"Oil wells go dry and coal seams run out, but for the first time since the Industrial Revolution began we are investing in energy sources that can last forever." –Lester R. Brown, Plan B 4.0: Mobilizing to
"Oil wells go dry and coal seams run out, but for the first time since the Industrial Revolution began we are investing in energy sources that can last forever." –Lester R. Brown, Plan B 4.0: Mobilizing to Save Civilization.
Chapter 10. Redefining Security: The Politics of Food Scarcity
For more than 40 years, international trade negotiations have been dominated by grain-exporting countries—principally the United States, Canada, Argentina, and Australia—pressing for greater access to markets in importing countries. Now the world may be moving into a period dominated not by surpluses but by shortages. In this case, the issue becomes not exporters’ access to markets but importers’ access to supplies. 10
The behavior of exporters in recent years shows why grain-importing countries should be concerned. In early September of 2002, Canada—following a harvest decimated by heat and drought—announced that it would export no more wheat until the next harvest. Two months later, Australia, another key exporter, said that because of a short harvest it would supply wheat only to its traditional buyers. And in the summer of 2003, during the crop-withering heat waves in Europe, the European Union announced that it would not issue any grain export permits until the supply situation improved. 11
A similar situation developed in Russia following a poor harvest in 2003. Facing a rise in bread prices of more than 20 percent, in January 2004 the government imposed an export tax of 24 euros ($30) per ton on wheat, effectively ending wheat exports. The tax continued into May. 12
In late August 2004, China approached Viet Nam to buy 500,000 tons of rice. The leaders in Hanoi responded by saying that the rice could not be supplied until the first quarter of 2005 at the earliest. This is because the Vietnamese government had imposed export limits of 3.5 million tons for the year, or just under 300,000 tons per month, out of fear that growing external demand for its rice would lead to overexporting and thus to rising domestic prices. 13
This response is of interest because Viet Nam is the world’s second-ranking rice exporter after Thailand. Thailand, Viet Nam, and the United States account for 16 million of the 25 million tons of world exports. In addition to China, more than 30 other countries import substantial amounts of rice, ranging from 100,000 tons a year for Colombia and Sri Lanka to 1.8 million tons for Indonesia. 14
China’s rice crop shortfall in 2004 of 10 million tons hangs over the world market like a sword of Damocles. Where the rice will come from is not clear. What China may do in trying to import such large quantities is simply drive up world rice prices. If it had attempted to cover its shortfall in 2004 entirely by imports, world rice prices would almost certainly have doubled or tripled, as they did in 1972–74, forcing low-income rice-consumers to tighten their belts. 15
The big test of the international community’s capacity to manage scarcity may come when China turns to the world market for massive imports of 30, 40, or 50 million tons of grain per year—demand on a scale that could quickly overwhelm world grain markets. When this happens, China will have to look to the United States, which controls nearly half the world’s grain exports. 16
This will pose a fascinating geopolitical situation: 1.3 billion Chinese consumers, who have a $120-billion trade surplus with the United States—enough to buy the entire U.S. grain harvest twice—will be competing with Americans for U.S. grain, driving up food prices. In such a situation 30 years ago, the United States would simply have restricted exports, but today it has a stake in a politically stable China. The Chinese economy is not only the engine powering the A