Food Inflation, Food Shortges & Food Riots

Dees Illustration

A devastating global food crisis unlike anything we have ever seen in modern times is coming. Crippling drought and bizarre weather patterns have damaged food production all over the world this summer, and the UN and the World Bank have both issued ominous warnings about the food inflation that is coming.

To those of us in the Western world, a rise in the price of food can be a major inconvenience, but in the developing world it can mean the difference between life and death. 

 

Just remember what happened back in 2008. When food prices hit record highs it led to food riots in 28 different countries. Today, there are approximately 2 billion people that are malnourished around the globe. Even rumors of food shortages are enough to spark mass chaos in many areas of the planet. When people fear that they are not going to be able to feed their families they tend to get very desperate. That is why a recent CNN article declared that "2013 will be a year of serious global crisis". 

The truth is that we are not just facing rumors of a global food crisis - one is actually starting to unfold right in front of our eyes. The United States experienced the worst drought in more than 50 years this summer, and some experts are already declaring that the weather has been so dry for so long that tremendous damage has already been done to next year's crops.

 

 On the other side of the world, Russia, Ukraine and Kazakhstan have all seen their wheat crops devastated by the horrible drought this summer. Australia has also been dealing with drought, and in India monsoon rains were about 15 percent behind pace in mid-August. Global food production is going to be much less than expected this year, and global food demand continues to steadily rise. What that means is that food inflation, food shortages and food riots are coming, and it isn't going to be pretty.

The United States exports more food than anyone else in the world, and that is why the entire globe has been nervously watching the horrific drought in the United States this summer with deep concern.

It has been the worst drought in more than 50 years, and it has absolutely devastated corn crops all over the nation. According to Bill Witherell, the U.S. corn crop this year "is said to be on a par with that of 1988 crop, the worst in the past thirty years."

Sadly, this will be the third year in a row that the yield for corn has declined in the United States.

That has never happened before in the history of the United States.

And coming into this year we were already in bad shape. In fact, U.S. corn reserves were sitting at a 15-year low at the end of 2011.

So where will we be at the end of 2012?

The official estimates for corn yields put out by the U.S. government just keep dropping, but many fear that they aren't dropping quickly enough. There have been some reports on the ground from some areas of the country that have been very distressing. The following is from a recent Wall Street Journal article....

Meanwhile, scouts with the Pro Farmer Midwest Crop Tour on Monday reported an average estimated corn yield in Ohio of 110.5 bushels per acre, down from the tour's estimate of 156.3 bushels a year ago. In South Dakota, tour scouts reported an average yield estimate of just 74.3 bushels per acre, down from 141.1 bushels a year ago.

Those are catastrophic numbers.

But farmers are not the only ones that have been impacted by the dry weather. A recent article by Chris Martenson summarized some of the other effects of this drought.....

Even though the mainstream media seems to have lost some interest in the drought, we should keep it front and center in our minds, as it has already led to sharply higher grain prices, increased gasoline costs (via the pass-through of higher ethanol costs), impeded oil and gas drilling activity in some areas (due to a lack of water), caused the shutdown of a few operating electricity plants, temporarily reduced red meat prices (but will also make them climb sharply later) as cattle are dumped in response to feed- and pasture-management concerns, and blocked and/or reduced shipping on the Mississippi River.

All this and there's also a strong chance that today's drought will negatively impact next year's Winter wheat harvest, unless a lot of rain starts falling soon.

Ranchers have had a particularly hard time during this drought. If you expect to pay about the same for meat this time next year as you are doing now you are going to be deeply disappointed. The following is from a recent Reuters article....

The worst drought to hit U.S. cropland in more than half a century could soon leave Americans reaching deeper into their pockets to fund a luxury that people in few other countries enjoy: affordable meat. 

Drought-decimated fields have pushed grain prices sky high, and the rising feed costs have prompted some livestock producers to liquidate their herds. This is expected to shrink the long-term U.S. supply of meat and force up prices at the meat counter.

All over the western United States pastures have been destroyed and there is not enough hay. It would be hard to overstate the damage that this nightmarish drought is doing to our ranchers....

I spoke with Caldwell [of Indiana horse rescue] and a number of other horse-rescue organizations around the country by telephone this week. The relentlessly hot dry weather, amplified in many areas by wildfire, has been devastating to farmers, ranchers and other horse owners. 

'Everybody is using their winter hay now. The pastures are destroyed and they probably won’t recover before winter,' said Caldwell. 'The price of hay has doubled, and the availability is down by 75 percent.' 

Caldwell is somewhat sanguine about his own lot, but not optimistic about what lies ahead. 

'Today the problem is not nearly as bad as it’s going to be,' he told me. 'It’s terribly bad today, but it is going to get a lot worse.'

But of course as I mentioned earlier this is not just an American problem.

The truth is that the entire globe is facing a rapidly growing food crisis.

According to the UN, the global price of food rose 6 percent in the month of July alone.

According to the World Bank, global food prices actually rose 10 percent during July.

Either figure is really, really bad.

The other day, the UN Food and Agriculture Organization, the International Fund for Agricultural Development and the World Food Program issued a joint statement in which they stated the following....

'We need to act urgently to make sure that these price shocks do not turn into a catastrophe hurting tens of millions over the coming months.'

If the price of food at our supermarkets suddenly went up 20 percent that would really stretch our family budgets here in the United States, but we would survive.

On the other side of the globe, such a price change can mean the difference between life and death. The following is from the CNN article mentioned above....

But step outside the developed world, and the price of food suddenly becomes the single most important fact of human economic life. In poor countries, people typically spend half their incomes on food -- and by 'food,' they mean first and foremost bread. 

When grain prices spiked in 2007-2008, bread riots shook 30 countries across the developing world, from Haiti to Bangladesh, according to the Financial Times. A drought in Russia in 2010 forced suspension of Russian grain exports that year and set in motion the so-called Arab spring.

Already, 18 million people in Niger, Mali, Chad, Mauritania and Senegal are dealing with very serious food shortages.

In Yemen, things are even worse....

Yemen has a catastrophic food crisis. Nearly half the population, 10 million people, does not have enough to eat. While 300,000 children are facing life threatening levels of malnutrition. 

The United Nations says Yemen is already in the throes of a disaster. 

'The levels are truly terrible. Whatever we do thousands upon thousands of children will die this year from malnutrition,' Unicef's man in Yemen, Geert Cappelaere, said. 

'In some areas child malnutrition is at 30%, to put it in context, an emergency is 15%. It is double that already.'

But this is just the beginning. These food shortages are going to spread and we will eventually see food riots that will absolutely dwarf the food riots of 2008.

Many scientists fear the worst. Some are even now warning that food shortages will become so severe that they will eventually force much of the globe on to a vegetarian diet....

Leading water scientists have issued one of the sternest warnings yet about global food supplies, saying that the world's population may have to switch almost completely to a vegetarian diet over the next 40 years to avoid catastrophic shortages. 

Humans derive about 20% of their protein from animal-based products now, but this may need to drop to just 5% to feed the extra 2 billion people expected to be alive by 2050, according to research by some of the world's leading water scientists. 

'There will not be enough water available on current croplands to produce food for the expected 9 billion population in 2050 if we follow current trends and changes towards diets common in western nations,' the report by Malik Falkenmark and colleagues at the Stockholm International Water Institute (SIWI) said.

The days of very cheap meat are coming to an end. Meat will be increasingly viewed as a "luxury" around the globe from now on.

Sadly, there are some in the financial world that actually intend to make lots of money off of this crisis....

The United Nations, aid agencies and the British Government have lined up to attack the world's largest commodities trading company, Glencore, after it described the current global food crisis and soaring world prices as a 'good' business opportunity. 

With the US experiencing a rerun of the drought 'Dust Bowl' days of the 1930s and Russia suffering a similar food crisis that could see Vladimir Putin's government banning grain exports, the senior economist of the UN's Food and Agriculture Organisation, Concepcion Calpe, told The Independent: 'Private companies like Glencore are playing a game that will make them enormous profits.'

Does that disturb you?

It should.

Driving up the price of food for starving people is not a good way to make money. Food is one of our most basic needs. When people are deprived of food they become very desperate.

Just look at what is already happening in Spain. The economic crisis in that country has just begun, and people are already looting supermarkets. You can see a video news report about Spanish activists looting 3 tons of food from local supermarkets right here.

Much of that food was donated to food banks, but in the future I am sure that the desperate "activists" will not be so generous when things get really tight.

In other areas of Spain, large numbers of people have been filmed digging through trash dumpsters for food.

Could you ever see yourself doing that? Don't be so sure that hunger will never come to America. Right now, a record 46.7 million Americans are on food stamps, and anti-hunger organizations all around the country are reporting more of a need than ever before.

For now the federal government is able to feed the tens of millions of Americans that do not have enough money for food, but what happens when a day comes when the federal government stops doing that?

And what happens if the drought in the United States continues throughout the winter and into next summer and Dust Bowl conditions return to the United States?

In a previous article entitled "17 Signs That You Better Start Preparing For A Nightmarish Global Food Crisis", I detailed some more of the reasons why people need to start preparing for food inflation and food shortages.

In the past we could always go out to the supermarket or to Wal-Mart and fill up our shopping carts with huge piles of very cheap food whenever we wanted to.

It will not always be that way.

Get prepared while you still can.

Meanwhile, many Americans continue to enjoy life as if nothing will ever change. For example, the "Rich Kids of Instagram" have been very busy showing off their wealth all summer long. You can see some of the ridiculous ways that they are blowing their wealth right here.

Sadly, they are just a product of our degenerating society. We have piled up wealth in these troubled times while the rest of the world has suffered.

But even our great wealth was not enough for us so we went out and borrowed trillions upon trillions of dollars. We have accumulated the greatest mountain of debt in the history of the world, but we are still not satisfied.

In the end, we will weep and howl in misery as everything that we have built falls apart around us.