Saturday Sprouting Reads: The Four Fundamental Forces of the global food price crisis
Agriculture and Food systems are 'wicked' problems. When you peel the layers of any food and agriculture related wicked problems, you have already entered the discipline of climate change, sustainability, biodiversity and ecology. I started writing Agribusiness Matters primarily because this interdisciplinary focus was sorely missing in the agritech discourse. I am glad now that I have more company - looking at issues from a broader, systemic lens. I strongly recommend you check out this graphic series on right to food.
Agribusiness Matters is read by those who seek interdisciplinary perspectives on a multi-variable, multi-agent domain called Agriculture in an age of runaway Climate Change. You are most welcome to support my work and become a paid subscriber:)
About Sprouting Reads
If you've ever grown food in your kitchen garden like me, sooner than later, you would realize the importance of letting seeds germinate. As much as I would like to include sprouting as an essential process for the raw foods that my body loves to experiment with, I am keen to see how this mindful practice could be adapted for the food that my mind consumes.
You see, comprehension is as much biological as digestion is.
And so, once in a while, I want to look at one or two articles or reports closely and chew over them. I may or may not have a long-form narrative take on it, but I want to meditate slowly on them so that those among you who are deeply thinking about agriculture could ruminate on them as slowly as wise cows do. Who knows? Perhaps, you may end up seeing them differently.
Four Fundamental Forces of the Global Food Price Crisis
Last week, thanks to a hat tip from an anonymous reader, I stumbled upon a report that really caught my attention for getting to the heart of the global food price crisis. Since I consider it important for many of us, lost in the maze of various manifestations of the global food price crisis, I want to add a narrative modelling layer along with excerpts from the report to see if it can help us see from a system lens.
The ongoing global food price crisis, much like physics, can be reduced to four fundamental forces:
This is also roughly the order of decreasing influence in how they have caused the global food price crisis.
The impact of colonization on the current global food price crisis is far more than the Ukraine War, for the war is as much a trigger as the global recession was during 2007-08 when we faced a similar global good price crisis.
While I often love to talk about food production systems, when you take a systems view, you would realize that agribusiness is the weakest of the forces that are driving this global food price crisis.
Colonization is the most mysteriously dark of these forces, quietly manifesting in the way it has destroyed countries’ traditional diets and made them import-dependent on staple foods - ‘wheat, rice and maize - just 3 of the 7000 plants consumed by humans’.
In many countries, cash crops have taken the place of more diverse food cropping and nutritionally important foodstuffs. For example, tobacco farming is considered to have displaced vegetables and pulses in Bangladesh, as well as cassava, millet, and sweet potatoes in a number of African countries. The development of high-yielding wheat varieties during the ‘Green Revolution’ has also accelerated production and dietary shifts, leading for example to the replacement of rice-pulse intercropping with wheat monocultures in India. Public distribution systems, notably in South Asia, have tended to focus on wheat and polished rice, further changing dietary preferences over time.
From the data I see, African countries have been terribly affected, reeling from a double whammy - impacted both by colonization and food geopolitics - when they became …
‘food import-dependent, following the adoption of Structural Adjustment Programs in the 1980s, which promoted cash crops exports and cheap grain imports, scaled back state support programmes, and dismantled the structural foundations of food production in many African countries.’
In a nutshell, what is exacerbating the global food price crisis in many countries is
'double dependency - 1) on import of staple crops 2) handful of exporters for a high percentage of those imports’
The various manifestations of the food crisis we are seeing (As I am typing this, Ecuador which supplied many fruits that I consumed in Switzerland during my recent vacation is in the throes of an economic crisis) are a pendulum effect of each of these four forces.
When there are supply and price shocks due to structural weaknesses enumerated above, countries are forced to enact export bans.
‘As of early May 2022, some 20 countries had imposed food export bans. These and other export restrictions (e.g. licensing requirements) affect 17% of globally traded food calories, i.e. a similar magnitude to the export restrictions invoked in 2008.3 Countries that impose such restrictions are typically seeking to shore up their access to domestic supplies and to keep prices low at home in the face of global market instability.’
India also joined the export ban party, when it realized that its crop forecast was way off the mark and the methodology underpinning it was ridiculously obsolete.
Much like a pendulum that swings back in motion, when there are export bans, they ‘further exacerbate price spikes on world markets, particularly when introduced unilaterally and at short notice’.
‘For example, the unexpected expansion of Indonesia’s export restrictions to all forms of palm oil on April 27 caused US soy oil futures to jump 4%’
When food import-dependent countries are indebted and also heavily reliant on fertilizer imports from a handful of suppliers’, given the fact that ‘Russia and Belarus combined supply 40% of the world’s potash fertilizers’, you realize that we are in the midst of a perfect storm, thanks to Ukraine War.
The impact of the Ukraine War accelerating underlying structural weaknesses in our global food systems must be obvious. How have agribusinesses worldwide contributed to the perfect storm ?
1. When individual farms become ‘highly specialized in the production of specific commodity crops, these investments in specialized commodity systems create path dependencies, which create a lock-in effect among buyers and investors in the industrial food systems’;.
During my previous Saturday Sprouting Reads edition, I mentioned that we may be facing a supply shortage that is production driven. Reviewing the data I see in this report, I don’t see the case.
“Supply disruptions are occurring as new/rerouted grain shipments are awaited, leading to temporary shortages and rising prices – but there is not a global food supply shortage at the present moment.”
2. ‘Opaque, dysfunctional and speculation-prone grain markets’ have further accelerated the global food price crisis. War has always historically attracted speculators making the most of the volatility and this time, it is no different.
The report goes into a lot more granular detail than I have covered in this quasi-summary and I strongly recommend checking it out. More than the ant’s eye-view details, I am interested in the bigger picture: How do we understand the fundamental forces that have caused the global food price crisis? This brings me to an important question
So what did I leave out of this four forces model?
I left the messiness of anthropogenic Climate Change from this four forces model, although you could point out various data points on how climate change has caused sudden production shocks and farmers worldwide are unable to cope with the supply shocks.
Today, the climate change discourse, as I see it, is caught in binaries: On one end, you have those saying that this is the end of humanity and on the other end, you have those saying that this is a political agenda, and point out cherry-picked data points of how future predictions have failed.
This narrative fails to understand
1) Climate Change has been a historical phenomenon in the history of Earth.
2) In the past, we have seen temperature spikes in shorter time periods.
Given this historical context, i am now beginning to consider Climate Change as not a black swan event, but as a constant regular occurrence in the long history of Earth. When Climate Change is a constant occurrence, how will it impact the design of food systems? We will explore this further.
So, what do you think?
How happy are you with today’s edition? I would love to get your candid feedback. Your feedback will be anonymous. Two questions. 1 Minute. Thanks.🙏
💗 If you like “Agribusiness Matters”, please click on Like at the bottom and share it with your friend.