Corn is a major staple in the diets of many people world-wide. Now, because it is still recovering from the worst drought in 50 years in the corn producing mid-west region of the United States, the global corn supply is seriously threatened and looks to become even more in peril in the future. Some experts are even saying the world is on the brink of a food catastrophe.
In May of 2012 U.S. farmers were anticipating a record corn crop, and corn importing countries around the world were expecting the price for the corn they need to import to drop. The draught drastically curtailed those expectations. U.S. corn yields were expected to be the lowest in 17 years, and corn prices shot up 60 percent after June 15.
A fairly recent article in Aljazeera (Sept.3, 2012) reported, “According to a report by the World Hunger Bank released this week, global food prices have hit record highs. In July alone, its global food price index increased by 10 percent and the price for corn and soybeans has reached record prices in recent days.”
In another fairly recent article in Aljazeera (Aug. 21, 2102) by Robert Kennedy, the author states in part, “Analysts say crippling drought in the U.S. is likely to trigger unrest in impoverished nations dependent on food imports…When food prices spike and people go hungry, violence soon follows. Riots caused by food shortages similar to those of 2007-2008 in countries like Bangladesh, Haiti, the Philippines among others may be on the horizon, threatening the stability of impoverished nations the rely upon U.S. corn imports.” What does this mean to China?
There was an article in the” Financial Times” on-line publication by Gwen Chen in Beijing entitled, “Chinese Grain Imports Hit Record High”. In this article, Ms. Chen goes into detail about the amount and types of grain China imported in March 2012, and it describes China’s dependency on imported grains. Among other things, her report contains the following information.
“China’s grain imports reached a record high in March, as the world’s most populous country increasingly turns to overseas markets to meet its agricultural needs.”
“Custom data from Beijing revealed that grain imports reached 1.64m tonnes in March 2012, up to six fold from a year earlier and up 50 percent from the previous month.”
“China has to feed a fifth of the world’s population with only 8 percent of the world’s arable land, and does not grow genetically modified grains. As rising incomes and more meat heavy diets boost demand, China’s reliance on imports has slowly increased.”
“China accounts for about 20 percent of the world’s corn consumption and only four percent of global corn trade, but its sudden corn buying has greatly tightened the global market. China’s corn imports in January and February of 2012 totaled 1.26m tonnes, four hundred times more than the same period last year.”
“China’s corn prices are among the highest in the world…”
China’s corn prices are destined to climb higher because the dwindling supply of corn as the bidders in a hungry market vie for as large a share of it as they can secure. How this situation will affect China’s huge population of consumers has yet to be seen.
There are an increasing number of calls from places like the International Food Policy Research Institute in Washington, D.C. for the U.S. to end its biofuel program that uses 40 percent of the U.S. corn output to make fuel. About 4.5 billion bushels (114.3 million metric tons) is planned to be used beginning on September 1. That is almost as much as the combined forecast amount in Argentina, Brazil and the Ukraine. It remains to be seen if the conversion of corn this year into biofuel will be curtailed entirely in the U.S. in light of the looming global food crisis.
There was some rain late in the season in the corn producing mid-west region of the U.S., but sadly it was a matter of too little too late. The damage to the corn had been done so the global community must do what it can to mitigate the looming food crisis. The U.S. can curtail ethanol production and countries including China and India can release their food stockpiles to help their poor cope with rising costs. We will know more about how bad the food crisis may be only after the corn is harvested in 2013, and after global governments do whatever they can to forestall it.
Food and water supplies are becoming critical all over the world, and particularly in China. There isn’t enough water to make it feasible to irrigate marginal farm land. Therefore, China will become increasingly dependent on the rest of the world for its food and water. This is not a position the country wants to be in now, or in the future.
Hawkeye in China
Lex Smith