180 kg of flour peryear. This import diversion will also ease the concerns of Egypt's politicians, who were no doubtskittish after the recent death of a 25-year-old in a bread queue revived memories of 2008, whensimilar violence broke out among protesters and police in the city of Mahalla. Ultimately, though, this game of mercantile musical chairs is nothing more than a stopgapmeasure that masks a more insidious, if less obvious malady-Egypt's wheat subsidy program. Sub-par Subsidies Each year, the Egyptian government devotes some $3 billion to food subsidies-a third of whichgoes to buoying the country's bread supply. Under this system, the state procures wheat fromforeign suppliers at a fixed price. In a country where roughly 16 million inhabitants are classified aspoor, guaranteeing a constant food supply certainly makes political sense. There's an economic logic to the country's subsidies as well. By devoting so much capital to thewheat market, Egyptian authorities are essentially attempting to protect the domestic market fromthe often violently sinusoidal tremors that can rattle international grain prices. In September, when the GASC announced that it had secured sufficient imports to feed theEgyptian population, deputy chairman Noamani Nasr Noamani pointed out that the governmenthad also secured enough money to increase the budget for its wheat subsidies. This increasedbudget, Noamani claimed, means "the Egyptian consumer and the Egyptian citizen will not feel thepain of the increase of prices globally." The problem for Egypt though, is that today's market conditions couldn't be less favorable to sucha massive-and often misdirected-subsidy program. 
In October, Minister of Agriculture Amin Abaza promised that the government would not allow localprocurement prices for the new harvest season to fall below LE300 Egyptian pounds per ardab(measuring unit for crops). Abaza's proclaimed threshold is roughly 20 percent higher than lastseason's, but Egyptian wheat farmers say it's still not high enough. With the cost of fertilizers having risen over the course of the past few years, Egypt's agrarianshad been hoping for a guaranteed price of at least LE350 per ardab. Today's wheat farmer,according to estimates from Cairo-based investment firm CI Capital, has to spend roughly LE2,000to cultivate a single feddan (1.038 acres). Without a higher guaranteed price, farmers will likelydevote their arable land to more profitable crops, thus exacerbating an already grim outlook. There are, of course, several exogenous factors over which Egypt has little or no control.Commodity traders may continue to drive up international food prices through speculativeinvestments; the inexorable forces of urbanization and large-scale, agro-industrialization can onlybe harnessed through global, cooperative efforts; and, of course, there's no telling when the nextdrought or heat wave might decimate international harvests. The one thing Egypt can control is its domestic production chain. Yet thus far, governmentalsubsidies have only resulted in an underperforming market and distorted prices. This is not to say that the country must abandon its subsidy program altogether. Some 60 millionpeople benefit from subsidized foods, and, with a parliamentary election on the horizon, calling foran end to subsidies would be tantamount to political suicide. Rather, Egypt must look to reform theprogram, with an eye toward creating very real incentives for farmers to plant wheat. Setting asimple price threshold, in today's protean economic climate, clearly won't be enough. Fortunately, the state seems well aware that domestic wheat production needs to be reinvigorated.In August, the agricultural ministry proclaimed its goal to achieve 70 percent self-sufficiency by2020 with the help of a new, higher-yield strain of seed. It's certainly a step in the right direction,but if Egypt wants to avoid shortfalls in 2011, it must set about implementing higher-yield subsidiesas well. http://www.majalla.com/en/international_investor/article193053.ece http://www.guardian.co.uk/environment/2010/oct/25/impending-global-food-crisis http://www.alarabiya.net/articles/2010/09/18/119616.html  Article Source:http://EzineArticles.com/?expert=Amar_Toor 

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