The Price of Feed is Soaring, and the Price of Food Will Follow

And what do you think the reaction is going to be? A reduction in ethanol or a reduction in the US consumption of meat? Farmers throughout the country face a Fourth of July where big decisions are going to be made--cut costs or go under.

“This used to be 50 bucks for the full barrel,” [David] Hale said, pointing to a barrel of chicken feed.

And now?

“Seventy-five dollars - a fifty-percent increase," he said.

“All these cattle will eat 40 lbs. of feed a day and it went from two cents to nine cents a pound for that feed, that's a big big difference," [Steve] Foglesong said.

Corn prices are at the highest levels they’ve ever been; and meat farmers are hit especially hard.

It takes 2.6 lbs of corn to make one pound of beef or chicken. It takes 3.6 lbs. of corn to make a single pound of pork.

“Chicken feed is supposed to be an idiom for 'cheap,' right?" Hale said.

But not any more. The mountains of corn it takes to feed Hale’s chickens and Foglesong’s cows are getting more expensive, because of increased domestic demand from ethanol plants, higher overseas demand thanks to a weak dollar, increased transportation costs - and let’s not forget tight supplies.

As feed prices soar, the question over how much ethanol we are going to manufacture in this country becomes a hot topic for discussion. Before Iowa came along in the Presidential primary process, you heard a lot of good things--now, you hear virtual silence. The scarcity of materials and the cost of making it make this a bad year for ethanol.

The recent floods in the Midwest wiped out an estimated two million acres of corn and soybean crops.

“The only thing a guy's got the opportunity to do is cut back on the number of cows he's carryin', because he doesn't have any feed for 'em,” Foglesong said. “So those cows go to market."

And that means sticker shock at the grocery stores, as farmers fold under pressure of high feed prices.

Now, if people are already facing a dilemma between food and gas for their car, how much do you want to bet they're going to cut down on expensive foods--and that means red meat and other high cost staples of the dinner table.

The FDA blows off the GAO

Typically, when the Government Accounting Office says that a government agency should do something, it does so with the best interests of the American people in mind. The Food and Drug Administration (FDA) typically blows them off and does whatever it wants. Which is usually nothing.

The Food and Drug Administration (FDA) is responsible for ensuring the safety of roughly 80 percent of the U.S. food supply, including $417 billion worth of domestic food and $49 billion in imported food annually. Changing demographics and consumption patterns along with an increase in imports have presented challenges to FDA. At the same time, recent outbreaks, such as E. coli from spinach and Salmonella from tomatoes, have undermined consumer confidence in the safety of the food supply.

In November 2007, FDA released its Food Protection Plan, which articulates a framework for improving food safety oversight.

In January 2008, GAO expressed concerns about FDA's capacity to implement the Food Protection Plan and noted that more specific information about the strategies and resources needed to implement the plan would facilitate congressional oversight. This testimony focuses on

(1) FDA's progress in implementing the Food Protection Plan,
(2) FDA's proposal to focus inspections based on risk, and
(3) FDA's implementation of previously issued GAO recommendations intended to improve food safety oversight.

To address these issues, GAO reviewed FDA documents, such as FDA's operations plan, and FDA data related to the plan. GAO also interviewed FDA officials regarding the progress made. GAO also analyzed FDA data on domestic and foreign food firm inspections. GAO also analyzed the status of past recommendations.

So that all sounds well and good, doesn't it? Hundreds of people have been sickened this past week--and the US tomato industry is collapsing.
What is the FDA doing to comply? To protect American citizens?

Since FDA's Food Protection Plan was first released in November 2007, FDA has added few details on the resources and strategies required to implement the plan. FDA plans to spend about $90 million over fiscal years 2008 and 2009 to implement several key actions, such as identifying food vulnerabilities and risk. From the information GAO has obtained on the Food Protection Plan, however, it is unclear what FDA's overall resource need is for implementing the plan, which could be significant.

For example, based on FDA estimates, if FDA were to inspect each of the approximately 65,500 domestic food firms regulated by FDA once, the total cost would be approximately $524 million. In addition, timelines for implementing the various strategies in the plan are also unclear, although a senior level FDA official estimated that the overall plan will take 5 years to complete.

Importantly, GAO has noted that public reporting is the means through which the federal government communicates the results of its work to the Congress and the American people. FDA officials told GAO that they had prepared a draft report on progress made in implementing the Food Protection Plan, but as of June 4, 2008, FDA told GAO that the Department of Health and Human Services had not cleared the report for release. The Food Protection Plan identifies the need to focus safety inspections based on risk, which is particularly important as the numbers of food firms have increased while inspections have decreased.

For example, between 2001 and 2007, the number of domestic firms under FDA's jurisdiction increased from about 51,000 to more than 65,500, while the number of firms inspected declined slightly, from 14,721 to 14,566. Thus, conducting safety inspections based on risk has the potential to be an efficient and effective approach for FDA to target scarce resources based on relative vulnerability and risk. FDA has implemented few of GAO's past recommendations to leverage its resources and improve food safety oversight.

Since 2004, GAO has made a total of 34 food safety related recommendations to FDA, and as of May 2008, FDA has implemented 7 of these recommendations.

Yep--the FDA is in compliance with about 21% of what the GAO recommends. That's a great track record. But--when all is said and done--it's a great metaphor for where we stand today. The American people are in danger because this administration cannot protect them from bad food supply issues that have already been identified and have already been submitted to them as recommendations. We're not talking about unknown threats, variables no one can anticipate or obscure issues that only affect a handful of people. We are talking about major problems facing millions of consumers that have been identified by the GAO.

And, sadly, that's the Bush administration--21% in the approval ratings, and 21% in the compliance ratings.

Pentagon Begins Assessing Impact of Rising Food Prices

In light of growing unrest around the world over rising food prices, the chairman of the Joint Chiefs of Staff is asking for a closer look at the crisis and its security implications, a U.S. military official said Monday.

Adm. Michael Mullen has instructed his staff to investigate the matter so his office can be prepared in the event the crisis becomes a defense issue, the source said.

It's the first time the highest levels of the U.S. military have become involved in the issue.

The crisis first gained international attention when riots broke out several weeks ago in Haiti and Egypt over the high cost of food.

The U.S. military official emphasized that there is "no military planning" and no intention of getting U.S. troops involved in the crisis.

The source acknowledged there is little the U.S. military can do, but said, "This is an area that has certainly got our attention now."

Even as they look into the matter, Mullen's staffers are not expected to come up with any formal recommendations to the chairman.

The rising cost of bread in Egypt has led to government crackdowns

Police clashed with protesters in the Nile Delta city of Mahalla on Sunday, firing tear gas and arresting dozens after angry residents demanding an end to price hikes and soaring inflation set two schools ablaze and burnt tyres along the city's railway.

Egypt is the world's biggest consumer of bread, with each Egyptian eating 400 grams of bread a day. That compares with France - the land of the baguette - where the figure is only 130g per day.

The shortages have forced bakers and consumers on to the black market. According to the state-owned daily Al-Ahram, 12,000 people have been detained in raids across the country in recent days and they are all to face justice over selling flour on the black market.

A 100 kilogram sack of subsidised flour is worth about $3.14. The same sack costs $377 on the black market.

The government is desperately scrambling to contain the crisis.

On Friday the authorities announced plans to suspend rice exports for six months from April and the commerce ministry said cement exports will also be frozen over the same period in an attempt to combat price rises.

The Pentagon views what is happening in Egypt as a crisis:

Egypt could be one area of concern for the Pentagon because unrest there has continued sporadically over food prices, two senior U.S. military officials have said.

Cairo is a major ally of Washington in the global war on terror, and the United States does not want the unrest there to grow, possibly risking the regime of President Hosni Mubarak.

Other countries throughout the developing world have been hit hard by the rise of food prices:

There also have been riots over high food costs in Haiti, sparking concern about another wave of illegal immigration to the United States.

The rising costs and chaotic riots have prompted several countries to stop exporting wheat and rice, and the U.N. World Food Program has cut food rations to millions of displaced people in Sudan's Darfur region because so many food convoys have been hijacked.

In other areas of the Middle East, bread is a symbolic basic staple of life, and as prices rise, resentment of wasteful government spending begins to grow:

In Yemen, where food riots broke out in recent months, the answer to nearly every question we asked about food elicited emotions ranging from fear of malnutrition to anger over the exorbitant rise in prices.

The cost of one round of traditional flat bread, roughly two slices of bread in the United States, has risen sharply, from about 10 Yemeni rials (about 2.5 cents) to 20 rials in the local bakeries. This may not sound like much to an American who’s used to paying $3.50 or more for a loaf of bread, but it is to a Yemeni – and to many others in the developing world for whom food expenditures can represent 60 to 80 percent of a family’s spending.

Few of the Yemenis we met, if any, understand why food prices have risen so sharply. Even Americans awash in information are as confused and confounded as Yemenis. More than one person made a connection between higher food prices and the ongoing construction of what they call the “President’s Mosque” – a mosque named after the country’s leader and reported to cost $65 million. (They had no proof, which, of course, seems an unnecessary part of any discussion about supposed government excess.)

In Yemen, when the price of bread rises, so does anger and resentment of the government. Elsewhere, because of government subsidies, the price of bread is stable, contributing to different kinds of headaches.

In Iran, inflation is now up to an annual rate of 18 percent; earlier this month, that cost the economic minister his job. The bakers get government flour and are allowed to charge only a certain low rate for the bread they sell.

[SNIP]

The menu that people hit by this immediate crisis are using is fairly simple: flour and rice, even as these staples double or quadruple in price; cakes in Haiti made largely of mud, choked down in a desperate attempt to fill one’s belly; bread baked by the military in Egypt. But from our travels, it seems that the menu items that helped create the current crisis are more complex, processed and partially hydrogenated than these modest items.

Food corporations have learned how to enter the developing world. Few of the families we met could afford a week’s worth of a processed food item at one time, so the global food companies make their wares more affordable by offering them in single-serving packets. In Manila, individual portions of “foods” such as imitation-cheese spreads, chips and spiced rice dishes are much like the convenience packs sold in the United States. Highly processed foods are making inroads into the diets of the developing world, and with that comes dependence.

In fact, there are many organizations throughout the world who are expressing concern about the rise in food prices:

UN staff in Jordan also went on strike for a day this week to demand a pay rise in the face of a 50% hike in prices, while Asian countries such as Cambodia, China, Vietnam, India and Pakistan have curbed rice exports to ensure supplies for their own residents.

Officials in the Philippines have warned that people hoarding rice could face economic sabotage charges. A moratorium is being considered on converting agricultural land for housing or golf courses, while fast-food outlets are being pressed to offer half-portions of rice.

The UN Food and Agriculture Organisation says rice production should rise by 12m tonnes, or 1.8%, this year, which would help ease the pressure. It expects "sizable" increases in all the major Asian rice producing countries, especially Bangladesh, China, India, Indonesia, Burma, the Philippines and Thailand.

Holmes is the latest senior figure to warn the world is facing a worsening food crisis. Josette Sheeran, director of the UN World Food Programme, said last month: "We are seeing a new face of hunger. We are seeing more urban hunger than ever before. We are seeing food on the shelves but people being unable to afford it."

The programme has launched an appeal to boost its aid budget from $2.9bn to $3.4bn (£1.5bn to £1.7bn) to meet higher prices, which officials say are jeopardising the programme's ability to continue feeding 73 million people worldwide.

Robert Zoellick, president of the World Bank, said "many more people will suffer and starve" unless the US, Europe, Japan and other rich countries provide funds. He said prices of all staple food had risen 80% in three years, and that 33 countries faced unrest because of the price rises.

In the UK, Professor John Beddington, the new chief scientific adviser to the government, used his first speech last month to warn the effects of the food crisis would bite more quickly than climate change. He said the agriculture industry needed to double its food production, using less water than today.

He said the prospect of food shortages over the next 20 years was so acute it had to be tackled immediately: "Climate change is a real issue and is rightly being dealt with by major global investment. However, I am concerned there is another major issue along a similar time-scale - that of food and energy security."

The possibility that the Pentagon might need to deploy US troops to prop up various "friendly" regimes throughout the world hinges on whether such a move would be feasible. The strain on US troops because of the wars in Afghanistan and Iraq have left the Pentagon less likely to resort to full scale invasions.

Any plan to invade a country or countries due to instability would likely resemble the plans revealed by General Wesley Clark:

GEN. WESLEY CLARK: I knew why, because I had been through the Pentagon right after 9/11. About ten days after 9/11, I went through the Pentagon and I saw Secretary Rumsfeld and Deputy Secretary Wolfowitz. I went downstairs just to say hello to some of the people on the Joint Staff who used to work for me, and one of the generals called me in. He said, "Sir, you've got to come in and talk to me a second." I said, "Well, you're too busy." He said, "No, no." He says, "We've made the decision we're going to war with Iraq." This was on or about the 20th of September. I said, "We're going to war with Iraq? Why?" He said, "I don't know." He said, "I guess they don't know what else to do." So I said, "Well, did they find some information connecting Saddam to al-Qaeda?" He said, "No, no." He says, "There's nothing new that way. They just made the decision to go to war with Iraq." He said, "I guess it's like we don't know what to do about terrorists, but we've got a good military and we can take down governments." And he said, "I guess if the only tool you have is a hammer, every problem has to look like a nail."

So I came back to see him a few weeks later, and by that time we were bombing in Afghanistan. I said, "Are we still going to war with Iraq?" And he said, "Oh, it's worse than that." He reached over on his desk. He picked up a piece of paper. And he said, "I just got this down from upstairs" -- meaning the Secretary of Defense's office -- "today." And he said, "This is a memo that describes how we're going to take out seven countries in five years, starting with Iraq, and then Syria, Lebanon, Libya, Somalia, Sudan and, finishing off, Iran." I said, "Is it classified?" He said, "Yes, sir." I said, "Well, don't show it to me." And I saw him a year or so ago, and I said, "You remember that?" He said, "Sir, I didn't show you that memo! I didn't show it to you!"

The Pentagon has long maintained plans to invade virtually any and all countries in the world:

It sounds like a joke but it's not. War Plan Red is real. It was drawn up and approved by the War Department in 1930, then updated in 1934 and 1935. It was declassified in 1974 and the word "SECRET" crossed out with a heavy pencil. Now it sits in a little gray box in the National Archives in College Park, available to anybody, even Canadian spies. They can photocopy it for 15 cents a page.

War Plan Red was actually designed for a war with England. In the late 1920s, American military strategists developed plans for a war with Japan (code name Orange), Germany (Black), Mexico (Green) and England (Red). The Americans imagined a conflict between the United States (Blue) and England over international trade: "The war aim of RED in a war with BLUE is conceived to be the definite elimination of BLUE as an important economic and commercial rival."

In the event of war, the American planners figured that England would use Canada (Crimson) -- then a quasi-pseudo-semi-independent British dominion -- as a launching pad for "a direct invasion of BLUE territory." That invasion might come overland, with British and Canadian troops attacking Buffalo, Detroit and Albany. Or it might come by sea, with amphibious landings on various American beaches -- including Rehoboth and Ocean City, both of which were identified by the planners as "excellent" sites for a Brit beachhead.

Governments Will Fall

I can't help but look at stories like this and think about what comes next:

The U.N. World Food Program has flagged 30 nations confronting mounting food insecurity this year as a direct result of market forces; 22 of them are in Africa. As prices climb, Mauritania, Burkina Faso, Cameroon, Senegal and other net food importers have been racked by civil unrest. Hunger is spiking in parts of the continent in patterns similar to past bouts of drought, floods or civil strife. In Mauritania -- a nation of 3 million straddling Arab and black Africa -- the number of people not getting enough food is up this year by 30 percent in rural areas despite a relatively good annual harvest, according to the WFP. A food emergency has been declared in broad sections of the country, with the food program rushing to roll out feeding stations.

U.N. experts, World Bank officials and aid groups fear it marks the onset of the worst food crisis in the region in decades; officials are calling for $755 million in fresh emergency food assistance from rich countries. Aid groups are already falling behind in their efforts to provide food across the continent, leaving even the poorest communities increasingly dependent on the market.

"This is the new face of hunger," said Josette Sheeran, WFP executive director.

Globalization was supposed to eliminate this kind of recurring disaster. With economists radiating confidence about the new efficiencies of the global market, the need for food self-sufficiency seemed almost archaic. In that new reality, global markets would provide the long-term cornucopia that the arid earth here could not, and at reasonable prices.

Globalization is the cause of these problems, not the solution. If you consider that having one genetic strain of seed material can lead to a lack of biodiversity, then that's globalization in a nutshell, pardon the pun. If the same seed grown in Iowa, Kenya and the Ukraine is susceptible to drought or some other type of failure, you have the makings of a global problem on your hands.

Everything has a cause and effect, and if people are starving and going without basic necessities, then the consequence of that is going to be unrest. Governments will fall. Revolutions will happen. Arable land that can sustain crops is going to increase in value, and armed men are going to protect their arable land or take it away from someone who is weaker. Flooding Africa with cheap arms and weapons means a greater chance of seeing ten or fifteen or even more regional wars could break out over scarce resources. If you don't think the issue of Ukraine trying to break away completely from Russia and become a separate entity matters, think of Russia starving while Ukraine feeds Europe. No, I don't think Putin is going to stand by and let that happen, either.

And, just in time, the Pentagon has created AFRICOM so they can "keep a handle" on all of these issues, right? Well, right now, they're temporarily based in Stuttgart, Germany.

No, that's not a joke.

Biofuels, food prices, and you

I started noticing food prices creeping upward a little over a year ago. It was in the winter, and I started hearing on the BBC overnight that Mexico was in the grip of a tortilla panic, as corn prices, driven by ethanol demands, increased to the point that the food staple was priced out of reach of hundreds of thousands of Mexico's poor, and new price controls were put in place after people filled the streets in protest. I made a conscious effort to start noticing food prices.

I live an urban existence - I rarely shop in a supermarket or purchase processed foods, instead I shop at produce stands, specialty markets, the natural foods store, farmers markets, and Costco. Prices at the produce stands haven't changed all that much. What I have noticed most acutely have been increases in prices of staple food items at Costco. The price of 25-pound bags of flour, rice and pinto beans have either doubled or nearly doubled in the last year.

Across Africa, NGOs and scientists have joined their voices to form a chorus calling for a moratorium on converting food crops to fuel crops.

Wooed by the possibility of an emerging "green OPEC," struggling nations of sub-Saharan Africa have rushed to convert their farm land from food crops to fuel crops - and decreased food security for the people who live in those countries.

In Asia, skyrocketing prices of rice have fueled fears of social instability driven by food insecurity. In Pakistan, thousands of troops have been deployed in recent months to guard shipments of wheat and flour. Soybean shortages in Indonesia have sparked street protests and driven fears of social unrest. China has implemented stringent price controls on cooking oil, grains, meats, eggs and milk.

The universal increases in food prices prompted World Bank President Robert Zoellick to speak out about the looming crisis in food security yesterday.

Zoellick held up a bag of rice during a news conference Thursday to illustrate the severity of the food crisis.

"In Bangladesh a two-kilogram bag of rice ... now consumes about half of the daily income of a poor family," he said. "The price of a loaf of bread ... has more than doubled. Poor people in Yemen are now spending more than a quarter of their incomes just on bread."

And Zoellick says prices for basic staples will remain high for an extended period of time.

"I think you have a perfect storm of things coming together," he tells NPR's Steve Inskeep in an interview. "You have high energy prices. You have the increase in demand from some of the developing countries. ... As the Indian commerce minister said to me, going from one meal a day to two meals a day for 300 million people increases demand a lot.

Not only is food insecurity increasing; globally, diets are changing and becoming homogenized; more and more of the world's people rely on mass-produced, factory farmed food stuffs that are shipped all over the world. In this reality, that a Big Mac tastes exactly the same in Tokyo as it does in Topeka is a goal to be worked toward, rather than a fact that sets off creepy, sci-fi, spine-tingling like it ought to.

This trend toward dietary homogenization ought to spark rounds of worry, and panels of United Nations experts should be seated for brainstorming sessions to reverse this disturbing trend. The fact that dietary diversity is decreasing globally increases the vulnerability of vast numbers of people as reliance on external sources of food increases and self-sufficiency becomes a thing of the past, and cereal grains that could feed millions of hungry people end up in gas tanks of Ford Extinctions and Dodge Dinosaurs.