Tuesday, April 10, 2007

Food prices continue rise to chagrin of developing world

Food commodity prices are up. The price of corn has nearly doubled over the last year. Soybeans and sugar have both risen at annual rates higher than inflation (although sugar has been coming down recently), even as harvests have been good. A significant driver of these increases has been the push for ethanol and biodiesel:
Soaring prices for farm goods, driven in part by demand for crop-based fuels, are pushing up the price of food world-wide and unleashing a new source of inflationary pressure.

The rise in food prices is already causing distress among consumers in some parts of the world - especially relatively poor nations like India and China. If the trend gathers momentum, it could contribute to slower global growth by forcing consumers to spend less on other items or spurring central banks to fight inflation by raising interest rates.
Crop-based fuels are a problematic long-term solution to the energy problem for a couple of reasons. Agricultural production requires lots of land. Fertile rainforests in countries near the equator are prime targets for cultivation (corn, sugar, and soybeans all grow better best in warm, wet climates). In addition to their aesthetic beauty and biological diversity, these rainforests soak up lots of CO2. The latter point is putatively thought to be a positive, although increased CO2 levels may help stave off the next inevitable period of global cooling that, historically, has presented a much more dire existential threat to humanity than any bout of warming ever has (parenthetically, read through the material presented here by the indefatigable Al Fin for an informed contrarian view to the CAGW 'consensus').

The upward pressure on food prices created by increased demand hits the developing world especially hard. Undeveloped third-world countries that have populations engaged primarily in subsistence farming are left mostly unperturbed, with the higher prices even being beneficial in terms of what can be had by selling surplus. In developed countries where food expenditures per capita comprise around one-tenth of income, including the artificially high cost of going out to eat, increased food prices are merely a nuisance for those not employed in agriculture, while countries that are major net food exporters like the US, Sweden, and France, come out ahead.

The big losers are developing countries in the process of moving away from having large majorities of their populations employed in food production. India and China, together representing 37% of the world's population, are the two behemoths that stand to lose substantially from surging food prices.

India and China. Where have we seen those two countries paired up before? Generally, they're portrayed as mutual antagonists, but in rising food prices and international scoffing for the skyrocketing emissions they're producing, the world's two most populous nations are in the same boat. In addition to feeling the food pinch (per capita spending on food comprises half of the average Indian's income, and a little over 40% of the average Chinaman's income), they also take the top two spots in projected emissions growth over the next half-decade, dwarfing any ground gained by the rest of the pro-Kyoto world:
By 2012, the plants in three key countries - China [1.926 billion], India [486 million], and the United States [275 million] - are expected to emit as much as an extra 2.7 billion tons of carbon dioxide, according to a Monitor analysis of power-plant construction data. In contrast, Kyoto countries by that year are supposed to have cut their CO2 emissions by some 483 million tons.

This appears to be one step forward, five steps backwards. But it's worse than that, accentuated by the fact that few Kyoto signatories who've committed to reducing emissions have actually done so (five of the 156, specifically).

If clean-burning fuel sources are to be taken up in India and China, they'll have to be economically competitive. China has a glut of coal and is the globe's largest user of it. India is third, with the US sandwiched between the two. I understand photovoltaics, hydro, wind, and batteries (though lithium shortages present a problem) all have potential, but nuclear is the sole demonstrable, reliable long-term solution. It is especially appealing in places undergoing significant consumption growth, since so much of its cost is upfront--once up-and-running, nuclear power plants are best utilized if running at full capacity almost perpetually. Build it now, India--it won't go to waste in the future (that's just what Singh's government is doing, with 20 potential plants under proposal, second in the world only to South Africa).

Stateside, private industry is seeing a renewed interest in nuclear power. Texas, with a deregulated energy market that forces producers to take a direct hit to the wallet for construction snafus or cost overruns, may be the canary in the coalmine. Currently, Texas generates the sixth most energy from nuclear (38 quadrillion kWh in 2005) of any state (Illinois, at 93, has the top spot), but in a decade it may have the most. Although US plant construction has been in hibernation for three decades, GE and Westinghouse both have federally-certified reactor designs ready for construction.

NRG's (mentioned in the link above) CEO is eagerly looking to take advantage of as much of the $400 million in federal incentives for nuclear power plant construction as he can. I'd like to see those incentives increase one thousand-fold, with a corresponding decrease in money poured into the sewer that is Iraq. This way, the shift remains expenditure-neutral!

5 comments:

adog said...

Patrick Moore, Greenpeace co-founder, has done a 180. He is now a loud advocate of nuclear power. Why shouldn't he be? It is clean and takes up little space and it's renewable. The safety concerns are overblown. Three Mile Island was an isolated incident and Chernobyl was more the fault of negligent communists than nuclear reactors themselves. Nuclear is the way to go.

meeker said...

biofuels won't be crop based in the long run
research into cellulase enzyme is certain to lead to use of biowaste and stubble instead of crops to make ethanol.

Anonymous said...

If we must use biofuels, we should really be using hemp. Smoking it is for fools. The oil is good for burning and the seed is nutritious. The pulp is ideal for paper, and dried it can be burned. It grows everywhere easily and will save our forests. Nobody needs to be told that the cloth and cordage has been used for hundreds of years and is quite durable. I am sure it has plenty of other industrial and consumer applications. See the movie Hemp for Victory that the Library of Congress claimed for years it didn't have. The anti-hemp crowd also included the timber industry back in the early part of the 20th century because they were afraid hemp would wreck their business (They'd be right too). Corn takes too much fertilizer and we'd never grwo enough of it and anyway that is a sop to Big Ag.
But adog is correct. If we can put reactors on subs and in ships and have them operate safely for years we can do it all acros the nation. When the lefties, enviros and John Kerry whine about it, tell them the French use nuclear power and that will shut them up.

nzconservative said...

One get the feeling India may be find itself trapped in mid- development and China will take most of the economic spoils.

By the time India catches up with with where China is now, commodity prices may have gone through the roof.

Having said that, China's soon to be aging population may make it easier for India to compete industrially.

adog said...

Meeker. Even more reason NOT to go crazy with biofuel now. Nuclear fission now, nuclear fusion in the future. Problem solved, hopefully.