The Age of Disruptive Climate Change, and its impact on the
supply of food, is a major source of modern-day uprisings, toppling
governments around the world.
The United States, “the breadbasket of the world,” and the largest
exporter of corn, soybeans, and wheat, accounts for one in every three
tonnes of staple grains that feed the world. Over the past month,
futures prices for corn and wheat are up approximately 50%. The culprit
behind this abnormal pricing behaviour is a major drought that is
scorching one-half the breadbasket of America. The U.S. Department of
Agriculture declared on July 11 that more than 1,000 counties in 26
states are natural-disaster areas, the biggest such declaration ever!
According to
The Economist,
by the end of 2007, when high grain prices sparked riots in 48
countries, the magazine’s food-price index reached its highest point
since originating in 1845. Alarmingly, as of today, corn is back to
those same 2007 peak prices, wheat is rapidly approaching the same high
levels, and soybeans are at multi-year highs, but the U.S. drought has
only begun… maybe. Thankfully, rice, which feeds one-half of the world,
is still moderating at its midpoint of the past 5-years… so far, and
here’s hoping commodity speculators, with their penchant for riding the
contrails of rising grain prices, do not drive the price of rice up as
well. Without a doubt, Goldman Sachs is eyeballing this wager.
Food shortages and high food prices pose a huge potential strain for
worldwide governments and tottering capitalist socio-economic systems.
According to Abdolreza Abbassian, senior economist with the UN Food
& Agriculture Organization (Rome), “The world looks to the U.S. as
the safest source of supply… Everyone watches the U.S. because they can
rely on it. Without it, the world would starve.”
The phenomenon of people rioting in the streets to protest lack of
food at affordable prices is as old as recorded history, e.g., Emperor
Cicero’s (106-43 BC) house, on Palatine Hill overlooking the Forum, was
attacked by angry mobs over food shortages. In France grain crops failed
two years in a row, 1788-89, and the price of bread shot up to 88% of
the average 18th century worker’s wages, preceding the start of the
French Revolution. And, in 2007-08 a worldwide price surge of grains
triggered riots in streets around the world, causing numerous deaths and
leading to toppled governments.
The Arab Spring uprisings of last year brought to the surface
political and economic issues, but, behind the scenes, climate stress
played as big a role. The warning behind Syria’s disruptive climate
change, i.e., drought, is chilling. Syrian farmlands north and east of
the Euphrates River are the breadbasket of the Middle East, and up to
60% of Syria’s land experienced one of the worst droughts on record from
2006-11. In the northeast and the south, nearly 75% suffered total crop
failure. Herders in the northeast lost 85% of their livestock.
According to the UN, 800,000 Syrians had their livelihoods totally wiped
out, moving to the cities to find work or into refugee camps.
Furthermore, the drought pushed three million Syrians into extreme
poverty. As of January 2012, Abeer Etefa of the World Food Programme,
states, “Food inflation in Syria remains the main issue for citizens.”
And, it is believed [by some] to be one of the major causes of domestic
unrest.
With the current fragile state of worldwide economic conditions, the
upshot of rapidly rising food prices and/or food shortages may turn the
world upside down, and shake it, because much of the Western world is
already on life support, addicted to low interest rates, with a
“steady-as-she-goes” very tempered economic recovery, and a high-wire
balancing act to support uncomfortable levels of debt. The tenuousness
of the economic situation takes one’s breath away! Any major imbalances
in this quiescent economic tinderbox could be a dagger to the heart of
the status quo, causing unprecedented rioting in the streets, which is
already an indeterminate trend in the great metropolises.
Capitalist nation-states are already under more financial duress than
at any time since the Great Depression; however, today is different
than the 1930s, it is the developed nations that are under water with
debt ratios higher than in the 1930s. This is the reverse of the
situation in the 1930s when undeveloped nations were most at risk. Thus,
the countries that normally weather the storm the best are the weakest.
Can Western Civilization handle rapidly increasing food prices,
possibly accompanied by street riots, and with severely weakened
socio-economic conditions?
The good news is a grain shortage, standing alone, will not develop
into an uncontrollable inflationary spiral because the contribution of
“agflation” on core PCE Indexes (Personal Consumption Expenditures) are
more modest than one might expect, affecting a very limited range of
final goods (Current Issues in Economics and Finance, Federal Reserve
Bank of NY, Nov. 2008.) However, price increases of food components are
brutally severe for individual householders the world over, and herein
lays the big problem, like in Syria.
According to a landmark study, the
World Development Report 2011,
“Food insecurity is both cause and a consequence of political violence.”
There is direct evidence that disruptive climate change caused the
political fires that burned across North Africa one year ago, i.e., the
Arab Spring, and it was kindled in Russia. Extreme drought triggered
wildfires and destroyed one-third of the Russia’s wheat harvest. Russia
refused to export the rest of its harvest. Markets panicked and food
prices shot up.
“Definitely, it is one of the causes of the Arab Spring,” says
Shenggen Fan, director-general of the International Food Policy Research
Institute. It is increasingly clear that the climate models that
predicted the countries surrounding the Mediterranean would start to dry
out are correct.
Meanwhile, today in the United States, NOAA says, as of June 2012, “…
the 12-month period from July 2011 to June 2012 was the warmest on
record since recordkeeping began in 1895.” And, to make matters even
worse, Central and Eastern Canada’s drought is “baking crops,” says
David Phillips, senior climatologist with Environment Canada, who goes
on to comment, “… it’s almost as if the atmosphere has forgotten how to
rain,” Michael Oppenheimer, professor of Geosciences at Princeton
University states, “What we are seeing is a window into what global
warming really looks like.”
These concerns with global warming are poppycock according to one
leading Republican, Rick Santorum, who tersely informed Rush Limbaugh in
an interview in June 2011, “… global warming is ‘patently absurd’ and
‘junk science’.” Leading Right Wing mouthpieces like Ann Coulter claim
climate researchers are “cult members,” who practice deception. As for
Mitt Romney, while holding one finger up in the air, testing the
direction of the latest polling breeze, he claims, on the one hand, he’s
not sure “if humans are causing climate change,” but on the other hand,
he is not a “denier of climate science.” Talk about a safe bet! Talking
out of both sides of his mouth, which climate science does he refer to?
It is patently disturbing that anybody would deny climate change with
97% of scientists saying man-made climate change is real, according to
the National Academy of Sciences, after posing the question to 1,372
scientists.
Considering the fact that three percent are not onboard, it prompts one
to wonder if these three percent are the scientists Rick consults and
Mitt refers to when he says he is not a “denier of climate science,”
which, come to think about it, could go either way. Thus, Romney has
safely straddled the fence for himself while the Santorums and Coulters
of the world do the heavy lifting for powerful Right-Wing proponents of
global warming.
Contrary to American politicians’ positions on global warming,
including several former Republican presidential candidates who
recommend ‘gutting’ the EPA, Yale University’s list of the world’s
greenest nations demonstrates sensible/sober/prudent politics at work,
“… countries that are attentive to good environmental management have
good business management as well.” For example, the Scandinavian
countries have made investment in environmental businesses an important
part of their economic base. The largest solar power company is in
Norway, which is the No. 3 on the Yale University list. The United
States is No. 39, behind Costa Rica and several Eastern European
countries as well as Japan, Germany, and the UK — all of which rank much
better than the U.S. And, even though the U.S. has a stellar reputation
for invention, it does not have the political heart to overcome a
deathly addiction to hydrocarbons, the likely source of today’s drought
conditions.
What a strange paradox, indeed, that the United States of America
built interstate highways connecting every corner of the country,
measuring 3000×1500 miles, but yet, it does not even consider
construction of solar panels or wind turbines along the same
right-of-ways, producing electricity for every community from Maine to
California.
There is no doubt about disruptive climate change ravishing crops,
which is especially obvious to Americans witnessing it firsthand in the
heartland. According to Marco Lagi,
he claims to have discovered the single factor that triggers riots
around the world: The Price of Food! The evidence comes from two
sources: The first is data gathered by the United Nations that plots the
price of food against time, the so-called food price index of the Food
and Agriculture Organization of the UN. The second is the date of riots
around the world, whatever the cause. Lagi’s work proves the old maxim:
Society is three square meals away from anarchy.
December 13, 2010, four days before Mohamed Bouazizi set himself on
fire in Tunisia, starting the Arab Spring riots, the NECSI contacted the
U.S. government, warning that global food prices were about to cross
the threshold they had identified as the tipping point when almost
anything can trigger riots. The NECSI study was presented, by
invitation, at the World Economic Forum in Davos and featured as one of
the top 10 discoveries in science in 2011 by
Wired magazine. Interestingly, Lagi and colleagues have isolated two serious predominate causes for out-of-control food
prices, in addition to normal supply and demand: (1) deregulation of
commodities, resulting in speculators who can control unlimited purchase
contracts and (2) conversion of corn into ethanol. Here we go again —
the deregulation quandary — the predominate theme of the Right Wing and a
favorite of Mitt Romney, popping up every time trouble brews, similar
to the 2007-08 financial meltdown and the direct connection between that
travesty and the U.S. Congress’s deregulation (killing) the 1933
Glass-Steagall Act, which act kept commercial banks out of speculative
securities for over 60 years.
Yes, disruptive climate change is the “fons et origo” or “source and
origin” of uprisings. In this regard, it is fascinating, and horribly
frightening, how the political Right Wing continues to support policies,
by ignoring the ravages of global warming, that inevitably bite back at
society, and the biggest bite, or carnage, will likely be global
warming itself, caused by hydrocarbons in the atmosphere from oil &
gas and coal. In this same vein, one of the most alarming results of
manmade global warming, other than drought conditions devastating the
breadbaskets of the world, is the fact that the world’s glaciers are
melting like ice cream cones in July.
With grain prices cranking up once again, and with commodity
speculation wide open, blessed by deregulation, providing for unlimited
purchase contracts that conforms to manipulated control of pricing, the
Great Betting Game on Grains will most likely result in food riots,
leading to blood in the streets, and as certain as the riots are
expected in many underdeveloped countries of the world, a North American
Spring is not entirely out of the question.
Robert Hunziker, a former hedge fund manager, is a
professional independent negotiator for worldwide commodity actual
transactions and a freelance writer for progressive publications as well
as business journals. Mr. Hunziker earned an MA degree in economic
history at DePaul University/Chicago, and he resides in Los Angeles. He
can be contacted at:
rlhunziker@gmail.com.
Read other articles by Robert.
