The poor in Africa are hit hardest when grain prices rise. Not only the people in the cities, but also the small farmers have to fear for their food. Wheat and corn have already risen rapidly in price.
Rising grain prices are the first warning sign of a global hunger crisis. Since the beginning of June, the price of wheat has risen by 32 percent to 330 U.S. dollars per ton, according to the UN Food and Agriculture Organization FAO. Droughts in the USA, Russia, Ukraine and Kazakhstan drove up prices.
"It's alarming," says Mathias Mogge, program director of German Agro Action. He is thinking of the many African countries that have to import grain. In West Africa, up to 18 million people are acutely threatened by hunger if foreign aid does not arrive quickly enough. But the tide could also turn again, believes Mogge.
Four years ago, markets went crazy. "Between 2005 and 2008 alone, the prices of wheat, rice and corn tripled," emphasizes the expert group on "Global Economy and Social Ethics" of the Catholic German Bishops' Conference. Nearly 80 million people plunged into hunger and poverty at that time, according to FAO estimates. Since then, prices have not fallen back to their old levels, and there are always price jumps.
Detlef Virchow, who holds a doctorate in agricultural economics from the University of Hohenheim in Stuttgart, views the current trends with concern: "We are facing something worse than 2008," says the managing director of the Hohenheim Food Security Center. The consequences for the poor in Africa, who have to spend almost their entire income on food, would be
The situation is grave: "They can't tighten their belts." Say: If they eat less, they starve.
It's a paradox: According to UN estimates, 925 million people are already starving worldwide. And about 50 percent of them are small farmers in developing countries who produce their own food. "That's what makes the whole thing so bitter," Virchow says. Theoretically, farmers could profit from the price increase, but the reality is different.
Competition between tank and tell
Many farmers have to sell much of their grain after harvest when the price is low. They cannot store the corn or millet and need money for the doctor, for clothes, shoes and school fees. Later in the year they have to buy grain – at seasonally higher prices. "Effectively, they lose," says Virchow. And this all the more, the more the prices climb.
There are several reasons why food prices have become more unpredictable and erratic since the turn of the millennium. "A major factor is the growing demand for animal feed," Bishops' Conference experts explain. Consumption of meat is growing worldwide. However, a lot of soy, grain and pasture land is needed to raise cattle, pigs and poultry.
But the competition between tank and plate is also problematic. The production of biofuel from corn, rapeseed or sugar has brought the energy and food markets closer together. The USA uses almost half of its corn crop for bioethanol. If oil prices rise, demand for fuel from fields grows. Fields are not planted for food, but for energy. "It's not a fair market," Virchow says.
The Hohenheim scientist argues for an immediate end to subsidies for biofuel, a move away from E-10 blending in gasoline in the EU, and a clear "food first policy" that gives priority to nutrition: if corn is in short supply, it should no longer be processed into bioethanol. Only waste and manure should provide energy in his view.
Speculators also play a role in the price spiral. Large insurance companies, funds and banks are now buying securities from agricultural futures markets, but their influence is difficult to calculate. "Speculation plays a role in agricultural prices, but it is not the driving force," Virchow says. "It only reinforces a trend that is there anyway."
Only five to 15 percent of global grain production is traded internationally. Big players are agricultural exporters like the U.S., Australia, Argentina, Brazil and Russia. China, with its 1.3 billion people, does not normally need to import rice, but that can change in the event of a crop failure. "If China buys rice for ten percent of its population, the world market is empty," says Virchow.