Global Agriculture Supply Worsening May Spur Food Shortages, Rogers Says
“We’ve got to do something or we’re going to have no food at any price at times in the next few years,” Rogers said in a Bloomberg Television interview with Rishaad Salamat today in Singapore. “I still own agriculture. If I found something to buy, I would buy it.”
Rogers joins former United Nations Secretary General Kofi Annan, the UN Food & Agriculture Organization and the World Bank, in highlighting the need to boost global food production and address issues pushing prices higher. Group of 20 farm ministers agreed last week to increase agriculture output, set up a crop database and limit export bans to tackle what French President Nicolas Sarkozy calls the “plague” of rising food prices.
Monthly food prices tracked by the FAO have surged nine times in the past 11 months and last month stayed near a record reached in February, as global demand for corn and wheat outstripped production and drought and flooding ravaged harvests. The World Bank estimates higher food prices have pushed 44 million more people into poverty.
China, the world’s largest consumer of grains, energy and metals, has raised interest rates four times since October and increased bank reserve requirements nine times to tame above- target inflation. The nation’s food-price inflation was at 11.7 percent in May, matching levels in March and November when they were at the highest since July 2008, the year of the global food-price crisis.
Global stockpiles of corn, the most-consumed grain, are forecast to drop to 47 days of use, the fewest since 1974, data from the U.S. Department of Agriculture show. Inventories are declining as demand continues to outstrip production that’s forecast to rise to a fifth consecutive year of record.
The proportion of the U.S. corn harvest going to ethanol has almost quadrupled since 2002 and will reach 40 percent in the current marketing year, according to USDA data. Ethanol output has increased more than six-fold since 2002, boosted by federal renewable fuel standards and subsidies now being scrutinized by Congress.
The Standard & Poor’s GSCI Agriculture Index fell 9.6 percent this quarter, the first loss since the first three months of 2010. While corn has lost 4.7 percent this quarter, the grain is still 92 percent costlier than it was a year ago, making it the best performer in the index. Corn traded at $6.685 a bushel in Chicago today.
Inventories of wheat, used in making pasta, noodles, bread and feed for hogs and poultry, will drop to a three-year low of 184.26 million metric tons before next year’s Northern Hemisphere harvest, as output misses demand for a second year, the USDA said.
“Production just hasn’t been able to respond to new demand,” Michael Creed, an agribusiness economist at National Australia Bank Ltd., said in a phone interview from Melbourne today. Demand continues to outstrip global harvests because of rising ethanol production in the U.S. and China’s surging demand for meat, Creed said.
“Grain is a solid input into all those food sectors and so there’s really no way to go to avoid grain-based inflation,” John Bryant, chief executive officer of Battle Creek, Michigan- based Kellogg Co., the largest U.S. maker of breakfast cereal, said in a June 2 conference.
Unless governments come together to successfully address the issue of food security, “hopes for wider international cooperation looked doomed,” Annan, who served as UN Secretary General from 1996 to 2007, said last week.
“We have serious problems in inventories” of farm products, Rogers said.
To contact the editor responsible for this story: James Poole in Singapore at firstname.lastname@example.org
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