What is in this article?:
- When will the food bubble burst?
- How much time before food bubble bursts?
- Lester Brown, EPI president, likens the current food bubble economy to the recent U.S. housing bubble that sent shockwaves through the world economy when it burst. He warns a food bubble could have farther reaching impacts because of its geopolitical implications.
How much time before food bubble bursts?
“How much time do we have before the food bubble bursts?” asks Brown. “No one knows. If we stay with business as usual, the time is more likely measured in years than in decades. We are now so close to the edge that politically destabilizing food price rises could come at any time.”
For example, Brown notes that if the 2010 heat wave centered in Moscow had instead been centered in Chicago, it could easily have reduced the U.S. grain harvest of 400 million tons by 40 percent, or 160 million tons. World carryover stocks of grain for 2011—the amount remaining in the bin when the new harvest begins—would have dropped to an all-time low of 52 days of consumption, well below the 62-day carryover that set the stage for the tripling of world grain prices in 2007–08.
In short,” Brown says, “if the July temperature in Chicago were to average 14 degrees above the norm, as it did in Moscow, there would be chaos in world grain markets.” Grain prices would quickly climb off the chart. Food prices would soar worldwide. Many grain-exporting countries, trying to hold down domestic food prices, would restrict or even ban exports, as they did in 2007–08.
Oil-exporting countries would try to barter oil for grain. Low-income grain importers would lose out. Instead of being dominated by scenes of smoke and fire in Moscow, the TV evening news would run live footage of food riots in low-income grain-importing countries and carry reports of spreading hunger, falling governments, and failing states. With governments collapsing and with confidence in the world grain market shattered, the global economy could start to unravel.
Rising temperatures are not the only threat to world food security. So too is the depletion of aquifers from overpumping for irrigation. In Saudi Arabia, grain production is collapsing as aquifer depletion has reduced its wheat harvest by two thirds in three years. It is not alone. In the Middle East as a whole, peak irrigation water is now history, making this the first geographic region where the grain harvest has started to shrink as aquifers are depleted and as irrigation wells go dry.
On a far larger scale, a World Bank study indicates that 175 million people in India are being fed with grain produced by overpumping. For China, the equivalent figure is 130 million people. Countries can overpump in the short run, but not over the long run.
And there are signs that a combination of trends, including aquifer depletion and the paving of millions of acres of cropland for new cars, is about to force China to import massive quantities of grain, much as it already does for soybeans. When this happens, China will necessarily turn to the United States, which is far and away the world’s largest grain exporter. For American consumers, for whom food security has never been a major issue, the prospect of competing for the U.S. grain harvest with 1.4 billion Chinese consumers with fast-rising incomes is a nightmare scenario.
“The new reality,” says Brown, “is that the world is only one poor harvest away from chaos. It is time to redefine security. The principal threats to our future are no longer armed aggression but instead climate change, population growth, water shortages, spreading hunger, and failing states. What we now need is a mobilization to reverse these trends on the scale and urgency of the U.S. mobilization for World War II. The challenge is to quickly reduce carbon emissions, stabilize population, and restore the economy’s soils, aquifers, forests, and other natural support systems. This requires not only a redefining of security but a corresponding reallocation of fiscal resources from military budgets to budgets that address the new threats to security.”
For decades, we environmentalists have talked about saving the planet. Now it is civilization itself that is at stake.