We’re eating more than we’re producing
September 27th, 2012
04:25 PM ET

We’re eating more than we’re producing

By Evan Fraser, Special to CNN

Editor’s note: Evan Fraser is an associate professor of geography at the University of Guelph in Canada and author of Empires of Food: Feast, Famine and the Rise and Fall of Civilizations. The views expressed are his own.

With this summer’s terrible weather decimating America’s corn crop, pundits are suggesting that a food crisis is brewing. This isn’t an idle concern. In 2008, soaring food prices prompted sometimes violent unrest in dozens of countries. In 2010, drought and wildfire destroyed 25 percent of Russia’s wheat; the Kremlin banned grain exports. This sent food prices up, too, triggering the first protests in Tunisia, Algeria and Egypt that ultimately formed the Arab Spring.  Now, drought in the United States has wiped out between 20 percent and 30 percent of what corn farmers thought they were going to harvest, while corn prices have soared to all-new highs.

Will this year’s events send crowds into the streets to topple governments?

Two U.N. reports published earlier this month shed contradictory light on this question. The first report is optimistic.  The September Food Price Index published by the U.N.’s Food and Agriculture Organization (FAO)shows that the price of food did not rise between July and August. More importantly, the price of cereals, when taken as a whole, remained stable. This is very good news.  And while cereals are still expensive relative to historic levels, prices are a bit below those that sparked riots in 2008 and 2010. One reason for this is that thanks to good harvests last year and the year before, we have a fair bit of food stored, and hence have a bit of a buffer. Jose Graziano da Silva, the director general of the FAO, stated “This is reassuring…although we should remain vigilant, current prices to do not justify talk of a world food crisis.”

The second report, also published by the FAO, focuses on the amount of food we produce and use. It is considerably less optimistic and forecasts that in 2012/13 the world will eat more than it will produce.  What’s more, forecasters have downgraded estimates for all of our most important crops: “coarse grains” (which includes the U.S. corn crop) are down 52 million tons, wheat is down 15 million tons and rice is down 6 million tons.  This means 2012 to 13 is set to be the sixth year out of the past eleven that we’ve consumed more than we’ve grown.

A key point in the report is how food stocks help maintain global food security. The United Nations calculates food stocks through what’s called the “stock-to-use” ratio, which is a measure of the surplus food we take from one year to the next. In 2002 to 2003, we had a 25 percent stock-to-use ratio for all grains. This was a respectable buffer. But it’s been steadily falling. Next year, our stock-to-use ratio will likely be 20 percent. This is bad news, especially for people in the developing world who spend a large share of their income on food, as it means there is nothing standing between their food budget and a price shock triggered by bad weather.

But correcting this problem is far from simple because most nations have adopted a just-enough, just-in-time food system that relies on the market to move food around.  While this is economically efficient, it takes strategic planning away from policy makers.

For instance, early in 2012, the U.S. government announced that American corn farmers were on their way to producing a world record harvest. Merchants, fearing a glut and price crash, reduced inventories and the stock-to-use ratio for corn (and the other coarse grains) dropped to a mere 13.3 percent. Then, the drought hit, and the U.S. Department of Agriculture realized that their estimates had been wildly optimistic. With little corn in reserve, commodity markets soared. 

But as noted, prices haven’t gone as high as they might have.  This is partly because we have decent supplies of wheat (stock-to-use ratio is 25 percent) and rice (34 percent), so things may not boil over this year. But, even if we’re OK now, by next summer, we’ll have used up this buffer and consumers in the poorer parts of the world will once again be exposed to the effects of anything that hurts production.

Maintaining a large stock-to use buffer for food is a bit like holding onto a large cash reserve in an investment portfolio.  When times are good – things are stable and the economy is growing – it makes sense to reduce your cash and invest more of your money to get better returns. However, the need for household stability suggests that to weather economic storms, people should save more and create a bit of an economic security blanket to protect their families.

But just like saving your money means you miss all sorts of opportunities you might otherwise enjoy, storing food as a buffer is costly, too. For a poor nation, building the infrastructure to maintain food stores is an expense that few can afford. Managing such systems, meanwhile, has in the past also proven rife with problems such as corruption.

Yet despite these challenges, building the capacity to maintain larger food stores is necessary. Since virtually no one expects the weather over the next few decades to be as accommodating as in the past we need to take the opportunity now to build up our reserves. Only when we have a bigger buffer between urban consumers and the dangerous swings of international commodity markets will we be able to prevent a repeat of the food related political unrest of the past four years.

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Topics: Economy • Egypt • Environment • Food

soundoff (22 Responses)
  1. Doc

    YUM! YUM! I GUESS THAT IS WHY THE BIGGEST PROBLEM IS THE USA IS BEING FAT!

    September 27, 2012 at 4:40 pm | Reply
    • Khadija

      Have you ever seen the size of muslims and their children.
      Meals take hours to eat followed by copious amounts of sugar based deserts.
      Huge amounts of meat is eaten and that is why so many muslims are packed solid.
      Sure Americans are fat also but not like the muslims.

      September 27, 2012 at 5:19 pm | Reply
      • zainab-lucknow-india

        Better fat than dead. LOL !!

        In some Haryana villages in India, the young girls are routinely threatened, abused and killed all under Khap (tribe/clan) verdicts. It is acceptable for the families to feed pesticide pills to the teenage girls and then dispose off their bodies by burning them without any police records.

        September 30, 2012 at 3:35 pm |
      • Ganesh "Gunny" Snouty_Chandigarh_India

        Did you have size of anything particular in mind....sister???? Mwah ha haha

        September 30, 2012 at 3:36 pm |
      • Daniel

        For the last time, stop saying muslims and refer to nationalities, muslims are not a species, not a natinality, it is a religion, get that through your thick skull.

        October 3, 2012 at 10:48 am |
  2. deep blue

    We just need to stop wasting food. We throw away 40% of our food without eating it.
    80 million people a year die of starvation.
    The US has 300 million people, and we waste 40% of our food, only eating 60%.
    Do the math.

    September 27, 2012 at 8:30 pm | Reply
  3. Isaac

    Too many people.

    September 27, 2012 at 8:31 pm | Reply
    • Roma

      Where?

      September 30, 2012 at 7:28 pm | Reply
      • Isaac

        All over the world.
        Especially in muslim countries. :)

        September 30, 2012 at 8:51 pm |
      • Isaac

        Now that you ask; now that I think of it, why is there so many people in sandpit countries?
        These countries have to import a great amount of food because food cannot be grown in sand.
        Everything to guarantee their survival has to be imported and nothing but oil in return.
        What is going to happen when there is no more demand for that oil?
        When there is no more food, no more amenities, who will have enough money to emigrate to civilized countries?
        Who will be left behind?

        September 30, 2012 at 8:56 pm |
  4. deniz boro

    Yes there is a decrease in production this year because of the heat and etc. And yes states are supposed to keep a grain stock to last 2 years for its population. And yes when there are gossips, there are speculations causing the prices to go up higher. Me'thinks the best way to end speculations and increase in food prices is for the States to declare their stocks at hand. And clear their hands of these speculations.
    On the other hand YES we waste more than we eat. Think of all those rotten breads put in the garbage. Traditionally every parent teach his children to take as much as he/she can eat and finish off everything on his/her dish. In Muslim cultural tradition "waste of food" is something neer sin.
    Just count your nation's obeses and the amount of energy and calories they cary around their stomack. That is the national over-consumption you sustain.

    September 27, 2012 at 8:55 pm | Reply
  5. deniz boro

    When you count out your obeses you can get a general percentage of unsatisfied people in your society. Except for those people unfortunately inflated due to another side effect of a medicine people eat if they do not get satisfaction from anything else. This is the interesting point realy. How many unsatisfied people do you have in your society?

    September 27, 2012 at 9:04 pm | Reply
  6. Barbra & Jack Donachy

    Thanks for the post, Evan. Troubled by the perspective, though. "...we need to take the opportunity now to build up our reserves..." To what end? The opportunity that would far better serve humankind's long-term interests would be to take the opportunity to begin to address overpopulation. There will be no long-term food security given current population growth.

    September 27, 2012 at 11:02 pm | Reply
  7. .

    Ever go into a Sam's Club and see all the gi-normous people wearing spandex pants with their carts filled up with big meats and industrial sized boxes of macaroni and cheese? And after they've checked out, they go stock up at the cigarette sales counter.

    And you wonder why we need a healthcare bill? Why not make these fat slobs pay MORE for their healthcare?

    September 29, 2012 at 4:30 pm | Reply
  8. Muhammad

    i am going to have it written it down- since I am illiterate.
    From now on all "fat slobs" have to py MORE for their healthcare".

    September 29, 2012 at 6:55 pm | Reply
  9. Magic Carpet Driving Instructor

    When you use food for auto fuel the price of food is going to rise up, it's so simple. Duh'

    September 30, 2012 at 4:37 am | Reply
  10. Ganesh "Gunny" Snouty_Pitz_Louisiana

    We have invested a lot of resources in India over the past two decades and given a lot of aid to prop it up. There has been no investment on this return. Instead India has squandered all the resources in building nuclear weapons while poverty remains rampant in the country. We need to revisit our relationship with India. American taxpayers will not tolerate this anymore. We need to take care of our own populace going forward. We cannot be exporting jobs to India or giving it financial or technical handouts.It has become too big to govern or create any value for western countries or even for its own population. India needs to be carved up into smaller independent states to be a viable economically and geo politically.

    September 30, 2012 at 11:44 am | Reply
  11. BJ

    Tragically, in India people are dying of hunger. Why are low caste poor Hindus prohibited from eating beef? People stop their cars, and sit for hours waiting for a cow to clear the roadway, thinking it to be sacred. In India cow meat is cheaper than other available meats. Instead of these Brahmins taking care of the low caste peoples of India, they are doing their best to save their "holy" cows instead. This is evil. According to Valmith's Ramayana, God Rama "ATE" meat. So then "why" have these Brahmins given up beef-eating? It's hypocrisy within their own religion.

    September 30, 2012 at 11:52 am | Reply
  12. Zameer Hassim

    It doesn't make sense.

    Governments spend billions to fight wars when they can easily be spending money on farming and farming technologies.

    We could be investing billions into our food production, yet we allow the government to get away with spending it on killing civilians...

    Us Americans SIT BY and eat from our dollar menu's and our fast food chains. Pffft...

    There needs to be a change in thinking.

    September 30, 2012 at 11:57 pm | Reply
  13. Jorge Rosh

    Sachs and investment funds are up in the soup. Literally.
    Goldman Sachs juicy full of ideas for the people of the stock market, created a financial instrument that allows any bird invest their funds in commodities like wheat, rice and coffee. From what you eat is raised, and raised tons of benefits.
    Many bets on the roulette of staple grains markets are responsible for the rise in prices of these, and thus responsible for millions of people can not buy their food requirements.
    Since 2000 until now, no other bubbles that inflate the price of staple foods has almost tripled in parallel to the increase of financial assets in these financial delicacies.
    For Goldman Sachs, invest in loaves and fishes magic expecting their multiplication, they represent benefits year five billion dollars. A lot of money in a few years would to repair global hunger, but of course that is not their purpose, that is not their business, is quite the opposite. Manufactured hunger are starvers.

    October 4, 2012 at 3:11 pm | Reply
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    June 21, 2013 at 10:05 am | Reply

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