The United States is currently in the midst of a severe drought, its worst in 50 years. Half of all U.S. counties have been declared disaster areas. In response, the international prices of maize and soybeans have risen past 2007-08 peaks, when they fueled food riots in more than 30 countries.
There have not been food riots but the world remains in a tenuous position. Another shock to the global food system could spark another food crisis. Here are four things to watch:
The demand for maize has risen drastically in the past 10 years due to increasing demands for livestock feed in emerging economies and biofuel in high-income countries. Production cannot keep up and prices are rising. This is the status quo.
Add in what will be a disappointing maize harvest from a high-production country - the U.S. - and the world is one step closer to a calamitous food crisis.
The U.S. exports 53 percent of the world's maize. Major maize-importing countries will feel these record high prices once local supplies are exhausted.
For example, many African countries have recently harvested maize - or are preparing to do so. They may avoid the full impact of high prices for months. Once their local production is consumed, these countries must rely on maize from international markets where there is no escape from high prices.
NON-FOOD USES OF MAIZE
The U.S. maize crop has three primary uses: food, animal feed, and ethanol. Food makes up the smallest percentage. Most is used for animal feed and the remainder for ethanol. Ethanol "eats first" when it comes to the U.S. maize crop.
The U.S. mandates for ethanol are not adjusted to price shocks or market shortages, though doing so would be an effective tool to control staple food prices. Any disruption or major change in the maize-as-fuel or the maize-for-animals markets will impact the maize-as-food markets. Higher prices will be felt most by poor consumers who rely on maize as a dietary staple.
Unlike during recent food price crises, wheat and rice prices are relatively low, offering poor consumers options other than maize - but wheat prices are heating up.
Severe heat and drought in recent weeks have driven up wheat prices by 50 percent in Russia, Kazakhstan, and the Ukraine - a region that accounts for nearly a quarter of global wheat exports. Iran's wheat harvest was also affected by a severe drought. If the region's wheat harvest is further impacted, export controls are a possibility.
Despite being major wheat producers, North Africa and the Middle East - the world's biggest cereal importers - remain vulnerable to rising wheat prices. In 2011, rising wheat prices were an impetus to the rioting in North Africa that evolved into the Arab Spring.
FAILURE TO LEARN FROM PAST MISTAKES
With two food price crises in recent years and another one looming, what have we learned?
Every year, weather events (drought, floods, fires) significantly impact commodity markets. Climate change is making these weather events more frequent and severe.
Still, the world food supply maintains an overreliance on a few, high-production "bread basket" countries. Low stocks of staple crops, superimposed with financial speculation, have brought the world into a precarious situation where reduced production in one of these bread baskets can destabilize global food prices.
It has happened three times in less than six years, in 2007-08, in 2010-11, and now again. From 2005-2011 rice prices rose 102 percent, wheat 115 percent, and maize 204 percent.
Farmers in the U.S. fall back on government insurance and assistance programs when their crops fail. Investment in similar programs in developing countries would add stability to a volatile market.
There are many developing countries where productivity could be increased to reduce overreliance on imports and benefit rural poor and development in those countries at large. The potential for improvement is enormous.
Providing farmers with knowhow and improved agronomy, seed, and storage methods can produce dramatic effects both for individual families, entire countries, and the globe as a whole.
CALL TO ACTION
Cooperative research between developing and developed countries must increase. The negative harvest news, linked to hot weather and lack of rain, makes it clear that maintaining crop yields under increasing heat and drought conditions is a challenge in both developed and developing countries.
It is an international priority for researchers to collaborate on disease resistance, heat tolerance, and drought tolerance for the world's major food crops. The CGIAR research programs on MAIZE and WHEAT, the G-20 Wheat Initiative, the Wheat Yield Consortium,and the Wheat, Heat, & Drought Consortium are model examples of such international collaboration.
Individual countries must increase investment in agriculture. Agriculture remains one of the best uses of development money. Africa has invested in developing drought-tolerant maize and improving the productivity of maize-legume cropping systems.
Mexico has launched an ambitious program to raise maize and wheat yields across the country by modernizing farming to be more productive, sustainable, and environmentally-friendly. India created an international agricultural research institution to address food problems specific to South Asia.
Comprehensive national and international research approaches can help both smallholders and larger-scale farmers in developing countries to grow enough for their needs and for markets at all levels.
Solutions must include improved agronomy (to maintain or improve soil quality), more efficient use of inputs (water, land, fertilizer, labor), better seed and storage methods (to reduce post-harvest losses), implementing biophysical and molecular research (to increase crop yields), and improving the efficiency of local and regional markets.
The world can avoid repeating the same mistakes by rallying around global action plans such as the CGIAR's MAIZE and WHEAT. The goal is not simply to avoid another food crisis but.to responsibly and efficiently grow enough food to feed the planet.
We have the means to eliminate hunger and malnutrition in spite of climate change and rising demand, but we need political will and investment - or the world will continue to lurch from one food crisis to the next.
Marianne Banziger is the deputy director general for research and partnerships of CIMMYT, the International Maize and Wheat Improvement Center.
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