A Drought in
The New York Times, April 17, 2008
The Deniliquin mill, the largest rice mill in the Southern Hemisphere, once processed enough grain to meet the needs of 20 million people around the world. But six long years of drought have taken a toll, reducing
Ten thousand miles separate the mill's hushed rows of oversized silos and sheds -- beige, gray and now empty -- from the riotous streets of
The collapse of Australia's rice production is one of several factors contributing to a doubling of rice prices in the last three months -- increases that have led the world's largest exporters to restrict exports severely, spurred panicked hoarding in Hong Kong and the Philippines, and set off violent protests in countries including Cameroon, Egypt, Ethiopia, Haiti, Indonesia, Italy, Ivory Coast, Mauritania, the Philippines, Thailand, Uzbekistan and Yemen.
Drought affects every agricultural industry based here, not just rice -- from sheepherding, the other mainstay in this dusty land, to the cultivation of wine grapes, the fastest-growing crop here, with that expansion often coming at the expense of rice.
The drought's effect on rice has produced the greatest impact on the rest of the world, so far. It is one factor contributing to skyrocketing prices, and many scientists believe it is among the earliest signs that a warming planet is starting to affect food production.
It is difficult to definitely link short-term changes in weather to long-term climate change, but the unusually severe drought is consistent with what climatologists predict will be a problem of increasing frequency.
Indeed, the chief executive of the National Farmers' Federation in
Drought has already spurred significant changes in
Scientists and economists worry that the reallocation of scarce water resources -- away from rice and other grains and toward more lucrative crops and livestock -- threatens poor countries that import rice as a dietary staple.
The global agricultural crisis is threatening to become political, pitting the
With rice, which is not used to make biofuel, the problem is availability. Even in normal times, little of the world's rice is actually exported -- more than 90 percent is consumed in the countries where it is grown. In the last quarter-century, rice consumption has outpaced production, with global reserves plunging by half just since 2000. A plant disease is hurting harvests in
All these factors have made countries that buy rice on the global market vulnerable to extreme price swings.
Scientists expect the problem to worsen. The Intergovernmental Panel on Climate Change, set up by the United Nations, predicted last year that even slight warming would lower agricultural output in the tropics and subtropics.
Moderate warming could benefit crop and pasture yields in countries far from the Equator, like
But the scientists said the effect would be uneven, and enormous quantities of food would need to be shipped from areas farther from the Equator to feed the populations of often less-affluent countries closer to the Equator.
The panel predicted that even greater warming, which might happen by late in this century if few or no limits are placed on greenhouse gas emissions, would hurt total food output and cripple crops in many countries.
Paul Lamine N'Dong, an elder in
Sitting on a concrete dais reserved for elders, Mr. N'Dong said on a recent morning, "The price rises very quickly, which means we really have to go and look for money."
"It is live or die," he said.
For farmers in a richer nation like
The rice farmers who do not give up and sell their land or water rights are experimenting with varieties or techniques that require less water.
The accidental beneficiaries of these conditions have been the farmers who grow wine grapes in the river basin where the Deniliquin mill stands silent.
Even with the recent doubling of rice prices, to around $1,000 a metric ton for the high grades produced by
Also selling water rights to grape growers are ranchers like Peter Milliken, who raises sheep on 37,500 acres near
Sheep farmers have already worked out cooperative arrangements to send flocks to whatever fields have recently received rain, sometimes herding or trucking them long distances. Keeping an eye on a flock, Frank Cox, a drover, said recently, "We had to move the sheep because they were dying of starvation, and truck them down here."
The drought is making rice harder to find. For instance, SunRice, the Australian rice trading and marketing giant owned by the country's rice growers, began preparing to mothball the Deniliquin mill five months ago, when it noticed that Australian farmers were planting almost no rice. To make sure that it could continue supplying the domestic market, as well as export markets in
The SunRice purchases became one among the many factors that are making it harder for longtime rice importers elsewhere to find supplies.
Researchers are looking for solutions to global rice shortages -- for example, rice that blooms earlier in the day, when it is cooler, to counter global warming. Rice plants that happen to bloom on hot days are less likely to produce grains of rice, a difficulty that is already starting to emerge in inland areas of
"There will be problems very soon unless we have new varieties of rice in place," said Reiner Wassmann, climate change coordinator at the International Rice Research Institute near Manila, a leader in developing higher-yielding strains of rice for nearly half a century.
The recent reports of the Intergovernmental Panel on Climate Change carried an important caveat that could make the news even worse: the panel said that existing models for the effects of climate change on agriculture did not yet include newer findings that global warming could reduce rainfall and make it more variable.
Seeking Hardier Rice
Many agronomists contend that changes in the timing and amount of rain are more important for crops than temperature changes. Rajendra K. Pachauri, the chairman of the panel, said long-range climate forecasts for precipitation would require another 5 to 20 years of research.
In addition to drought, climate change could also produce more extreme weather, more pest and weed outbreaks, and changes in sea level as polar ice melts. Most of the world's increase in rice production over the last quarter-century has occurred close to sea level, in the deltas of rivers like the Mekong in
Yet the effects of climate change are not uniformly bad for rice. Rising concentrations of carbon dioxide, the main greenhouse gas, can actually help rice and other crops -- although the effect dwindles or disappears if the plants face excessive heat, inadequate water, severe pollution or other stresses.
Still, the flexibility of farmers and ranchers here has persuaded some climate experts that, particularly in developed countries, the effects of climate change may be mitigated, if not completely avoided.
"I'm not as pessimistic as most people," said Will Steffen, the director of the Fenner School of Environment and Society at
Meanwhile, changes like the use of water to grow wine grapes instead of rice carry their own costs, as the developing world is discovering.
"Rice is a staple food," said Graeme J. Haley, the general manager of the town of
The new economics of hunger
Amid brutal convergence of events to hit global market, poor suffer most
The globe's worst food crisis in a generation emerged as a blip on the big boards and computer screens of
As prices rose, major grain producers including
At the same time, food was becoming the new gold. Investors fleeing Wall Street's mortgage-related strife plowed hundreds of millions of dollars into grain futures, driving prices up even more. By Christmas, a global panic was building. With fewer places to turn, and tempted by the weaker dollar, nations staged a run on the American wheat harvest.
Foreign buyers, who typically seek to purchase one or two months' supply of wheat at a time, suddenly began to stockpile. They put in orders on
"Japan, the Philippines, [South] Korea
"We have never seen anything like this before," Voge said. "Prices are going up more in one day than they have during entire years in the past. But no matter the price, there always seems to be a buyer. . . . This isn't just any commodity. It is food, and people need to eat."
The food price shock now roiling world markets is destabilizing governments, igniting street riots and threatening to send a new wave of hunger rippling through the world's poorest nations. It is outpacing even the Soviet grain emergency of 1972-75, when world food prices rose 78 percent. By comparison, from the beginning of 2005 to early 2008, prices leapt 80 percent, according to the United Nations Food and Agriculture Organization. Much of the increase is being absorbed by middle men -- distributors, processors, even governments -- but consumers worldwide are still feeling the pinch.
The convergence of events has thrown world food supply and demand out of whack and snowballed into civil turmoil. After hungry mobs and violent riots beset
To quell unrest, countries including
"This crisis could result in a cascade of others . . . and become a multidimensional problem affecting economic growth, social progress and even political security around the world," U.N. Secretary General Ban Ki Moon said.
The new normal
Prices for some crops -- such as wheat -- have already begun to descend off their highs. As farmers rush to plant more wheat now that profit prospects have climbed, analysts predict that prices may come down as much as 30 percent in the coming months. But that would still leave a year-over-year price hike of 45 percent. Few believe prices will go back to where they were in early 2006, suggesting that the world must cope with a new reality of more expensive food.
People worldwide are coping in different ways. For the 1 billion living on less than a dollar a day, it is a matter of survival. In a mud hut on the Sahara's edge, Manthita Sou, a 43-year-old widow in the Mauritanian desert
Countries that have driven food demand in recent years are now grappling with the cost of their own success -- rising prices. Although China has tried to calm its people by announcing reserve grain holdings of 30 to 40 percent of annual production, a number that had been a state secret, anxiety is still running high. In the southern
Liu Yinhua, a retired factory worker who lives in the port city of
"Almost everything is more expensive now, even normal green vegetables," said Liu, 53. "The level of our quality of life is definitely reduced."
In India, the government recently scrapped all import duties on cooking oils and banned exports of non-basmati rice. As in many parts of the developing world, the impact in India is being felt the most among the urban poor who have fled rural life to live in teeming slums. At a dusty and nearly empty market in one
"If one doesn't have enough to fill one's own stomach, then what's the use of an economic boom in exports?" he said, looking sluggish in the scorching afternoon sun. He said his customers were asking for cheaper goods, like groundnut oil instead of soybean oil.
Even wealthy nations are being forced to adjust to a new normal. In Japan, a country with a distinct cultural aversion to cheaper, genetically modified grains, manufacturers are risking public backlash by importing them for use in processed foods for the first time. Inflation in the 15-country zone that uses the euro -- which includes France, Germany, Spain and Italy -- hit 3.6 percent in March, the highest rate since the currency was adopted almost a decade ago and well above the European Central Bank's target of 2.0 percent. Food and oil prices were mostly to blame.
"A bigger pinch than ever before," said Pat Carroll, a retiree in
The root cause of price surges varies from crop to crop. But the crisis is being driven in part by an unprecedented linkage of the food chain.
A big reason for higher wheat prices, for instance, is the multiyear drought in
This year, at least a fifth and perhaps a quarter of the
"If you didn't have ethanol, you would not have the prices we have today," said Bruce Babcock, a professor of economics and the director of the Center for Agricultural and Rural Development at Iowa State University. "It doesn't mean it's the sole driver. Prices would be higher than we saw earlier in this decade because world grain supplies are tighter now than earlier in the decade. But we've introduced a new demand into the market."
In fact, many economists now say food prices should have climbed much higher much earlier.
After the fall of the Berlin Wall, the world seemed to shrink with rapidly opening markets, surging trade and improved communication and transportation technology. Given new market efficiencies and the wide availability of relatively cheap food, the once-common practice of hoarding grains to protect against the kind of shortfall the world is seeing now seemed more and more archaic. Global grain reserves plunged.
Yet there was one big problem. The global food trade never became the kind of well-honed machine that has made the price of manufactured goods such as personal computers and flat-screen TVs increasingly similar worldwide. With food, significant subsidies and other barriers meant to protect farmers -- particularly in Europe, the
If market forces had played a larger role in food trade, some now argue, the world would have had more time to adjust to more gradually rising prices.
"The international food trade didn't undergo the same kind of liberalization as other trade," said Richard Feltes, senior vice president of MF Global, a futures brokerage. "We can see now that the world has largely failed in its attempt to create an integrated food market."
In recent years, there has been a great push to liberalize food markets worldwide -- part of what is known as the "
Consider, for instance, the French.
The European Union doles out about $41 billion a year in agriculture subsidies, with France getting the biggest share, about $8.2 billion. The 27-nation bloc also has set a target for biofuels to supply 10 percent of transportation fuel needs by 2020 to combat global warming.
The French, whose farmers over the years have become addicted to generous government handouts, argue that agriculture subsidies must be continued and even increased in order to encourage more food production, especially with looming shortages.
Last week, French Agriculture Minister Michel Barnier warned E.U. officials against "too much trust in the free market."
"We must not leave the vital issue of feeding people," he said, "to the mercy of market laws and international speculation."
© 2008 The Washington Post Company