“If we have any kind of weather problem in the northern hemisphere, we don’t have enough corn.” This was the alarming verdict of Alberto Weisser, chief executive of Bunge, during last Thursday’s presentation of first quarter results for the US agribusiness and food multinational.
Whilst the motive of questions posed by financial analysts on the Bunge conference call was related to profit forecasts, low corn stocks have also been a concern amongst agencies monitoring global food security.
“We do need good weather,” repeated Weisser, without mentioning that the northern hemisphere already has a weather problem.
Parts of Europe are experiencing unusually high temperatures and shortage of rain. The UK Met Office has warned that both March and April could be the driest for 50 years. This may be too early to affect the corn crop cycle but does not augur well for a stable summer season.
More commonly known as maize in the southern hemisphere, corn influences the price of other grains and food commodities traded on world markets. Its cost and availability impact the volume of food aid that major humanitarian donors are able to source from the US and elsewhere.
Other developments shortly before and after the Bunge press conference illustrate the stark contrast between the ability of rich and poor regions of the world to cope with rising food prices.
Newly published US consumer spending figures for March brushed aside the implications of food costs. The average American family spends less than 10% of household income on food.
The price of gasoline has instead been the center of public concern. This explains why 40% of the 2011 US corn harvest is expected to be converted into ethanol, despite the stressful repercussions for global food stocks.
A very different consumer spending analysis has been released by the Asian Development Bank in advance of its annual meeting which starts tomorrow.
Drawing data from 25 developing countries in the region, the Bank concludes that food inflation of just 10% is enough to push 64.4 million people below the international poverty line. “Poor households allocate more than 60% of their consumption to food,” explained ADB Chief Economist Changyong Rhee.
Annual food inflation to early 2011 is such that “the estimated increase in the number of poor due to a 10% increase in domestic food prices may have already occurred,” warns the report. The Bank also points out that prices are rising further.
Asia accounts for two thirds of world poverty. Africa is the location for the remaining third and is even more vulnerable to price inflation.
The implication of the ADB analysis is that global poverty has increased by over 100 million due to the spike in food prices over the last year.
Evidence for the added sensitivity in Africa is seen in the simmering risk of public unrest in several countries. What started earlier this month in Uganda as a peaceful “walk-to-work” protest over rising food prices has provoked a heavy-handed response by President Musoveni’s security forces.
Responsibility for monitoring the world’s supply and demand for food lies with the UN Food and Agriculture Organization. The timing of the current crisis is awkward for the FAO due to the forthcoming retirement of its long-serving Director-General, Jacques Diouf.
The selection process for his replacement, due to be chosen in July, has now moved a step forward. Six shortlisted candidates have released 4-page statements to promote their credentials.
All the candidates are men, not one of them from Africa or South Asia where hunger and malnutrition are most acute. Only the candidate from Iraq included any specific reference to the human right to food in the context of his plans.
Another multilateral body with the power to energize global food supplies is the World Trade Organization. Its Doha Development Agenda was devised as a new trade round which would assist poor countries in expanding exports of agricultural products.
The process has been moribund for some years. On Friday a fresh attempt at resuscitation expired with WTO Director-General Pascal Lamy lamenting “a loss of interest by political leaders in many quarters.”
Constructive proposals for global food security last week were therefore left to the leading humanitarian agency, Oxfam International, which has released a research report with the pertinent title: “Who will feed the world?”
The report grapples with the apparently irreconcilable differences between 500 million tiny family farms across the developing world and industrial agribusiness, hungry for new markets and land.
The two can co-exist, says Oxfam, by “making large investments pro-poor.” This requires stringent legal and political safeguards for the rights of poor farmers. However, the report stops short of clarifying how such conditions might be achieved in countries of weak institutional capacity.
For now it seems that the only winners from the food crisis are the agribusiness giants such as Bunge, whose profit for three months totalled $232 million. “It’s probably our best first quarter ever in agribusiness,” said Bunge chief executive Alberto Weisser.
this article was first published in the OneWorld section of Yahoo World News