IMF Head Gives Food Price Warning

[Purveyor]

Source: BBC

The head of the International Monetary Fund (IMF) has warned that hundreds of thousands of people will face starvation if food prices keep rising.

Dominique Strauss-Kahn said that social unrest from continuing food price inflation could cause conflict.

There have been food riots recently in a number of countries, including Haiti, the Philippines and Egypt.

Meeting in Washington, the IMF called for strong action on food prices and the international financial crisis.

Market turmoil

Although the problems in global credit markets were the main focus of the meeting of the IMF's steering committee of finance minister from 24 countries, Mr Strauss-Kahn warned of dire consequences from continued food price rises.

"Thousands, hundreds of thousands of people will be starving. Children will be suffering from malnutrition, with consequences for all their lives," he told reporters.

He said the problem could lead to trade imbalances that may eventually affect developed nations, "so it is not only a humanitarian question".



Read more: http://news.bbc.co.uk/1/hi/business/7344892.stm

[Hannah Bell]

1. Interesting, in light of this, from 2004:

IMF warns hedge funds over commodity speculation
By Edmund Conway in Washington
October 5, 2004

The International Monetary Fund has issued a stern warning to hedge funds, saying they have destabilised global equity markets and pushed oil prices higher...

A lack of volatility in equity and bond markets has hit hedge funds' profits, prompting many funds to invest in commodities and oil, which, in turn, has contributed to higher prices. Oil prices dominated talk at the IMF and Group of Seven meetings in Washington. Both institutions warned that oil markets had become more volatile because of a lack of information about global crude oil supplies...

http://www.smh.com.au/articles/2004/10/04/1096871813676.html

[Baby Snooks]

4. Market manipulation

Part of the reason why oil has been above $100 a barrel is market manipulation. Options are nothing more than placing bets on a roulette table. Most of course win. Few people really understand the options markets. Those who do make quite a nice profit off it.

Part of the reason is the "lack of information about global crude oil supplies" which three years after this warning was issued became clearer by the oil and gas industry itself and of course by the statement by PEMEX that Mexico's largest reserve is being depleted.

Transportation costs have risen considerably in the past year as a result and we are finally seeing that in the grocery store in particular but there are also real food shortages looming. Countries are already beginning to restrict exports to ensure food supplies in their own country are kept stable as everyone has seen with regard to rice.

We are facing a very scary and really a very draconian future.

[Hannah Bell]

6. Last year's (2007) global grain harvests were bigger than 2006's.

Rice was a record. Wheat harvests were bigger than 2006, despite the problems in australia. China is basically self-sufficient in rice & wheat, so there's not much new demand coming from that quarter, though news reports sometimes make it sound like millions of Chinese just started eating in the last few years & were in suspended animation before that, or something.

a Food & ag (FaO) official was quoted as saying the reason grain was going so high was "speculative attack". The reason I thought the OP was interesting was that, in light of the 2004 article, it sounded like a veiled call to do something about speculative activity to ensure political stability.

[amandabeech]

14. China doesn't have enough grain and soybeans to feed its people and meat animals

at the same time. That's why they're thinking about going to potatoes, which provide more carbohydrate calories per acre in most places.

Plus, their northern farm areas are in drought.

It is my understanding that China, in fact, is in the grain markets.

Overall grain stocks are lower now than they were a year ago, at least the last I checked a couple of weeks ago.

From where do you get your info? I'm curious. I get a lot from posts on the E&E forum here and at theoildrum.

[Hannah Bell]

19. I look at production statistics: usda, fao, etc.

ag forecasts, commodities trading boards, etc.

Stocks are down because free trade agreements & other political pressures have led to reduction of gov't supports for production & holding stocks. Yes, China is currently in the grain market, not because they find it impossible to feed their people (or animals), but because, with the previously lower prices for grain, they found it more cost-effective to be in the market:

"Chinese government policies on wheat production have shifted several times during the past two decades, as policy makers strive to satisfy both national security concerns and market needs. In the 1980s, the country imported as much as 13 million tons. Then, in 1995, Chinese policy-makers decided that the nation should be self-sufficient in grain. To this end, local officials raised the price they would pay for wheat, an incentive that led to huge wheat harvests in 1997-98 — harvests that were more than double those of the early 1980s. With such bin-busting numbers, inventories soared and imports dropped off the charts (Hsu 1).

Gradually, stockpiles were reduced and imports, from the United States and elsewhere, resumed, though they have not recovered to the level of the 1980s. Production has fallen, a reflection of a reduction in incentives and of farmers switching to other cash crops, such as horticulture products and cotton, which bring a better return. A soil and water conservation program that provides incentives to farmers to revert cropland, particularly sloped or otherwise fragile fields, to natural vegetation has also led to reductions in sown area (Lohman 4). The Chinese government has also shifted from a call for complete self-sufficiency to one of primary self-reliance, where farmers would produce 85 percent or 90 percent of China’s wheat needs instead of 100 percent (Jiang and Gifford 4)."

http://www.asiakan.org/ag_products/wheat_production_china.shtml


a large segment of the world is poor & landless. Without government price supports, grain producers in the international market won't produce enough for those people (no profit in it, because their costs are priced in the international market). That doesn't mean they can't.

The main reason for the current price rises isn't a lack of grain. Gov't policy is the biggest driver of grain supply, here, & internationally.

[xxqqqzme]

2. Rah, rah, unrestricted free trade makes

everything better for everyone - isn't that the tune?

[Baby Snooks]

3. Coffee...

One of life's staples. "Store brands" have risen over 50 cents in the past three months. Along with everything else. Between 25 and 50 cents average. Does anyone in Congress have any idea what the average American is facing at this point? Does anyone in Congress really even care? It seems not.

Food pantries around the country are seeing a new clientele. The middle-class that simply cannot make ends meet. Faced with keeping the lights on or keeping food on the table, they choose to keep the lights on. So they turn to the food pantries. And the food pantries are beginning to see shortages themselves on many staples such as rice. A lot of people don't realize the food pantries BUY their food. Those little bags you buy in grocery stores are not donated directly. They are donated to a central facility called a "food bank" that sells the reduced-price items to the food pantries. Welcome to America. Even the "food banks" are scams.

And it's not just Republicans who don't care. A lot of Democrats don't care either. I hear Democrats all the time complaining. Property taxes, the light bill, the price of gas, food prices going up. Of course they chose to buy 5,000-10,000 square foot homes, drive BMWs and Hummers, and eat out most of the time so they really are complaining about the price in the restaurants. Not at the grocery store. And they probably don't tip any better than Republicans.

Most staples will continue to rise in price. Not just coffee. Produce and dry goods like rice and pasta. Meat is already out of the reach for many unless it is marked down for "quick sale" and you see more and more of that in the stores that mark it down. Some don't. Some would rather toss it and give the impression that their shoppers don't mind paying double what they did a year ago for meat. If you can't afford it, too bad. It's a little psychological trick of marketing. The problem is the people who would have bought it marked down. And the people who would have retrieved it from the dumpster if they'd known it was there and the dumpster wasn't locked. The explanation about the dumpsters is very interesting. It is for health reasons. Mustn't let the homeless and starving actually be able to find something to eat in a dumpster. Never mind that the stores could, if they wanted to, donate it directly to homeless shelters. Never mind that the homeless and starving are still starving. And it's not just meat. Stores toss out produce, dry goods, canned goods, milk a day or two before expiration even though most milk will be good for another day or two after expiration. Again, the little psychological trick of marketing. At most of these stores, of course, the parking lots are filled with BMWs and Hummers. Quite a few driven by Democrats as well as Republicans.

The reality of Nancy Pelosi's comment about having the homeless arrested is that it is reflective of the attitude of a lot of Democrats as well as a lot of Republicans. Out of sight, out of mind.

[BeHereNow]

5. Does anyone in Congress care? FUCK NO. The global elite are determined to survive- the rest of us?

Congress critters are part of the global elite- they are well versed in what is
pending due to climate change. If you want to know what the future looks like
for the rest of us, examine the plight of the victims of Katrina.
It was not incompetence, it was deliberate.
The more of us that die off, the better off they will be.
Make no mistake, that is the reality.

BHN

[barb162]

15. Is the US the Elite? I think not. We're headed for a severe recession

and we'll probably never get out of it. The dollar is in severe trouble. Look to China and India and Japan for money.

What do you expect Congress to do? Make rice? Direct American farmers to grow rice? Hand out money we don't have? Take a look at our debt and take a look at China's. Of course, the reason the US is in the trouble it's in was free trade deals IMO and letting corporations here run wild. The thing is, right now, we're not in much shape to help anyone.

[SpiralHawk]

8. "Cake, anyone?" - Commander AWOL & McSame

[wordpix]

10. "Dems chose to buy 5,000-10,000 square foot homes, drive BMWs and Hummers, "

uh, this is absolutely NOT TRUE. Yes, some Dems enjoy the "good life" you describe (:sarcasm:), if you want to call conspicuous overconsumption the good life. But a lot of Dems are just getting by and barely, or they are "middle class" and trying to maintain their older small gas sippers and 1000-2000 sq. ft homes, yet they are still volunteering to help those in their communities who are even worse off.

Your portrayal of Dems as all Richie Riches is not appreciated, and it's not true.

[barb162]

17. Do you have a link re Pelosi /having homeless arrested?

[fasttense]

7. Food riots soon to follow. n/t

[girl gone mad]

13. Maybe if we're lucky..

we'll get a revolution out of it like France did.

[barb162]

16. There are already food riots in some places.

It will be more frequent.

[madrchsod]

9. the sub prime market is played out

oil and gold has`t any future so it`s our food....

[Hatchling]

11. The grocery I frequent used to donate day old bread to food banks.

Now they just reduce the price and sell it. Good for me, bad for the food banks. I get packs of bagels, pita and good bread (which I usually can't afford) for $.69.

[girl gone mad]

12. What's your solution, IMF?

Let me guess. More forced deregulation and handouts to giant agro-businesses? :eyes:

[barb162]

18. DO you notice there is not a word in the article about population control

Resources become scarcer thus driving up prices as more and more people also demand more resources. Petroleum is used in fertilizer and transport costs of food increase. It's amazing the UN hasn't started calling for all countries to control population increases. WHere's the new arable land coming from to feed ever increasing numbers of people?

[Hannah Bell]

20. Do you notice that the global birthrate is 2.54 children per woman?

Do you notice that in the US & China, wheat acreage in production has declined, but harvests have increased? Do you notice that suddenly this year, in the face of rising prices, that mothballed acreage has been put back into production?

Not a food crisis, not a population crisis - a profits crisis. What drives planting is the profit motive.