Sunday, November 23, 2003

China's rising grain prices could signal global food crisis

US environmentalist Lester Brown warned Wednesday that sudden food price hikes in China could be the sign of a coming world food crisis brought on by global warming and increasingly scarce water supplies among major grain producers.

"I view the price rises as an indication, as the warning tremors before the earthquake," Brown, director of the Washington-based Earth Policy Institute, told an audience of Chinese environmental non-governmental organizations.

"World grain harvests have fallen for four consecutive years and world grain stocks are at the lowest level in 30 years. If farmers can't raise production by (late next year) we may see soaring grain and food prices worldwide."

In the past few months, wheat prices in northeast China have shot up 32 percent, maize prices have doubled and rice prices are up by as much as 13 percent, official reports show.

China faces a 40 million ton grain shortfall this year following five years of smaller harvests.

Brown said that the world will be facing a 96 million ton shortfall in grain this year following poor harvests in the United States and India in 2002, and a poor harvest in Europe due to scorching temperatures this year.

Shortfalls worldwide have been made up through dwindling grain reserves.

Brown, described by the Washington Post as "one of the world's most influential thinkers," was in China to unveil the translation of his new book "Plan B, Rescuing a Planet Under Stress."

While grain producers revel in rising prices, Brown said the trends are unsustainable, especially as the world population approaches eight billion by mid-century and as the main grain producers -- China, India and the United States -- face increasing water shortages.

As China's population grows and its people demand a more meat-based diet with rising living standards, China will increasingly have to look to world markets to satisfy grain needs for both food and feed for livestock, he said.

"When China turns to the world market for grain, it will need 30, 40, 50 million tons, more than anyone else in the world imports," Brown said.

"They will first come to US markets, which is going to make a fascinating geo-political situation."

With a 100 billion dollar trade surplus with the United States in 2002, China has "enormous purchasing power" to buy US grain, which "could drive up prices by two times."

Already an increase in Chinese demand for American soybeans, plus last year's bad soybean harvest, have seen prices jump from five dollars a bushel to eight dollars a bushel.

China is expected to announce substantial grain purchases from the US in the weeks ahead of a visit to Washington by Premier Wen Jiabao in December.

Further exacerbating falling grain harvests will be the effects of global warming as increasing scientific evidence reveals that grain production falls when temperatures mount, Brown said.

Studies by the International Rice Institute and the US-based Carnegie Institution have shown that grain production can fall 10 percent with a one degree celsius (1.7 degree fahrenheit) increase in temperature, as the increased heat stresses the plants.

The UN's International Panel on Climate Control has come to the conclusion that global warming from greenhouse gases caused by the burning of fossil fuels will lead to temperature rises from two to five degrees celsius this century.

"This is not encouraging for food security and we may very well be seeing that decisions made at ministries of energy will have a greater effect on food than decisions made at ministries of agriculture," Brown said.


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