The global impact of the U.S. drought
August 6th, 2012
11:16 AM ET

The global impact of the U.S. drought

By Isobel Coleman, CFR

Isobel Coleman is a senior fellow for U.S. Foreign Policy and director of the Civil Society, Markets, and Democracy Initiative at the Council on Foreign Relations. This entry of Democracy in Development originally appeared here. The views expressed are her own.

Global food prices are spiking upwards because of widespread drought in the U.S., the breadbasket of the world. Nearly 80 percent of the country’s corn crops and over 11 percent of its soybean crops – which are major exports for the U.S. and an important source of animal feed – have been affected. Last month, soybean and corn prices were at record-breaking highs. Poor weather conditions in Kazakhstan, Russia, and Ukraine are also inflating global wheat prices; these countries typically produce around one-quarter of the world’s wheat exports. The U.S. itself exports more wheat, corn, and soybeans than any other country.

While high food prices are devastating for importing countries that are already deeply food insecure, they can also be economically destabilizing for lower- and middle-income countries with big populations that import large amounts of food. Around the world, shortages and price spikes of everyday goods can throw societies into unrest and conflict. The current spike in food prices begs comparisons with other recent rises in food price that led to widespread protests. In 2008, high food prices incited protests and turmoil in a number of countries, including Egypt, Ethiopia, Indonesia, and the Philippines.

Arguably, food prices were one precipitating factor of the Arab Spring; in a report on the phenomenon, The Economist notes that in Egypt, local food prices increased by 37 percent from 2008 to 2010. The New England Complex Systems Institute (NECSI) has also done important work on the numerically demonstrable link between food crises and political instability in the MENA region, even “identify[ing] a specific food price threshold above which protests become likely.”

Many governments subsidize food, so rising prices puts significant pressure on their budgets. Egypt is a case in point: the largest importer of wheat in the world, Egypt spends about 4 percent of its total budget each year on food subsidies, a drain on its coffers. As I’ve written previously, its subsidy programs are in need of reform. As the Egypt Independent reports, the government’s draft budget proposes keeping overall subsidy levels the same, but shifting more towards food subsidies and away from fuel subsidies, which are particularly wasteful and tend to go toward the better off. This could help take the edge off the current food crisis, although given internal political dynamics in Egypt, the budget’s future is uncertain. At the same time, the government is revising price controls on farmers that keep the amount they are paid for wheat artificially low. Increased prices for farmers would provide incentives for them to plant more wheat, although this doesn’t help in the short term.

How can the U.S. minimize the impact of the drought on the rest of the world? There are no quick fixes, but as I and others have argued, the U.S. should reevaluate the 2007 law that compels gasoline to contain a certain amount of ethanol – a policy that channels some 40 percent of U.S. corn into gasoline and away from food each year. The New England Complex Systems Institute has also done some fascinating research on the role of ethanol as well as investor speculation in food prices; as its president Yaneer Bar-Yam says, “Given the possibility of price-driven famines, burning corn for cars is unconscionable.” Scrapping the ethanol policy would reduce pressures on corn prices. This would be no panacea to today’s tight global food supply chain, but it could mitigate the growing financial hardship and suffering around the world caused by the current spike in food prices.

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Topics: Economy • Egypt • Food • Middle East

soundoff (33 Responses)
  1. 100% ETHIO

    Planet Earth, never expand its size. Not even an inch, but it keep shrinking day by day, when its harmed and eroded by natural and human disasters.

    More than 10% of the Earth locations are occupied by Cemeteries and other unnecessary Buildings. That added-up to minimized its sizes and making it impossible to cultivated food products.

    !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    In our time, we proofed the U.S. is a steer-wheel and tractor with engine for the rest of the World, who are remained idle-trailers, ready to be pooled or/and pushed by US.

    Look around, we believe, it is our Almighty God given right to do as we damn well please and do whatever the hell/blessed we want, if it comes to our interests.

    There are those who oppose wars due to humanitarian reasons, and yet others who point to the economic costs of waging wars abroad, but most don't realized that change comes and started from US to give them the premeditated lifestyles.

    We believe in change, that started from US, then to others.

    We trust IN ALMIGHTY GOD, that we share the good spirit with others.

    August 6, 2012 at 12:41 pm | Reply
  2. joe anon 1

    no problem. israel, the chosen one, will save amuderka.

    August 6, 2012 at 1:05 pm | Reply
  3. joe anon 1

    apparently there is a censor.

    August 6, 2012 at 1:05 pm | Reply
    • Marine5484

      Yes joe, there is.

      August 6, 2012 at 2:11 pm | Reply
  4. deniz boro

    Increase in solar flares was predicted ages ago. Allotment of products to be produced in effected areas should have been changed. The world is affected of the El Nino year together with increased solar activity. But such environmental changes are below the concern of all politicians of the world.

    August 6, 2012 at 1:45 pm | Reply
    • Nina

      Deniz – how can you say that?
      do you have any idea how much the civilized world has put into researching the phenom?
      Here are a few places for you to go and educate yourself so that you do not keep sounding so ignorant:

      http://www.epa.gov/climatechange/

      http://www.ft.com/intl/cms/s/0/0ae7869c-477f-11e1-9a92-00144feabdc0.html#axzz22nCcgztd

      http://www.ambafrance-ca.org/article2102.html

      http://climatechange.gc.ca/default.asp?lang=en&n=e18c8f2d-1

      http://www.enn.com/climate/article/26927

      August 6, 2012 at 2:39 pm | Reply
      • deniz boro

        Researches and lots of summits and talks have been made to no substantial result. People can not eat research report files.I still do not see any actual shifting of agricultural fields, products nor irrigation methods. Only genetically altered and possibly unhealthy seeds have been produced so far. It was known that all weather conditions will be in the extreem. More rain and storms in Northern regions and dessertification in some Southern areas; telecommunication problems connected with solar radiation; possibly more skin cancer cases. Under such medium term weather predictions at least a 25% different grain planting strategy might have been adopted.
        Nina, I am perfectly aware of the efforts of the worldwide independent organizations. However, it does not help when it is not put to action, implemented, let alone imposed. The problem is that we face a trio crises; culmination of the solar circle, El Nino; and 5 major elections in a row.

        August 6, 2012 at 5:58 pm |
      • Nina

        Deniz – My research did produce the following that any individual can do:
        1. Reduce, Reuse, Recycle; 2. Use Less Heat and Air Conditioning; 3. Change a Light Bulb; 4. Drive Less and Drive Smart; 5. Buy Energy-Efficient Products; 6. Use Less Hot Water; 7. Use the "Off" Switch; 8. Plant a Tree; 9. Get a Report Card from Your Utility Company; 10. Encourage Others to Conserve.
        Essentially, to blame the civilized world for not actively pursuing measures to eradicate the problem is wrong. What about China, Russia and the underdeveloped world. The last time I was in the ME, there was garbage, mostly plastic everywhere and especially along waterways.

        August 6, 2012 at 6:52 pm |
    • sam

      Well said, deniz. Thank you. The right-wing politicians in Washington are only concerned with the military aspect of all of this and not the economic one.

      August 6, 2012 at 3:44 pm | Reply
      • Nina

        Okay, so what has the muslim world done to prepare?

        August 6, 2012 at 3:49 pm |
      • muslim traitor

        Well Sam or Quigley whatever you are today can you answer Nina question?

        August 7, 2012 at 8:36 am |
  5. sam

    This definately will not help our economy!

    August 6, 2012 at 2:08 pm | Reply
  6. Glenn Doty

    It's worse than you think.

    Google "agricultural apocalypse"

    This drought has consistently been underestimated and under-reported.

    August 6, 2012 at 3:35 pm | Reply
  7. Hahahahahahahahahahaha

    It's pretty funny how the Red States are asking for a Government Bailout. Hahahahahahahahaahhahahahaha

    August 6, 2012 at 4:17 pm | Reply
  8. deniz boro

    Nina; Plus 1- use local and seasonal food (they do not require additional transportation and packaging energy); 2- do not accept unnecisarry packaging material; 3- do not favor foods with additives for longer shelf life (they encourage farmers to produce uniform, tasteless unhealthy stuff for more money); 4- Keep on asking for recyclable energy; wind, solar or at least hydro- they will repent in the end; 5- educate and be an example for the new generation; 6- Encourage any local folk to be more aware of the waste we produce
    And all over in the short term try to educate people in the actual food they need for their health. No JUNK FOOD; NO REFINED SUGAR, SALT OR FLOOR.....ETC.

    August 6, 2012 at 7:19 pm | Reply
    • Nina

      Agreed!

      August 6, 2012 at 8:28 pm | Reply
      • deniz boro

        Nina I did like your culture and etc. I belive you may become more valuable if you say your true feeling rather than your resentments.

        August 6, 2012 at 10:37 pm |
      • Nina

        Deniz – the minute the islamists rise above the hate mongering; the minute they stop with the tiring lies about how hard they are done by the Jews and the Americans and the civilized world; the minute they decide they love their children more than they hate, then we will have some sort of peace. Noone is saying we will always get along but at least if we can communicate honestly, then we will all advance together.

        August 6, 2012 at 11:14 pm |
    • Nina

      Now, stop all the BS rhetoric, and the attempts at blame, and the constant insults and maybe we can divert some of those funds from defence to offense. Maybe heaven can be on earth!

      August 6, 2012 at 8:30 pm | Reply
      • deniz boro

        With MANNA falling on Earth? Remember that in the Old Testament it said those who collected more manna then they need swa that it dissapeared in the morning.

        August 6, 2012 at 10:11 pm |
      • Nina

        So you do not want to stop the BS then. Okay have it your way!

        August 6, 2012 at 10:23 pm |
      • deniz boro

        Time gap in between answering might have caused a misunderstanding between You, Nina and me. I am not a Muslim extreemist. I am born a Turkish Muslim, which generally means I am more Protestant-like or am not restricted by strict, imposed Sheriah. I believe in God, but can question the current religious trends- in all religions. Furthermore I do enjoy a free media to search for what I do not know, or have doubts about. I do not know what you mean by a "BS" that is supposed to be hateful. At least the Turks/ Muslims in by area do not have a special hatred against Jewish people or Americans. We do have a resentment for their unfair bahaviour. And do not trust them anymore. But that is not extended to the individuals. All people are the same in the soul and heart. Noone is different.This is the reason I am writing this to you even though I will not comment on GPS anymore. But I asked you to open up your heart and you did. And this is my responsibility towards you.

        August 14, 2012 at 2:57 pm |
  9. Polaris

    Let's see, the planet is gaining approximately 1 billion humans every 15 years. Meanwhile, fresh water is being depleted much faster than it can be replenished, and arable land is in decline world-wide. We have an ever increasing demand, while supplies continue to drop.

    This can't go on forever; something is going to give.

    August 6, 2012 at 9:29 pm | Reply
  10. deniz boro

    The good news is that El Nino lasts for only one year. And the solar extreme is doing its wost this year and will sublime gradually.. On the coming 5 years... But Polaris while previously wheat growing land can be converted into rice growing land İ and wheat growing land into potato .... Well I do not know, But there must be a solution.

    August 6, 2012 at 10:24 pm | Reply
  11. deniz boro

    I am not realy informed on agriculture. But given the predicted weather conditions of the next 2-3 years what shouls have been planted instead of the damaged product. What would have survived or benefitted from these conditions? It should not be an hard issue to assess? I governors do not rely on such forsights, they may as well risk 25 percent of plantation on such "ALTERNATIVE PLANTING". Well rather than loosing 60% of the product to so called Force Majeaur???

    August 6, 2012 at 10:32 pm | Reply
  12. Joe Peschi

    The drought in the northern hemisphere will remove the equivalent of what is needed to feed 200 million people for a year (based on current damage), and it could still get worse.
    If we don't stop ethanol production now, we could be looking at a world on fire this winter, not to mention if next year will also happen to be bad for food production.

    http://zoltansustainableecon.blogspot.com/2012/07/ethics-of-ethanol-amid-us-drought.html

    August 6, 2012 at 10:37 pm | Reply
  13. Boaz

    Who knew that the greatest country in the world – USA – was also susceptible to drought! Mother nature most certainly does not discriminate. We are living in such a globalized world where everything is intertwined and compliment each other. It's fascinating how the symbiotic relationship therein is quickly destabilized when one/more aspect(s) is/are affected. Case in point the drought crisis.

    The solution to the drought crisis and inflated food prices isn't necessarily as straightforward as some people put it. It's high time they invested in developing healthy drought resistant crops that are not easily affected by unprecedented high temperatures like the one we are currently experiencing. Times have changed and so has the weather pattern; I do not see an improvement in the weather, if anything it's going to get worse in the near future. The federal government must act now or we'll all suffer – including the rest of the world.

    August 7, 2012 at 12:49 am | Reply
    • USSR

      Боаз, а кто Вам сказал, что США самая большая страна в мире?

      August 7, 2012 at 8:38 am | Reply
  14. Matt

    Not easy with the ethanol reduction, there are oil sanctions on Iran.

    August 9, 2012 at 11:56 pm | Reply
  15. Joseph McCarthy/Quigley/LyndsieGraham/krm1007 ©™/Joe Collins/J. Foster Dulles/Marine5484

    I am a useless piece of camel dung. I post anti American, anti GB, anti semite, anti India, anti modern anything because I am a good moooooslem. I steal people's monikers because I am so ashamed of myself and post the most stupid comment. When people get angry with me, I claim insanity. I am the same guy.

    August 18, 2012 at 8:59 am | Reply
  16. deniz boro

    You know Joseph camel dung, or any short of animal cake may end up to be the most sustainable energy form in the end. Than people will realy be fighting over well "SITZ".

    August 18, 2012 at 2:35 pm | Reply
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    Howdy are using WordPress for your weblog platform? I am new to the blog world but I'm trying to obtain started and set up my own. Do you need any html coding expertise to make your own weblog? Any help would be greatly appreciated! 手機行動電源 http://www.powerbankland.com

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