Healthy soil and sustainable growing

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Soaring Oil And Food Prices Threaten Affordable Food Supply By Richard 
Heinberg
http://www.postcarbon.org/article/619300-soaring-oil-and-food-prices-threaten
Posted Dec 14, 2011
Advance version, for publication in UNCTAD Trade and Environment Review 
2011/2012 (February 2012).

Abstract

    The current global food system is highly fuel- and transport-dependent. 
Fuels will almost certainly become less affordable in the near and medium 
term, making the current, highly fuel-dependent agricultural production 
system less secure and food less affordable. It is therefore necessary to 
promote food self-sufficiency and reduce the need for fuel inputs to the food 
system at all levels.


The connection between food and oil is systemic, and the prices of both food 
and fuel have risen and fallen more or less in tandem in recent years (figure 
1). Modern agriculture uses oil products to fuel farm machinery, to transport 
other inputs to the farm, and to transport farm output to the ultimate 
consumer. Oil is often also used as input in agricultural chemicals. Oil 
price increases therefore put pressure on all these aspects of commercial 
food systems.

Evolution of food and fuel prices
Figure 1: Evolution of food and fuel prices, 2000 to 2009
Sources: US Energy Information Administration and FAO.

Thus there is concern that high and volatile prices of crude oil may cause 
food prices to continue to increase (Bloomberg, 2011).

Moreover, as oil prices rise, so does demand for biofuels, which are the only 
non-fossil liquid fuels able to replace petroleum products in existing 
combustion engines and motor vehicles. But biofuels are often made from corn 
and other agricultural products. As demand for these alternative fuels 
increases, crop prices are forced upwards, making food even less affordable.

Export-led agricultural strategies also increase the world’s vulnerability to 
high oil prices. Most donor agencies have encouraged the less industrialized 
countries to focus on the production of cash crops at the expense of staples 
for local consumption. As a result, people in these countries are forced to 
rely increasingly on imports of often subsidized cereals or those funded by 
food aid programmes. However, rising transport costs contribute to rising 
prices of food imports, making them ever less affordable. Fuel costs 
represent as much as 50 to 60 per cent of total ship operating costs.[1] From 
early 2007 to mid-2008, as fuel prices soared, the cost of shipping food aid 
climbed by about $50 per ton – a nearly 30 per cent increase, according to 
the United States Agency for International Development (Garber, 2008).

Meanwhile, many poor farmers who cannot afford machinery, fuels and 
commercial farm inputs find themselves at a disadvantage in the global food 
economy. Compounding this are agricultural policies in industrialized 
food-exporting countries that subsidize domestic producers and dump surpluses 
onto developing countries, thus adding to the economic disadvantages of the 
smallholder farmers in those countries. As a result, millions of those 
farmers are being driven out of business annually, those countries are giving 
increasing priority to production for export and they are witnessing a 
burgeoning landless poor urban class (whose immediate ancestors were 
subsistence farmers) that is chronically malnourished and hungry.

Soaring food and fuel prices have a disproportionate impact on developing 
countries and on poor people in developed countries. Americans, who, on 
average, spend less than one tenth of their income on food, are able to 
absorb the higher food prices more easily than the world’s poorest 2 billion 
people, who spend 50 to 70 per cent of their income on food.

Why are oil prices so high? Speculative investment in commodities plays a 
role, though there is a persuasive case to be made that oil prices would be 
rising even if oil futures speculation were entirely curtailed. The oil 
industry is changing, and rapidly. As Jeremy Gilbert, former chief petroleum 
engineer for BP, has put it, “The current fields we are chasing we’ve known 
about for a long time in many cases, but they were too complex, too 
fractured, too difficult to chase. Now our technology and understanding [are] 
better, which is a good thing, because these difficult fields are all that we 
have left” (Gilbert, 2011).

The trends in the oil industry are clear and undisputed: exploration and 
production are becoming more costly, and are giving rise to greater 
environmental risks, while competition for access to new prospective regions 
is generating increasing geopolitical tensions. According to the 
International Energy Agency, the rate of world crude oil production reached 
its peak in 2006.[IEA 2010a) The IMF has joined a chorus of energy industry 
analysts in concluding that scarcity and high prices are here to stay.[IMF 
2011a, 2011b]

A collapse in demand for oil resulting from sharply declining global economic 
activity could cause oil prices to fall, as happened in late 2008. Indeed, 
this is a fairly likely possibility. But while it would make oil cheaper, it 
would not make fuel more affordable to most people. It is theoretically 
possible for the world to curb oil demand through policies that limit 
consumption, and it is also conceivable that some unexpected technological 
breakthrough could rapidly result in a cheap, effective alternative to 
petroleum. However, these latter two developments are rather improbable. Thus 
there is no likely scenario in which the services provided by oil will become 
more affordable within the context of a stable global economy at any time in 
the foreseeable future.

While wealthy consumers are able to absorb incremental increases in food 
prices, a sudden interruption in the availability of fuel (due to 
geopolitical events) or a significant gradual curtailment of fossil fuel 
production (due to the continuing depletion of world hydrocarbon reserves) 
could lead to a breakdown of the food system at every level, from farmer to 
processor to distributor to retailer and finally to consumer.

To summarize, high oil prices contribute to soaring food prices. Our modern 
global food system is highly oil-dependent, but petroleum is becoming less 
and less affordable. Extreme weather events also contribute to high food 
prices, and, to the extent that such events result from anthropogenic global 
warming, they are also ultimately fuel-related. Thus there is no solution for 
the world’s worsening food crisis within current energy and agricultural 
systems.

What is needed is a major redesigning of both food and energy systems. The 
goal of managers of the global food system should be to reduce its dependence 
on fossil energy inputs while also reducing GHG emissions from land-use 
activities. Achieving this goal will require increasing local food 
self-sufficiency and promoting less fuel- and petrochemical-intensive methods 
of production.

Given the degree to which the modern food system has become dependent on 
fossil fuels, many proposals for delinking food and fossil fuels may seem 
radical. However, efforts to this end must be judged not by the degree to 
which they support the existing imperatives of the global food system, but by 
their ability to solve the fundamental challenge that faces us – the need to 
feed a global population of seven billion (and counting) with a diminishing 
supply of fuels available to fertilize, plough and irrigate fields, and to 
harvest and transport crops. Farmers need to reduce their dependence on 
fossil fuels in order to build resilience against future resource scarcity 
and price volatility.

In general, farmers can no longer assume that products derived from petroleum 
and natural gas (chiefly diesel, gasoline, synthetic fertilizers, and 
synthetic pesticides) will remain affordable in the future, and they should 
therefore change their business plans accordingly. While many approaches 
could be explored, which in any case would depend on specific geographic 
locations, the necessary outlines of a general transition strategy are 
already clear.


    Farmers should move towards regenerative fertility systems that build 
humus and sequester carbon in soils, thus contributing to solving climate 
change rather than exacerbating it.
    Farmers should reduce their use of pesticides in favour of integrated 
pest management systems that rely primarily on biological, cultural and 
physical controls.
    More of the renewable energy that will power farming activities can and 
must be generated on farms. Wind and biomass production, in particular, can 
provide farmers with added income while also powering farm operations.
    Countries and regions must undertake proactive steps to reduce the energy 
needed to transport food by reorganizing their food production systems. This 
will entail support for local producers and for local networks that bring 
producers and consumers closer together. More efficient modes of 
transportation, such as ships and trains, must replace less efficient modes, 
such as trucks and planes.
    The end of the fossil fuel era should also be reflected in changes in 
dietary and consumption patterns among the general population, with a 
preference for foods that are grown locally, that are in season, and that 
undergo less processing. Also, a shift away from energy- and meat-intensive, 
diets should be encouraged.
    With less fuel available to power agricultural machinery, the world will 
need many more farmers. But for farmers to succeed, current agricultural 
policies that favour larger-scale production and production for export will 
need to change in favour of support to small-scale subsistence farming, 
gardening and agricultural cooperatives. Such policies should be formulated 
and put in place both by international institutions, such as the FAO and the 
World Bank, and also by national and regional governments.

If such a transition is undertaken proactively and intelligently, there could 
be many additional benefits, with more employment in farming, more 
environmental protection, less soil erosion, a revitalization of rural 
culture and significant improvements in public health. Some of this 
transformation will inevitably be driven by market forces, led by the rising 
price of fossil fuels. However, without planning, the transition may prove 
destructive, since market forces acting alone could bankrupt farmers while 
leaving consumers with few, if any, options for securing food supplies. 
Removing fossil fuels from the food system too quickly, before alternative 
systems are in place, would be catastrophic. Thus the transition process 
requires careful consideration and planning.

There are reasons for hope. A recent report on African agriculture by UNCTAD 
and UNEP (2008) suggests that organic, small-scale farming can deliver the 
amount of increased yields thought to be possible only through industrial 
farming, and without the environmental and social damages caused by the 
latter. Recent research by Badgley et al. (2007) also concludes that organic 
and low-input methods can increase yields in developing countries while 
maintaining yields in industrialized countries.

Generally, smaller farms have greater biodiversity (Hole et al., 2005), place 
greater emphasis on soil-building (D’Souza and Ikerd, 1996) and display 
greater land-use efficiency than large farms (Rosset, 1999).

Nevertheless, despite these promising trends and findings, it is axiomatic 
that no food system tied to the earth’s finite soil and water resources can 
support an ever-expanding and ever more resource-demanding population. The 
prudent path towards reforming the global food system must therefore 
coordinate agricultural policy with appropriate population, education, 
economic, transport and energy policies. The transition to a post-petroleum 
food system will need to be comprehensive. In its scale and required speed it 
promises to be one of the greatest challenges in human history. But the 
challenge will only grow the longer it is postponed.


References
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[1] World Shipping Council, Record fuel prices place stress on ocean 
shipping,at: www.worldshipping.org/pdf/WSC_fuel_statement_final.pdf , 2 May 
2008.