Rising Demand Will Increase Food and Oil Prices
Urban Ecology News. 2007.11.9
Rising Demand for Food Developing Countries Will Increase Global Food and Oil Prices
According to Credit Suisse, global demand for food and biofuels will grow at about 3.3 per cent per annum - compared with the historic average of 2.3 per cent. So the outlook is for agricultural, commodity and oil prices to carry on rising. The $100 barrel of oil could be just the start.
Over the past few decades, consumption of meat in developing countries has grown at a rate of 5 to 6 per cent a year; consumption of dairy products at 4 per cent. Meat consumption is growing 10 times faster in newly industrialised countries than in, say, bacon-loving Britain. Poultry is the fastest growing sector worldwide; it represented 13 per cent of meat production in the 1960s, compared with 28 per cent now. Poultry is the most efficient means of converting grain into animal protein; the less palatable truth is that it is more effective to eat the grain directly.
The world is seeing some dairy prices up 200 per cent, the cost of wheat doubling and pork up 50 per cent.
Countries such as Bangladesh with large and growing populations but who are net importers of food will feel the effects badly (on top of dealing with rising sea levels in the Ganges delta). The less developed the economy, the greater the share of food prices in the shopping basket, and thus the bigger the impact on standards of living.
Everywhere, and especially in the least-developed regions, there will be a regressive redistribution of income, from the very poorest to the relatively well off, as food accounts for such an overwhelming proportion of the living costs of those at the bottom of the heap. Everywhere, pressure on water supplies and migration will inevitably follow.
Case study: China
China's remarkable economic growth is powering the global economy, but can the world afford to keep on supplying its ever-growing demands for food and raw materials?
Commodity inflation is spreading into a second phase covering the so-called "soft commodities", as China's burgeoning middle classes develop a taste for a more Western style of eating, enjoying foods such as milk, pork and beef that were once scarce. Like other peoples suddenly able to expunge the memories of socialist starvation, the Chinese are overcompensating for their malnourished past. Thus they have become a net food importer, probably for the first time in their very long history (socialist-inspired famines apart). There's also an aspect of culture; as China embraces the West so its young people are more given to hanging around the branches of Starbucks, McDonald's and KFC that have popped up all over the prosperous east of the nation. The rice bowl is giving way to the burger and shake.
In the past decade alone, meat consumption in China has been rising at an average of 2kg per capita per year, a pattern mirrored elsewhere.
Biofuels
Increasing demand for biofuels has also pushed grain prices higher. So called "phase one" biofuels - bioethanol (a petrol substitute or additive) from grain and biodiesel from palm oil - have met with opposition from environmentalists. Palm oil production has encroached on the remaining rainforest in Indonesia. We are only at the start of the process.
Crucially, though, "second generation" biofuels will use waste material and be a more unequivocally green and economical option; the stalks of grain crops rather than their seeds; surplus cellulose from paper mills; grass cuttings from your lawn.
Links
Source: How China is Eating the World. Sean O'Grady. Indpendent (UK). 2007.11.9