Saturday, March 5, 2011

Connecting The Dots: Climate, Energy, Global Markets and Food Security

This spring we'll be tackling some pretty heavy decisions to increase and sustain productivity on our farm.
I'm looking ahead to a lot of work and investment to grow, market and hopefully improve our ability to serve a few more of our neighbors in PEI.  It feels good to know we have the chance to add a bit more fresh food to our local supply from our very small farm.

In the mean time I'm reading more and more alarming news from a variety of sources on the current state of affairs in our world.  And I wonder again, as I often do, about the disconnect in the media between the dots (and sometimes "dotty") individual news headlines. It's the big picture that should be getting our attention.

This thread started for me when I heard a news item on the radio letting me know that my local fast food restaurant in Eastern Canada would not be able to serve me tomatoes or peppers because of unusual cold weather in California and Mexico. Hmmm.  

That item hit the news on the same day that oil prices broke 100 a barrel again. We know that the price of oil will continue to rise through spring and summer (driving season) and we know that this will impact consumers and producers alike. We also know that as long as petroleum prices are high, we simply can't grow our way out of economic trouble by using cheap energy to do most of the work. Hmmmm.

We also now know that the same financial houses that created the mortgage backed securities that caused the recent financial panic (a pox on them all!) have also created long term investment strategies in basic food commodities on a global scale. The result has been rapid increases in the market price for staple grains and cooking oil and these increases have hit consumers in the rear pocket and the stomach.
"Beginning in late 2006, world food prices began rising. A year later, wheat price had gone up 80 percent, maize by 90 percent and rice by 320 percent. Food riots broke out in more than 30 countries, and 200 million people faced malnutrition and starvation. Suddenly, in the spring of 2008, food prices fell to previous levels, as if by magic. Jean Ziegler, the UN Special Rapporteur on the Right to Food, has called this "a silent mass murder", entirely due to "man-made actions.”
 - Johann Hari
Hmmmmmmmmm. Pretty ominous.  But we still don't see the whole picture.

Here is how I connect the dots in these three otherwise unrelated stories. First of all, the shortage of tomatoes and peppers.  This is the second year in a row that there has been a shortage of tomatoes caused by changes in average climate.  Last year (also in the first week in March) it was reportedly caused by frost in Florida. This year, it's frost in California and Mexico.  This is a direct result of climate change.  Argue all you want about normal variables. Farmers don't like risk and they know what the normals are. The fact is that this year and last saw major climate related impact on food crops in the US, Australia, Russia, and Pakistan. And even though a few peppers on your sandwich or a tomato on your burger might seem trivial it is in fact a climate change food shortage in your face. The farmers who lost crops designed to put a tomato on your Whopper will now be calling in their bankers, their crop insurance and their governments for help to avoid bankruptcy. Some probably won't survive losing their investment.

Today's increasing energy costs are about to make the situation worse during the growing season in this hemisphere.  Most people probably don't know that the chief ingredient in our food supply is oil.  Our dependence on fertilizers and chemicals, farm equipment, livestock feed milling, water pumping, trucking, air freight, cargo ships, processing, packaging, refrigeration, storage and delivery are all tied directly to the price of oil.  This dot in the matrix is a big one. Food prices are going up in North America. Major grocery chains are already announcing a 5% increase here.

But why are food prices going up so fast when market supplies in oil and commodities are sufficient and demand is relatively stable?  Let's check in on those wacky, irrational investment markets again:
According to a study by the now-defunct Lehman Brothers, index fund speculation jumped from $13 billion to $260 billion from 2003 to 2008. Not surprisingly, food prices rose in tandem, beginning in 2003.  Hedge fund manager Michael Masters estimated that on the regulated exchanges in the U.S., 64 percent of all wheat contracts were held by speculators with no interest whatever in real wheat. They owned it solely in anticipation of price inflation and resale. 
So there you have it.  Climate change, energy costs and global commodity speculation are now playing havoc with your ability to afford, "what's for dinner". The risk of economic disaster for global food producers is tied directly to wobbles in the global climate.  And market speculators in oil and commodities are engaging in risky behavior that would make an Amsterdam sex worker faint. The "invisible hand" of the market is dope slapping us with lower wages, higher food prices, a wobbly climate and general nausea caused by a growing sense of insecurity. It's a combination that is already driving stable governments and solid financial institutions off a cliff.

So what can we do about it? Well I don't think the answer is some crazy Communist agrarian revolution where we move hedge fund managers to the farm and make them eat kale. I believe that there are healthy free market alternatives here and around the world that you can invest in. And your investment will help stabilize the big picture.  This is the final dot.

It's time to go and meet your local farmer. Buy into your local commodity market. Stop exchanging a higher portion of your income on low value energy dependent processed and packaged food "products". Live like rich people do. Look to make your profit on the higher quality and higher value food available directly from a wholesale producer. Make an investment in shopping and learning to prepare better meals for yourself. If the current system does not sustain you then don't sustain it. Stop feeding your food dollars into speculation and greed. Start eating healthy meals produced by people you know who will be there when you need them. You'll feel a whole lot better!

No comments: