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Attributing the food price spike



Climate blogger Tamino, who is generally a smart guy, has a post I disagree with arguing that the most recent food price spike should be attributed mainly to the failure of the Russian wheat harvest in 2010, rather than to biofuel production:

Food prices worldwide have gone up over the last 8 or 9 months. Some have tried to blame it on the use of corn for ethanol in the U.S., and by extension, on efforts to curb global warming. This is total bull...

His main evidence is this graph, which shows the various components of the FAO food price index:

Of this, he says:

Now it’s plain to see. The 2010-2011 rise in food prices was triggered by a rise in cereals prices. It started in July of 2010, and still hasn’t relented. Sure, there are other factors too — and as usually happens, an increase in cereals prices can cause a “ripple effect,” leading to increased prices in other commodities. But the root cause is something that happened to cereals prices in July of 2010.

And what on earth could that be?

“Cereals” includes wheat. What if one of the world’s largest wheat producers had devastating crop losses, reducing their production by a third? What if they were one of the world’s biggest wheat exporters, but production was so reduced that their exports dropped to zero? That’s exactly what happened in Russia. And the trouble started in July of 2010.

Why did the Russian wheat harvest suffer so? Because of the record-breaking heat wave and drought which plagued a massive region, at just the wrong time for Russian agriculture. And one of the contributing factors is: global warming.

To try to make a more careful attribution, I did the following.  First I took global biofuel production numbers (sources summarized in these posts).  I converted them to millions of tonnes of cereal equivalent using numbers for the efficiency of corn to ethanol from the National Corn Growers Association (as in this post).  This is obviously a very good approximation for US ethanol, and probably a good approximation for ethanol elsewhere (since it's all made from carbohydrate in one form or another).  It may not be a great approximation for the cereal that could have been produced on land used to make biodiesel instead, but biodiesel is a minority component in global biofuels, so let's not worry about that to first order:


Another caveat: I'm going to neglect supply-side feedbacks here (to the extent biofuels in past years increased prices, they could have caused more investment by farmers in subsequent years, and increased total production, rather than just diverting food to fuel).

Finally, note that I haven't been able to find figures for global biofuel production in 2010 yet, so I approximated that by assuming that 2010 growth over 2009 would be at the same rate as 2009 over 2008.  That is probably less than ideal, but it won't affect my main point, as you'll see.

Next, I went to the FAO and found the data on Russian wheat production.  2010 data aren't available there, but Tamino cites a Boston Globe news report from August 2010 that production was expected to fall by a third relative to 2009, so I use that one third fall to estimate 2010 production (note the news report numbers for 2009 don't agree with the FAO: I use the latter since it's an official source and has the full time series that I need).  Here is the data from 1992 on:


Crop yields in the industrial world have tended to grow steadily over time due to improvements in agricultural productivity, and some of that is no doubt going on in Russia.  However, it's also likely that this data carries some signature of the collapse of the Soviet Union, and the subsequent revival of Russia under Putin.  Still, as a first cut at distinguishing "weather" from "everything else", I just detrended the data using the straight line fit in the graph above, and treated the residuals as "weather".

I didn't include the 2010 point in my trend fit, since the idea was to treat 2010 as an exogenous shock.  However, you can see pretty clearly that 2010 is not actually that anomalous as a year-to-year fluctuation in Russian wheat production, which seems to have always been highly volatile.

Anyway, if we then treat wheat and the various carbohydrate/cereal feedstocks for biofuels as roughly equivalent on a weight basis, we get this graph:


Here, I have treated the biofuel feedstock as a negative quantity (the idea being that it's a deduction from global food supply).

All caveats aside, you can see the main point here: biofuels are much much larger than Russian weather fluctuations as a total factor affecting cereal supply for food.

This is not to deny any role for the Russian harvest change in the current food price spike.  It was an unexpected negative shock, and I'm sure it was the straw that broke the camel's back.  But should we blame the straw, or instead focus on the fact that the camel was already loaded to the breaking point?

What do you think? Leave a comment below.

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