_http://www.granma.cu/ingles/2007/junio/vier15/24cereales.html said:
Are we going to witness disturbances in coming months in Eritrea, Senegal, Armenia or Egypt caused by hunger? The World Bank fears that a rise in prices and weakness in global reserves of cereals could unleash a situation like that.
In its annual report on "Financing Development in the World," published on Tuesday, May 29, analysts at that financial institution estimate that the good health of the world economy faces three basic threats.
The first two are extremely well-known. They are the economic explosion in some emerging countries — inevitably, one thinks of China — and of a more serious readjustment than expected in the U.S. real estate market.
The third risk is something new, which essentially concerns the poor populations of underdeveloped countries: it is related to the extremely high cost of cereals.
Reserves of flour, corn and rice fell to 16% of global consumption, according to the report’s authors. Because a drought ravaged harvests in 2006 in Australia and Ukraine; because China has cut its storage by two-thirds since 1999, and because an increasingly larger share of the U.S. corn harvest is being allocated for production of biofuels.
This assessment confirms what Cuban President Fidel Castro, since March, has been saying every week, regarding a future "genocide" due to famine that could be caused by the growing use of cereals for energy purposes.
The World Bank estimates that the United States, the main corn producer and exporter in the world, could allocate 25% more of its annual harvest to ethanol production. Despite a 15% increase in planted acreage, the price of corn has shot up by 75% since the summer of 2006.
REDUCTION IN INCOME
As if it were a plague, inflation has affected other cereals, and the World Bank is worried about the possibility of a general increase of 40%, because "reserves are only slightly higher than levels seen when cereal prices doubled between 1972 and 1975."
According to the scenario outlined by the report, the price per ton of flour would rise from $195 in 2006 to $275 in 2007 (+43.2%); that of corn, from $122 to $175 (+43.4%) and rice, from $305 to $400 (+31.1%).
The consequences would be dramatic in underdeveloped countries like Kenya, where corn provides 35% of the calories consumed by a family. That figure is as high as 58% in the poorest homes. The impact would be higher on urban families, given that farmers consume less than they produce, and they take advantage of the higher cereal prices to sell their surpluses.
According to estimates, the reduction in income for the poorest populations could reach 6.3%. The fall in earnings — with respect to the gross domestic product — would be particularly negative for Eritrea, Tajikistan, Lesotho, Gambia, Yemen, Senegal, Armenia, Mozambique, Nigeria and Honduras.
"In countries like Nicaragua, a 40% increase in cereal prices would be sufficient to cause the disappearance of the 2% of the population that is living in extreme poverty," the reports authors affirm.
What the report doesn’t say is that there are other potential factors that could contribute to a further reduction of reserves and, therefore, a rise in prices: the advance of urbanization is diminishing cultivatable land, particularly in Asia; more opulent lifestyles in, for example, former Soviet countries, are increasing demand for meat and therefore the utilization of cereals in animal feed. The phenomenon of higher prices has only begun.
In order to know whether or not predictions of shortages by speculators will unleash a crisis, experts at the World Bank believe that they must await the U.S. cereals harvest in mid-October, given that the worst should not be ruled out: a doubling of prices for those products.
