Healthy soil and sustainable growing

["TradingPostPaul" <tradingpost@riseup.net>]

In the globalized economy, what happens halfway around the world is just
starting to come back to bite us. We're urging more decentralized, local
food production that reduces our vulnerability to distant suppliers and
distribution networks. In a few months people will wish they had taken it
seriously months ago

paul tradingpost@lobo.net
-----------------------------------------

"A startling change is unfolding in the world¹s food markets. Soaring
fuel prices have altered the equation for growing food and transporting it
across the globe. Huge demand for biofuels has created tension between
using land to produce fuel and using it for food."

http://www.nytimes.com/2008/01/19/business/worldbusiness/19palmoil.html

January 19, 2008
THE FOOD CHAIN
An Oil Quandary: Costly Fuel Means Costly Calories

KUANTAN, Malaysia ‹ Rising prices for cooking oil are forcing residents
of Asia¹s largest slum, in Mumbai, India, to ration every drop. Bakeries
in the United States are fretting over higher shortening costs. And here in
Malaysia, brand-new factories built to convert vegetable oil into diesel
sit idle, their owners unable to afford the raw material.

This is the other oil shock. From India to Indiana, shortages and soaring
prices for palm oil, soybean oil and many other types of vegetable oils are
the latest, most striking example of a developing global problem: costly
food.

The food price index of the Food and Agriculture Organization of the United
Nations, based on export prices for 60 internationally traded foodstuffs,
climbed 37 percent last year. That was on top of a 14 percent increase in
2006, and the trend has accelerated this winter.

In some poor countries, desperation is taking hold. Just in the last week,
protests have erupted in Pakistan over wheat shortages, and in Indonesia
over soybean shortages. Egypt has banned rice exports to keep food at home,
and China has put price controls on cooking oil, grain, meat, milk and
eggs.

According to the F.A.O., food riots have erupted in recent months in
Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen.

³The urban poor, the rural landless and small and marginal farmers stand
to lose,² said He Changchui, the agency¹s chief representative for Asia
and the Pacific.

A startling change is unfolding in the world¹s food markets. Soaring fuel
prices have altered the equation for growing food and transporting it
across the globe. Huge demand for biofuels has created tension between
using land to produce fuel and using it for food.

A growing middle class in the developing world is demanding more protein,
from pork and hamburgers to chicken and ice cream. And all this is
happening even as global climate change may be starting to make it harder
to grow food in some of the places best equipped to do so, like Australia.

In the last few years, world demand for crops and meat has been rising
sharply. It remains an open question how and when the supply will catch up.
For the foreseeable future, that probably means higher prices at the
grocery store and fatter paychecks for farmers of major crops like corn,
wheat and soybeans.

There may be worse inflation to come. Food experts say steep increases in
commodity prices have not fully made their way to street stalls in the
developing world or supermarkets in the West.

Governments in many poor countries have tried to respond by stepping up
food subsidies, imposing or tightening price controls, restricting exports
and cutting food import duties.

These temporary measures are already breaking down. Across Southeast Asia,
for example, families have been hoarding palm oil. Smugglers have been
bidding up prices as they move the oil from more subsidized markets, like
Malaysia¹s, to less subsidized markets, like Singapore¹s.

No category of food prices has risen as quickly this winter as so-called
edible oils ‹ with sometimes tragic results. When a Carrefour store in
Chongqing, China, announced a limited-time cooking oil promotion in
November, a stampede of would-be buyers left 3 people dead and 31 injured.

Cooking oil may seem a trifling expense in the West. But in the developing
world, cooking oil is an important source of calories and represents one of
the biggest cash outlays for poor families, which grow much of their own
food but have to buy oil in which to cook it.

Few crops illustrate the emerging problems in the global food chain as well
as palm oil, a vital commodity in much of the world and particularly Asia.
>From jungles and street markets in Southeast Asia to food companies in the
United States and biodiesel factories in Europe, soaring prices for the oil
are drawing environmentalists, energy companies, consumers, indigenous
peoples and governments into acrimonious disputes.

The oil palm is a stout-trunked tree with a spray of frilly fronds at the
top that make it look like an enormous sea anemone. The trees, with their
distinctive, star-like patterns of leaves, cover an eighth of the entire
land area of Malaysia and even greater acreage in nearby Indonesia.

An Efficient Producer

The palm is a highly efficient producer of vegetable oil, squeezed from the
tree¹s thick bunches of plum-size bright red fruit. An acre of oil palms
yields as much oil as eight acres of soybeans, the main rival for oil
palms; rapeseed, used to make canola oil, is a distant third. Among major
crops, only sugar cane comes close to rivaling oil palms in calories of
human food per acre.

Palm oil prices have jumped nearly 70 percent in the last year because
supply has grown slowly while demand has soared.

Farmers and plantation companies are responding to the higher prices,
clearing hundreds of thousands of acres of tropical forest to replant with
rows of oil palms. But an oil palm takes eight years to reach full
production. A drought last year in Indonesia and flooding in Peninsular
Malaysia helped constrain supply. Worldwide palm oil output climbed just
2.7 percent last year, to 42.1 million tons.

At the same time, palm oil demand is growing steeply for a variety of
reasons around the globe. They include shifting decisions among farmers
about what to plant, rising consumer demand in China and India for edible
oils, and Western subsidies for biofuel production.

American farmers have been planting more corn and less soy because demand
for corn-based ethanol has pushed up corn prices. American soybean acreage
plunged 19 percent last year, producing a drop in soybean oil output and
inventories.

Chinese farmers also cut back soybean acreage last year, as urban sprawl
covered prime farmland and the Chinese government provided more incentives
for grain.

Yet people in China are also consuming more oils. China not only was the
world¹s biggest palm oil importer last year, holding steady at 5.2
million tons in the first 11 months of the year, but it also doubled its
soybean oil imports to 2.9 million tons, forcing buyers elsewhere to switch
to palm oil.

Concerns about nutrition used to hurt palm oil sales, but they are now
starting to help. The oil was long regarded in the West as unhealthy, but
it has become an attractive option to replace the chemically altered fats
known as trans fats, which have lately come to be seen as the least healthy
of all fats.

New York City banned trans fats in frying at food service establishments
last summer and will ban them in bakery goods this summer. Across the
country, manufacturers are trying to replace trans fats. American palm oil
imports nearly doubled in the first 11 months of last year, rising by
200,000 tons.

³Four years ago, when this whole no-trans issue started, we processed no
palm here," said Mark Weyland, a United States product manager for Loders
Croklaan, a Dutch company that supplies palm oil. ³Now it¹s our biggest
seller.²

Last year, conversion of palm oil into fuel was a fast-growing source of
demand, but in recent weeks, rising prices have thrown that business into
turmoil.

Here on Malaysia¹s eastern shore, a series of 45-foot-high green and gray
storage tanks connect to a labyrinth of yellow and silver pipes. The
gleaming new refinery has the capacity to turn 116,000 tons a year of palm
oil into 110,000 tons of a fuel called biodiesel, as well as valuable
byproducts like glycerin. Mission Biofuels, an Australian company, finished
the refinery last month and is working on an even larger factory next door
at the base of a jungle hillside.

But prices have spiked so much that the company cannot cover all its costs
and has idled the finished refinery while looking for a new strategy, such
as asking a biodiesel buyer to pay a price linked to palm oil costs, and
someday switching from palm oil to jatropha, a roadside weed.

³We took a view that palm oil prices were already high; we didn¹t think
they could go even higher, and then they did,² said Nathan Mahalingam,
the company¹s managing director.

Growth in Biofuels

Biofuels accounted for almost half the increase in worldwide demand for
vegetable oils last year, and represented 7 percent of total consumption of
the oils, according to Oil World, a forecasting service in Hamburg,
Germany.

The growth of biodiesel, which can be mixed with regular diesel, has been
controversial, not only because it competes with food uses of oil but also
because of environmental concerns. European conservation groups have been
warning that tropical forests are being leveled to make way for oil palm
plantations, destroying habitat for orangutans and Sumatran rhinoceroses
while also releasing greenhouse gases.

The European Union has moved to restrict imports of palm oil grown in
unsustainable ways. The measure has incensed the Malaysian palm oil
industry, which had plunged into biofuel production in part to satisfy
European demand.

Another controversy involves the treatment of indigenous peoples whose
lands have been seized by oil plantations. This has been a particular issue
on Borneo.

Anne B. Lasimbang, executive director of the Pacos Trust in the Malaysian
state of Sabah in northern Borneo, said that while some indigenous people
had benefited from selling palm oil that they grow themselves, many had
lost ancestral lands with little to show for it, including lands that used
to provide habitats for endangered orangutans.

³Finally, some of the pressures internationally have trickled down. Some
of the companies are more open to dialogue; they want to talk to
communities,² said Ms. Lasimbang, a member of the Dusun indigenous group.
³On our side, we are still suspicious.²

Demand Outstrips Supply

As the multiple conflicts and economic pressures associated with palm oil
play out in the global economy, the bottom line seems to be that the world
wants more of the oil than it can get.

Even in Malaysia, the center of the global palm oil industry for half a
century, spot shortages have cropped up. Recently, as wholesale prices
soared, cooking oil refiners complained of inadequate subsidies and cut
back production of household oil, sold at low, regulated prices.

Street vendors in the capital, Kuala Lumpur, complain that they cannot find
enough cooking oil to prepare roti canai, the flatbread that is the
national snack. ³It¹s very difficult; it¹s hard to find,² said one
vendor who gave only his first name, Palani, after admitting that he was
secretly buying cooking oil intended for households instead of paying the
much higher price for commercial use.

Many of the hardest-hit victims of rising food prices are in the vast slums
that surround cities in poorer Asian nations. The Kawle family in
Mumbai¹s sprawling Dharavi slum, a household of nine with just one member
working as a laborer for $60 a month, is coping with recent price increases
for palm oil.

The family has responded by eating fish once a week instead of twice,
seldom cooking vegetables and cutting its monthly rice consumption. Next to
go will be the weekly smidgen of lamb.

³If the prices go up again,² said Janaron Kawle, the family patriarch,
³we¹ll cut the mutton to twice a month and use less oil.²

Contributing reporting were Andrew Martin in New York, Anand Giridharadas
in Kale, India, and Michael Rubenstein in Mumbai.