May 5, 2008

The New Resource Crisis

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Everyone knows about OPEC, the cartel of petroleum-producing nations that has manipulated oil prices and production for years, but if Thailand has its way there will be a cartel for rice producing nations. The interest in a rice-producer’s cartel highlights a new resource crisis that is upon the world, that of food. Over the past year food prices across the world have skyrocketed, with rice prices rising 74 percent and wheat prices going up 130 percent. The origin for much of the rising prices is the increasing world populations, as well as increasing incomes in developing countries, leading to higher demands for meat products, which require grain for feed. Although the food crisis is a by-product of economic growth, it also threatens global development and will require decisive multi-lateral action to solve.
Rising food prices have caused unrest in Indonesia, Egypt, Haiti and other places around the world. Many other governments have taken action to control prices. Some food exporters, such as Vietnam, have taken to imposing export limits in order to ensure their own food security. On a smaller scale, food vendors have adapted: in Liberia food, vendors have substituted spaghetti for rice in order to keep prices low and customers coming. Increases in the cost of food most greatly affect those at the margins, the urban poor of the developing world. It is clear that developed countries and developing countries must work together to address this crisis by sparking a new “Green Revolution” by pursuing development of high-yield crops and better agricultural methods. The U.S. should also lessen investment in ethanol and instead focus on other sources of renewable energy, as the corn produced for ethanol could be used for food and the land currently used to grow the corn could be used towards a more agriculturally productive end. As it stands, rising food prices may force